Organic Perspectives
July 1998

Inside This Issue:
1. Organic Perspectives Now Available on the FAS Home Page
2. National Organic Program (NOP) Update
3. Organic Guidelines Advance in Codex
4. UK Organic Acreage Up
5. Switzerland's Organic Market
6. Swedish Demand for Organic Products Grows
7. Hot Off the Press: The Organic Pages
8. Congress Earmarks Funds for Organic Research
9. Price Premiums for U.S. Organic Crops
10. Upcoming Events

1. Organic Perspectives Now Available on the FAS Home Page
To better serve the organics community, Organic Perspectives is now being made available on the Internet. The newsletter can be accessed either through the FAS home page under "World Market and Trade Feature Reports," or at FAS's Horticultural & Tropical Products (HTP) home page.

2. National Organic Program (NOP) Update
AMS continues to review the comments which now stand at approximately 280,000. To view the comments yourself, visit the NOP home page.

The National Organic Standards Board (NOSB) met in Washington D.C. July 21-23. The 14-member NOSB was established under the Organic Foods Production Act of 1990 to advise the Secretary of Agriculture on issues relating to the NOP. Membership consists of four organic producers, two organic handlers/processors, one organic retailer, three environmentalists, three consumer advocates, and one scientist. A fifteenth member, an accredited certifier, will join the NOSB once the NOP is fully operational. NOSB board members are appointed by the Secretary for 5-year terms.

The NOSB's work is divided among six working committees. During the meeting of the International Committee, Audrey Talley, ITP and Deputy Assistant General Counsel Kevin Brosch briefed the full NOSB and other interested parties from the organic industry on the WTO, Codex and emerging policy issues of importance to organic trade. Janise Zygmont, HTP discussed FAS programs and activities being developed and expanded to serve the U.S. organics community. To find out more about NOSB activities and makeup of the board, visit the NOP web site noted above.

3. Organic Guidelines Advance in Codex
The Codex Alimentarius Commission (Codex) was created in 1962 by two U.N. organizations, the Food & Agricultural Organization (FAO) and the World Health Organization (WHO). It provides a forum where member countries and international organizations can meet and exchange information and ideas related to food safety and trade issues. The main purpose is to facilitate world trade in foods and to promote consumer protection through the development of science-based food standards, codes of practice and other guidelines. Currently 160 countries hold membership in Codex.

Codex is organized by committees based on subject matter, commodity or regions. Before a new Codex food standard is adopted, it goes through an eight-step process that allows time for member countries and interested parties to review and comment on it. Organics is handled by the Committee on Food Labeling which meets annually in Ottawa. The U.S. delegation includes participants from USDA, FDA and EPA. USDA's delegate to the organics subcommittee is AMS's Keith Jones, National Organic Program Director.

After being stalled for several years at Step 6, "Guidelines on Organically Produced Foods" advanced to Step 7 in May 1998. (However, provisions relating to livestock standards and input evaluation criteria--that is, criteria for deciding if a substance should be allowed in organic production or processing--were held back for future consideration. A draft of the Codex Livestock Standards is expected to be released for comments in September 1998.) Compared to earlier versions, the revised draft provides clear and understandable conceptual guidelines rather than detailed prescriptive standards. The guidelines also allow greater flexibility for bilateral negotiations.

Delegates reached agreement on the following organic principles at the May meeting:

• GMOs and irradiation will not be allowed.
• The labeling of processed foods containing less than 95 percent organic ingredients will be controlled by the importing country.
• Split operations will be allowed, with restrictions. (In a split operation, only a portion of the farm is managed under organic methods; the remainder is farmed conventionally.)
• Inspection and certification were more clearly defined and differentiated.

The next committee meeting is scheduled for April 1999. When finally advanced to Step 8, the document will be submitted to FAO for review and approval, and to member countries for ratification. Recognizing that organics will continue to grow and change, delegates agreed at the May meeting that even after the Codex organic guidelines are approved, they will be reviewed annually by the committee.

Because the U.S. National Organic Program must be in line with Codex standards, the final Codex guidelines will have a direct impact on the U.S. organics industry and U.S. consumers of organically produced commodities and products.

Recent reports on Codex Committee meetings submitted by U.S. delegates are available at the FSIS home page.

