Product and Market Development ORGANIC FOOD AND BEVERAGES: WORLD SUPPLY AND MAJOR EUROPEAN MARKETS ITC INTERNATIONAL TRADE CENTRE UNCTAD CNUCED ORGANIC FOOD AND BEVERAGES: WORLD SUPPLY AND MAJOR EUROPEAN MARKETS ITC INTERNATIONAL TRADE CENTRE UNCTAD CNUCED GENEVA 1999 ii © International Trade Centre UNCTAD/WTO Abstract for trade information services 1999 SITC 0 ORG INTERNATIONAL TRADE CENTRE UNCTAD/WTO Organic food and beverages: world supply and major European markets Geneva: ITC, 1999. xiv, 271 p. Market study of organic food and beverages in Denmark, France, Germany, Netherlands, Sweden, Switzerland, and UK – explains nature of organic agriculture and identifies products that can be grown organically and sold commercially to build up profitable export markets for developing countries; provides information on quality requirements with particular reference to certification and labelling systems and procedures; gives comments and data on world trade, identifying major producing countries and import markets; outlines market requirements and characteristics in countries under review; examines distribution channels and identifies major importers, retail organizations and selected institutions. Subject descriptors: food, beverages, agricultural products. English, French, Spanish (Free to developing countries) Palais des Nations, 1211 Geneva 10, Switzerland The Government of Denmark financed the preparation of this study. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the International Trade Centre UNCTAD/WTO concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Mention of firm names and commercial products does not imply the endorsement of ITC. The opinions expressed in this study are those of the authors and their contacts in the trade and do not necessarily reflect the views of ITC. ITC encourages the reprinting and translation of its publications to achieve wider dissemination. Short extracts may be freely reproduced, with due acknowledgement of the source. Permission should be requested for more extensive reproduction or translation. A copy of the reprinted or translated material should be sent to ITC. ITC/P12.E/PMD/MDS/99-VII ISBN 92-9137-115-7 iii Acknowledgements Main contributors Rudy Kortbech-Olesen, Senior Market Development Adviser, ITC, and coordinator and joint principal author of this study, is responsible for ITC's trade promotion and development activities in processed fruits and vegetables, and fish and fishery products. He is also the ITC focal point for organic products. Mr Kortbech-Olesen wrote the introduction and the chapters on world trade and market characteristics, Denmark and Switzerland. Carol H. Haest, joint principal author, works for Haest Consultancy for the Organic Industry, Belgium, is a former treasurer of the International Federation of Organic Agriculture Movements (IFOAM) and is the current coordinator of the World Organic Supermarketing Club (WOSC). He wrote the chapters on the world supply situation and Germany, and provided guidance and assistance in the preparation of the study. Birthe Thode Jacobsen, joint principal author, is a Denmark-based independent consultant specializing in environmental and agricultural economics. She has worked with the Food and Agriculture Organization of the United Nations (FAO) for several years. She wrote the chapters on organic farming and the certification of organic products, and contributed to the chapter on the world supply situation. Joy Pakenham-Walsh, joint principal author and technical editor, is a Netherlands-based independent consultant whose clients have included the Centre for the Promotion of Imports from developing countries (CBI), Rotterdam. She wrote the chapter on the Netherlands and contributed to the chapter on world trade and market characteristics. Collaborating authors and consultants Dorothee Doswald-Kuhlmann, a food engineer in the Swiss private sector, has several years' experience in the technical and commercial aspects of the food industry. She contributed to the chapter on Switzerland. Peter Fuchs, of Fox Research AB in Sweden, specializes in the Nordic food sector. His clients have included the Swedish International Development Cooperation Agency (SIDA), the Swedish Ministry of Industry and Trade, and the private sector. He wrote the chapter on Sweden. David Jones, of David Jones & Associates, United Kingdom, has carried out a number of assignments for ITC, other United Nations organizations, the European Commission and the private sector over the years. He wrote the chapter on the United Kingdom. Jean Muller, of Jean Muller Consultants Internationaux, France, has worked for various clients, including the French