20. The expansion in organic production is racing
to keep up with the growth in customer demand. In April 2000 the
total organic retail market was worth almost £550 million
on an annual basis and no-one has seriously questioned predictions
that it will reach £1 billion next year.
Figure 1 below shows the trends in market growth since 1993.
Figure 1: UK retail market growth - actual
Source: SA (1999), p. 22.
To keep these figures in perspective, in 2000 organic
food accounted for just 2.5 per cent of the total UK food market.
To reach the market share of 20 per cent sought by the Soil Association
by 2005, would require annual growth of 50 per cent which, of
course, is much harder to achieve when the amounts involved are
already significant. Doubts have been expressed about the ability
of the market to sustain such growth; for example, the MLC cited
a survey of multiple retailers which revealed expectations that
the market for organic meat would command between 3 and 10 per
cent of total meat consumption in five years' time.
Nevertheless, the supermarkets are gearing up for further strong
growth over the next few years: Sainsbury's predicted that the
market will "begin to level out" in 2003 or 2004 and
would "reach a peak at the 10 year mark by 2010".
21. The major supermarkets have responded to consumer
demand by stocking vastly increased ranges of organic foods. Sainsbury's
now offers over 630 products, including frozen meals, vodka and
By comparison, in 1996 it offered just 42 lines, covering basic
commodities and fruit and vegetables.
Despite the cornucopia of products now on offer, it is still the
fruit and vegetables sector which dominates the organic market,
as figure 2 below illustrates.
Figure 2: Retail value of UK organic market,
Source: SA (1999), p. 22.
The biggest expansion in the future is likely to
come in baby food where organic products are variously predicted
to take 40 per cent of the market by the end of 2000 and 100 per
cent by the end of 2001.
22. The "organic trade gap" is set to continue
to grow as demand outstrips the rate of conversion. It currently
stands at around 70 per cent, although this varies between sectors
(see figure 3 below).
Figure 3: Imports of organic food (% share),
Source: SA (1999), p. 21.
Given the dominance of fruit and vegetables in terms
of overall sales, the large percentage of imports in that sector
plays a major part in setting the average for the whole organic
market. This indicates the need for some caution in assessing
the trade gap in organics since many of these products are inevitably
sourced from abroad, for example, oranges, mangoes or bananas.
By comparison, in 1999 home production for the conventional market
accounted for 71 per cent of vegetable supplies but only 11.9
per cent of fruit. Imports are not by definition a bad thing:
the NFU argued that they were crucial to developing the market
at this stage before UK farmers had had time to complete conversion.
Nevertheless, it is clear that there is a huge opportunity
for UK producers to expand still further into organic farming
to meet a ready market.