The report on the May meeting of the Committee on Food Labeling is expected to be posted to this site soon. For further information, contact: Keith Jones, AMS: t_keith_jones@usda.gov or Audrey Talley, FAS: Atalley@ag.gov

4. UK Organic Acreage Up
According to a recent press release by the U.K.'s Ministry of Agriculture, Fisheries and Forestry (MAFF), record numbers of farmers are applying to convert their land to organic farming. In the first five months of 1998, MAFF received nearly 140 applications. That is in addition to the 306 participants already in the Organic Aid Scheme. According to the press release, the new applicants intend to bring nearly 7,000 ha into the program which would raise UK's land area in organic production by nearly 25 percent. Major features of The Organic Aid Scheme include:

• Up to five years of financial aid for converting from conventional to organic farming, as authorized under EU regulations.
• Dedicated funding for a national research program to examine the economic and agronomic issues in converting to and maintaining organic agricultural production.
• Funding for the UK Register of Organic Food Standards (UKROFS) which administers EU regulations in the UK and both supervises and approves the six private sector entities which inspect and approve all farms producing to organic standards.
• Funding for an Organic Conversion Information Service to help conventional farmers decide if converting to organic production is right for them. This service also covers a free on-site consultation, and advice tailored to the individual operation.

In April 1998, MAFF announced some administrative changes to The Organic Aid Scheme to encourage more farmers to convert to organics. The package included a 30 percent increase in organic R&D and funding increases for other facets of the program. Specific research objectives include animal health, profitability of organic farms, and implications for organic farmers of cross contamination with pollen from GMO crops.

The government supports organic farming as "one option for environmentally friendly production and to meet consumer demand for organic produce which at present is met largely from imports." A recent estimate indicates that the UK organic market stands at US$455 million, and that imports account for about 70 percent of total UK organic food supply--a much higher percentage than other Western European countries. The United States supplies approximately 10 percent of UK's organic imports.
Sources: The European Organic Food Market, USDA, The Hague, March 1998, and MAFF press releases.

5. Switzerland's Organic Market
Agricultural policy reforms initiated in the early 1990s set the stage for expansion of organic food production in Switzerland. Under "Agricultural Policy 2002," farm payments will gradually change from supporting prices and income based on quantity produced, to supporting ecological objectives. Organic farms will receive higher payments than "integrated" farms (where use of synthetic inputs like fertilizers and pesticides are allowed under some circumstances) while conventional farms will not receive such payments. However, with its mountainous topography and limited crop area, Switzerland will have to look beyond its borders to meet the growing demand for organic foods.

Swiss consumers are used to a wide variety of organic foods in the market, and as is happening elsewhere around the globe, "organics" is increasingly going mainstream. The "Bio-Label"which indicates a product grown under a set of strict production and handling standards developed by the Union of Swiss Biological Organizations is widely recognized and accepted by consumers. The Swiss perceive natural and organic foods as healthy, good for the environment and free of GMOs. Generally, demand exceeds supply.

Two major retailers, Migros and Coop, together account for 75 percent of the Swiss organic market and as such have a tremendous influence on the availability of organic foods. Both have adopted the strict Bio-Label standards for their brand name products and adhere to the principle of "regional preference." Thus, in choosing their product lines, preference is given first to domestic products, secondly to products of neighboring countries and regions, and lastly, imports, but only if demand cannot be met by production within Europe and if the goods are transported by land or sea.

With these restrictions in mind, the best prospects for U.S. exports are bread grains and soybeans, dried fruits, nuts, wine and fruit juice. In value terms, cereals are currently the most important U.S. organic food crops exported to Switzerland, although market share may be threatened by growing production in Eastern Europe. Prospects for U.S.-made organic biscuits, crackers, pasta and baby food are not promising since the two dominant retailers offer their own name brand versions. Another aspect of the Swiss market is the importance of "fair trade" for organic items from the developing world such as sugar, coffee and cocoa.
Source: Attache Report SZ8006.

6. Swedish Demand for Organic Products Grows
Although organic food accounts for only 1 to 1.5 percent of the market, Swedish demand for organic food is growing at the rate of 25 to 30 percent per year. Organic products began entering mainstream supermarkets in 1983, and Swedish consumers are today accustomed to finding organic products offered side-by-side with conventional products on retail shelves. Product categories with the highest share sold as organic include vegetables, grain products, milk and baby food, but growth is reported in all areas. The following points illustrate the extent to which organic products have entered the market:

• Twenty-seven percent of the municipalities have begun to serve organic foods in schools and hospitals, and another 33 percent plan to do so.
• McDonald's restaurants serve organic milk and coffee. The chain also buys some organic meat but the supply is insufficient to meet demand.
• One major retail chain-Gröna Konsum-claims to have the highest share of organic foods (4%) of any chain in Europe.
• Major retailers intend to increase their organic product lines; three intend organics to make up 10 percent of sales by the year 2000.

