Organic farming: huge potential for producers

The New South Wales organic farming industry has huge potential to fill domestic and export markets, which are expanding by about 16% each year.

Defining the industry

Organic and biodynamic farming systems are best described as farming systems that do not use artificial chemicals.

Organic farmers aim to achieve a totally integrated production system where increased biodiversity and a balanced soil ecosystem encourage plant and animal health.

Biodynamic farming is considered synonymous with organic farming; however, it is recognised that a number of additional practices differentiate the two systems.

Opportunities

Current industry estimates put the domestic market retail value of the Australian organic farming industry at A$250 million a year, with produce worth $50–$70 million being exported.

There are about 2100 certified organic producers in Australia, farming about 10.5 million hectares. Approximately 650 of these producers are in NSW.

Much of the large-scale land dedicated to organic production in Australia is used for beef cattle production and mixed cropping/livestock enterprises. However, the majority of organic farmers are horticulturists who produce a range of fresh and processed products. Value adding to produce is a feature of many organic enterprises.

Surveys carried out in 1990 showed that the organic retail market in NSW was worth about A$13.3 million. In 1995 this figure had expanded to A$24 million — an annual growth of 16%. See Table 1:

Table 1. Organic produce retail market in NSW, 1995

Extrapolation of the 1995 survey figures suggests that today’s organic production in NSW could be worth as much as A$50 million at the retail level.

Organic food consumption in NSW comprises only 0.18% of total food sales, which is in line with the national consumption figure of 0.2%. At this consumption rate, NSW consumers are spending only 8c/week on retail purchases of organic produce.

World markets

• The retail value of the organic industry worldwide is currently estimated at US$23 billion. By 2005, world retail trade in organic produce is predicted to be worth US$31 billion.
   
• Current values for organic retail sales include:
  • US$11 billion in Europe
  • US$13 billion in USA
  • US$450 million in Japan.
     
• Markets for a wide range of Australian organic products have been identified, showing significant trade opportunities in Asia and Europe.
   
• There are an estimated 3–5 million consumers of organic produce in Japan.
   
• In 2000 the US exported US$715 million of organic produce into the Pacific rim countries. Potential exists for NSW organic farmers to expand into these markets.
   
• Currently there is also a large range of organic products imported into Australia, creating production and marketing opportunities for import replacement.
   
• Potential exports of organic produce from NSW include processed fruit and vegetables, wine, dairy products, soybeans, rice, flour-based products, and meat (beef and processed beef for the hamburger trade).
   
• 90% of Australia’s 2000 tonne organic soybean crop is currently exported to Japan; however, the industry reported demand for supplies of 10 000 to 20 000 tonnes of organic soybeans.
   
• Organic industry experts suggest that there is a trend towards more sophisticated marketing of organic products, with a decline in localised marketing and an increase in non-local and export sales.
   

  Examples of processed organic products

• There is a general shortage of manufactured or processed organic products available on the market. Ingredients such as sugar are in short supply for value-added or processed organic products.
• The most recent estimates suggest that, for organic products sold in NSW:
  • 38% are sourced from interstate suppliers;
  • 33% from local suppliers;
  • 16% from non-local NSW suppliers;
  • 13% from overseas.
     
• Marketing research suggests that for NSW organic producers:
  • 52% sell their products to processors/wholesalers;
  • 10% sell through a cooperative or organic products association;
  • 19% sell directly to retailers;
  • 9% sell directly to consumers;
  • 4% process, or value-add to, their own products;
  • 6% utilise some other form of distribution.

In 2000 a Rural Industries Research and Development Corporation (RIRDC) project identified a range of organic products and their priority for further development. Table 2 provides brief details of this project:

Table 2. Organic products for further development*

*Source: RIRDC, 2000

Benefits of modern organic farming systems

Organic farmers claim a number of tangible benefits are associated with modern organic farming systems. These principles are recognised in the standards of the International Federation of Organic Agriculture Movements (IFOAM).

• Organic farming practices increase humus levels in the soil, leading to improved water-holding capacity. The practices reduce pH fluctuations and increase long-term soil fertility.
   
• Organic farming systems utilise practices that avoid or exclude the use of synthetic compounded fertilisers, pesticides, growth regulators and livestock feed additives, resulting in benefits to the environment and to human health.
   
• Organic farming systems advocate the use of localised resources such as plant and animal waste.
   
• Organic farming aims to maintain the genetic diversity of the agricultural system and its surroundings, including the protection of plant and wildlife habitats.
   
• Organic farming aims to consider the social impact of the farming system, including the retention of the family farm and support for the local economy.
   
• Organic farming aims to meet consumer demand for food products that are nutritious and low in, or free of, chemical residues.

Industry support

NSW Agriculture has taken a lead role in the development and ongoing support of the organic farming industry. Bathurst Agricultural Research and Advisory Station, as the Centre for Organic Farming, has become the state’s focus for organic farming systems research, extension and education activities. With significant support from NSW Agriculture’s nine Centres of Excellence, the Department’s Organic Farming Liaison Officer provides information and advice on farming systems that have minimal impact on the environment.

Regular liaison with peak organic farming bodies in all parts of Australia and with other alternative farming industry groups maintains the flow of information and technology to NSW producer groups and individuals.

Current projects being undertaken by NSW Agriculture’s Alternative Farming Systems initiative include:

• creation of the Centre for Organic Farming at the Bathurst Agricultural Research and Advisory Station;
   
• an organic farming system demonstration farm at Yanco;
   
• preparation of publications that detail methods of organic farming;
   
• improving market access for organic and biodynamic agricultural products.

NSW Agriculture is also represented on a number of vitally important committees that assist the organic industry to shape policy and direction of further development of the organic farming industry.

NSW Agriculture’s Organic Farming Liaison Officer works closely with leading research scientists and advisory staff, and encourages adoption of chemical risk reduction strategies such as the use of integrated pest management (IPM).

In addition, considerable effort is made in the following areas:

• research and development of sustainable, low-input cropping rotations;
   
• development of environmental management systems for dairy farmers and grain producers;
   
• biological control and non-chemical management programs for a wide range of weeds.

Agsell, the NSW Agriculture export market development program, assists organic producers in NSW with the development of potential markets, especially in the Asian region.

Limiting factors

While a number of the impediments to faster expansion of the organic farming industry in NSW are being overcome, the industry faces a number of issues that may impact on its competitiveness:

• relatively small industry size and lack of volume throughput;
   
• lack of domestic certification legislation;
   
• fragmented nature of the industry — diverse commodities, philosophies and groups;
   
• a multiple-commodity focus — a diverse range of products is produced by the industry and sometimes by individual farmers, making an alignment with traditional, single-commodity producer organisations difficult;
   
• social isolation of producers and non-recognition by mainstream agriculture, largely due to the differing philosophies that exist between conventional and organic or biodynamic producers;
   
• regulatory impediments such as the availability of non-chemical postharvest treatments;
   
• unreliable supplies and inconsistent product quality;
   
• shortage of certified processing facilities and certified organic inputs such as sugar;
   
• the process of conversion to organic production can be slow and is often associated with a decline in income — this may have implications for the preservation of other farm enterprises;
   
• a general lack of production information for organic farming under Australian conditions;
   
• increased costs associated with marketing organic produce — market research and certification expenses.

Industry contacts

For a list of DPI and industry contact, see Advisory services and resources