Organic farmers hear a call: If you grow it, they will buy

Mary Long stretches her hand past piles of yogurt containers on the supermarket shelf and picks out one with a natural green label: Yeo Valley Organic Yogurt.

"It tastes nice and it's healthier," she says. The fact that it costs a bit more than its conventional counterparts "doesn't matter."

Mrs. Long, a housewife in the west of England, is part of a swelling global wave of consumers who are turning to organic foods in unprecedented numbers. And farmers from Arkansas to Argentina are racing to catch up in a global business worth $10 billion a year.

Far from a passing fad, organic food, produced without pesticides or synthetic fertilizers, is exploding out of the niche market and into the mainstream, say retailers in Europe and the US.

Four years after the so-called "mad cow disease" scandal erupted in Britain, and with public attention in many countries focused on the possible dangers of genetically engineered foodstuffs, industrialized-country consumers increasingly are playing it safe and going organic, adding to those who believe such products simply taste better.

"Globally, the main factor behind the growth of the organic food market is health," says Ulrich Hamm, an expert on organic produce sales at the University of Neubrandenburg in Germany.

"The organic market is growing all the time," says Melodie Schuster, a spokeswoman for the Tesco's supermarket chain. Britain's largest food retailer now stocks 250 different organic products - from fruit and vegetables to dairy products to bread and meat - and plans a major expansion of its lines next month. "We have told our suppliers that this is the way forward," she says.

Billion-dollar market

The UK market for organic food is rocketing by 40 percent a year, and has shot up from $160 million in 1993 to $640 million last year, according to the Soil Association, the principal organic farming group in Britain.

This is still well behind other European countries such as Germany, however, where organic retail sales are close to $2 billion a year. And the US alone, with sales of more than $4 billion in 1997, consumes as much organic produce as the whole of Europe.

Organic holdings still make up only a minuscule part of the agricultural landscape. They account for less than 0.5 percent of farmland in Britain, bottom of the league in Europe where the overall figure is 1.3 percent, and far behind Denmark and Sweden where as much as 10 percent of the land is organically farmed.

The rising demand for natural produce among well-heeled consumers in the rich industrialized world, however, is encouraging farmers around the globe to switch to organics.

Growers in Argentina, for example, have increased the acreage under organic cultivation by 4,600 percent since 1992, and sales of organic fruit, grain, and beef have been rising by 25 percent a year.

In China, the "green food" movement has swept the country, and tropical farmers in Africa and Asia are being encouraged by United Nations agencies such as the International Trade Center (ITC) to start meeting international demand. In a report to be published next month the Geneva-based agency foresees a "very large long-term potential" for third world growers able to supply out-of-season or exotic goods to European and American consumers.

But the booming market for healthy produce is also beckoning small and medium-size conventional British farmers who are struggling to make ends meet with standard crops that fetch poor prices.

Richard Watts, for example, who keeps a herd of dairy cows and grows wheat on his 330-acre farm near here, says he has "done the figures, and organic looks very interesting. It would increase my absolute bottom line by 75 to 100 percent. "I'd love to dive into it," he says. But he is hesitating because "there's a whole management structure behind it, and there's a two-year herd conversion period to get over" before his milk would qualify as organic.

The government this year introduced higher grants to encourage farmers to convert to organic production, helping them through the in-between period when yields have dropped because they are not using chemical fertilizers, but they cannot yet charge organic prices.

Those grants, Mr. Watts reckons, would cover only about 75 percent of his initial losses. And Britain lags behind most other European nations in fostering more organic farming: With France and Greece it is the only country that doesn't pay organic farmers an annual subsidy for as long as they forswear artificial fertilizers and pesticides, and intensive farming techniques.

A few miles away at Newhouse Farm, John Cullimore didn't wait for government grants to change over 10 years ago. The shifting economics of farming threatened to make his holding unprofitable, he recalls, and a request from a pharmaceuticals company that he take part in testing a drug to increase his cows' milk production "rang alarm bells with me."

If supply matched demand for organic produce in the early 1990s, it has lagged far behind in recent years, Mr. Cullimore points out. Though crop yields are about half what he would harvest with conventional methods, he has fewer input costs and his wheat, beef, and lamb command more than twice the normal price.

Whether consumers would go on paying those higher prices if hard economic times hit Britain is a question Arthur Pullin asks himself. Standing by his cowshed surrounded by 40 black-and-white Friesian dairy cows, Mr. Pullin remembers how he first took his herd organic in 1991.

He was earning 25 percent more for his milk than conventional neighbors, but then "the country hit a recession, people said they weren't prepared to pay extra, and the organic market went flop."

He started again in 1996, and feels that nowadays the popularity of naturally grown food is broad and deep enough to sustain the market under any circumstances.

"People started getting worried about four years ago," Pullin says. "[The 'mad-cow' scare] triggered it, then the medical people said that too many antibiotics in animal feed was creating resistant bugs. A lot of things are used that we don't know the long-term effects of, so people prefer to buy organic stuff, where there is less risk."

International market studies, says Professor Hamm, suggest that in countries where organic food is a novelty, sales follow economic trends but "when organics have higher market shares, it is not important if people's income goes up or down a bit."

The recent debate in Britain over the possible effects of genetically modified organisms (GMOs) gave another boost to organic food here: Tesco's organic sales went up by 20 percent in February alone "most definitely because of the GM scare, there's no doubt about that" says Ms. Schuster.

Saturation point?

As more and more conventional farmers ponder making the switch to take advantage of this booming market, though, the economic advantages could grow slimmer. Dairy and beef farmer Colin Pierce, for example, has invited one of the groups that certifies growers as organic to visit his farm, as he considers his options.

"The only thing that worries us," he explains, "is that if we all do it we will reach saturation point, and you really need the premium" over standard prices to make organic agriculture profitable.

But with Britain currently importing 70 percent of its organic foodstuffs, and the market growing by leaps and bounds, the time when supply will match demand closely enough to bring prices down seems a long way off, even if the government does more to encourage conventional farmers to take the plunge.

"The UK market is seen as a jewel in Europe," says Simon Brenman, manager of producer services for the Soil Association. "The consumer has seen the advantage of organic foods ahead of the government."

Elsewhere too, market opportunities beckon, according to the ITC, which is run jointly by the World Trade Organization and the UN Conference on Trade and Development. In the medium term, its new report predicts, demand in the US is likely to grow by as much as 30 percent a year, and by 40 percent a year in much of Europe.

What's organic? An organic farmer uses soil, insects, plants, microorganisms, animals, and humans to create a coherent and stable whole. A farm's production is integrated, humane, and environmentally sustainable. - Welsh Institute of Rural Studies, University of Wales