Both the EU and Sweden offer subsidies for organic farming. Currently, 4 percent of Swedish farmland is certified organic and another 3 percent is subsidized as organic but is not certified. In 1994, the government announced a goal that 10 percent of the land be farmed organically by the year 2000. However, Sweden will not become self-sufficient in organic products. Imports are concentrated in product categories that Sweden does not produce at all or produces in quantities inadequate to meet demand.

Main sources of organic imports include the Netherlands, Denmark, Italy, the United States, Israel and Argentina. Major U.S. organic exports to Sweden include raisins, seeds, beans, small grains, and apples. The following organic product categories hold some promise for the future: animal feed; chocolate and other candy; fresh fruit and vegetables; oil and oilseeds; snack foods; soft drinks; peanut butter and other spreads; and wine.
Source: Attache Report SW8009.

7. Hot Off the Press: The Organic Pages
The Organic Trade Association (OTA) membership directory The Organic Pages has just been published. With 770 members, OTA is the leading voice of the North American organics industry whose members represent all sectors including producers, certifiers, shippers, importers, exporters, manufacturers, retailers, distributors, suppliers, researchers and others. The 300+ page guide includes contact information on OTA's members, listings of more than 530 certified organic farms in North America, and extensive indexes arranged by industry sector, products, and business activity.

OTA is offering The Organic Pages to federal and state agencies at a special price: $34.95 plus shipping & handling ($6--domestic; $18--international air; $9--international surface). To order your copy, contact OTA at: ota@igc.apc.org

8. Congress Earmarks Funds for Organic Research
President Clinton signed The Agricultural Research, Extension, and Education Reauthorization Act of 1997 on June 23, which includes a provision authorizing funds for organic research and extension for fiscal years (FYs) 1999 through 2002. These funds are earmarked for: "(1) facilitating the development of organic agriculture production and processing methods; (2) evaluating the potential economic benefits to producers and processors who use organic methods; and (3) exploring international trade opportunities for organically grown and processed agricultural commodities."

A report published in 1997 by the Organic Farming Research Foundation (OFRF)--"Searching for the "O" Word"--was instrumental in garnering support for adding organics to USDA's research and education agenda. The report revealed that in FY 1995, less than one-tenth of one percent of USDA's research budget, and only 34 of the approximately 30,000 USDA-funded research projects were devoted to organic farming systems.

"Searching for the "O" Word" is available from OFRF for $15. For information on how to order the report, visit OFRF's new web site.

9. Price Premiums for U.S. Organic Crops
A researcher at South Dakota State University compared cash prices for conventional and certified organic commodities during the period 1995 through 1997. Following is the average organic price premium, expressed as a percent over conventional prices.

Source: "Price Premiums for Organic Crops,' Choices, Second Quarter 1998. pp. 39-41.

10. UPCOMING EVENTS
1998
July 27-30 - 1998 Organic Japan Seminar & Showcase, Tokyo and Osaka.
****September Is Organic Harvest Month**** (OTA promotion).
Sept. 9-13 - Natural Products Expo East, Baltimore, MD.
Sept. 11-14 - SANA '98, Bologna, Italy ( health, organic, and natural foods)
Nov. 16-21 - IFOAM General Assembly, Argentina.

1999
January - Ecological Farming Conference, Pacific Grove, CA.
Feb. 26-Mar. 3 - Biofach, Nuremburg, Germany.
Mar. 9-14 - Natural Products Expo West, Anaheim, CA.
Aug. 1-3 - Organic Farming Research Foundation Conference, Oakland, CA.
Oct. 16-18 - DIETEXPO '99 (Health/Dietetic/Organic Trade Show), Paris.
Oct. 20-24 - Natural Products Expo East, Baltimore, MD.

This newsletter was compiled by HTP's Organics Staff:
Janise Zygmont-Analysis: zygmont@fas.usda.gov (202-720-1176); FAX(202-720-3799)
Kelly Strzelecki-Marketing: strzelecki@fas.usda.gov (202-690-1341); FAX (202-690-3346)

Last modified: Tuesday, May 08, 2001