Government, ITC and the private sector. He wrote the chapter on France. iv A large number of persons from all over the world, including the following, have contributed to the study in one way or another: Rainer Bächi, IMO, Switzerland; Bernward Geier, IFOAM, Germany; Thomas B. Harding, AgriSystems International™ United States; Torben Laursen, FDB, Denmark; Otto Schmid, Research Institute of Organic Agriculture, Switzerland; and Conrad Thimm, consultant, Germany. Leni Sutcliffe edited the study. Carmelita Endaya and Isabel Droste Montgomery were responsible for desktop publishing and assisted in copy-editing. v Contents Acknowledgements iii Note xiii Tables xi PART I – BASIC CONCEPTS 1 INTRODUCTION AND GENERAL SUMMARY 3 Background 3 Product description and scope of the study 3 Objectives of the study 3 Summary of market opportunities for developing countries 4 Chapter 1 ORGANIC FARMING 6 Concepts 6 Standards and certification 7 Practical obstacles and constraints to conversion in developing countries 7 Chapter 2 CERTIFICATION 9 Introduction 9 What is certification of organic food products? 9 Certification procedures 10 Accreditation 11 Standards: development and application 11 IFOAM 11 Demeter International eV 12 Codex Alimentarius Commission 12 World Trade Organization 12 International Organization for Standardization 13 CEN and CENELEC 13 Regulations in major markets 14 European Union 14 Other markets 17 vi Certification in exporting countries 17 Certification by local bodies 17 Certification under partnerships between local and international bodies 18 Certification by a local branch of an international certification body 18 Certification by international bodies 19 Some types of certification arrangements 19 Subcontracting 19 Grower groups 19 Setting up a certification programme 20 The long-term possibility 20 Annexes I. Basic concepts 21 II. MAFF consolidated version of EC Regulation 22 PART II – GLOBAL OVERVIEW: TRADE AND SUPPLY 51 Chapter 3 OVERVIEW OF WORLD TRADE AND MARKET CHARACTERISTICS 53 Introduction 53 Target markets 55 Denmark 55 France 55 Germany 55 Netherlands 56 Sweden 57 Switzerland 57 United Kingdom 58 Other major markets 58 Market segments 59 The retail sector 59 Food processing industry 59 Catering and institutional sector 60 Distribution channels 60 Importers, processors, repackers 60 Food manufacturers 60 Retail trade 61 Fair trade 61 Market access 62 Organic certification and food laws 62 Customs duties 63 Sources of information 63 Trade fairs 64 FAO’s contribution to organic agriculture 65 Chapter 4 WORLD SUPPLY BY GEOGRAPHICAL REGION AND BY COUNTRY 67 Introduction 67 Africa 68 Asia 79 vii Oceania 88 Europe 90 The Americas (excluding NAFTA countries) 112 NAFTA countries 125 Chapter 5 WORLD SUPPLY BY PRODUCT GROUP 133 Animal products 133 Meat, dairy products, eggs 133 Honey 133 Fish 133 Vegetable products 133 Vegetables, roots and tubers 133 Fruits and nuts 134 Cocoa, coffee, tea and maté 134 Cereals 135 Oil-seeds and oleaginous fruits 135 Prepared foodstuffs 136 Vegetable oils and fats 136 Sugars and sugar confectionery 136 Preparations of vegetables, nuts and other parts of plants 136 Alcoholic beverages 136 Food additives 136 Other processed food products 137 Miscellaneous products 137 Feedstuff 137 Cotton 137 Natural pesticides and repellents 137 Other non-food products 137 PART III – MAJOR MARKETS 139 Chapter 6 DENMARK 141 Introduction 141 Supply and demand 141 Production 141 Market size 142 Import and market requirements by major product group 143 Fresh fruits and vegetables 143 Dried fruits and nuts, seeds and kernels 143 Processed fruits and vegetables 143 Grains, flour and bakery products 144 Coffee, tea and cocoa 144 Herbs and spices 144 Sweeteners 144 Dried legumes/pulses 145 Oil-seeds and oils, starch, soy 145 Other food and beverage products 145 Animal feed 145 Market characteristics 145 viii Market segments 145 Consumer habits and product preferences 145 Sales promotion and advertising 146 Market access 146 Customs duties 146 Food laws and regulations 147 Distribution channels 147 Agents, importers, repackers, processors 147 Food and beverage manufacturers 148 Retail organizations 148 Catering and institutional trade 149 Market prospects 149 Annex – Denmark: selected addresses 151 Chapter 7 FRANCE 154 Introduction 154 Supply and demand 154 Domestic production 154 Retail sales 156 Market characteristics 157 Consumer patterns 157 Product and market requirements 159 Market access 160 Regulations on organic foods 160 Certification 161 Distribution channels 161 Retail structure 161 Processors/packers and wholesalers 162 Imports 163 Future trends 163 Competition, prices and margins 163