Soil Association Certification will launch the Organic Market Report 2024 today, sponsored by RBOrganic Ltd.
The report reveals that the organic market has delivered its 12th year of positive growth despite the global political and economic turmoil and the cost of living crisis at home. The total market grew 2% in 2023 ending the year at £3.2 billion – almost double its value in 2011.
However, despite this solid performance, the sector’s heavy reliance on imports means that many farmers are currently missing out on the potential benefits organic can bring to their business – and the UK environment in turn is missing out on the benefits organic can bring for nature. Shopper spend on organic is a third higher versus five years ago, but UK organic farmland has stayed at a static 3%.
Soil Association Certification Commercial Director Alex Cullen said, “Organic has delivered a positive and resilient performance despite challenging financial and political conditions and without the support that organic food and farming receives in Europe and elsewhere in the world.
“The market and macro trends are pointing to an upward trajectory but there are still many challenges and barriers to the level of growth that UK organic should be delivering for farmers – with price the biggest barrier.
“We need a radical rethink if organic is going to reach its full potential and bring organic farming into the mainstream. The entire supply chain must work together to grow the market and unlock demand for homegrown UK organic fresh produce, supported by the government.
“And we can learn valuable lessons from Europe where there is greater support and commitment from governments and retailers for farmers and from some exciting innovations taking place right here across the UK – to make organic more available and affordable.”
Joe Rolfe, Managing Director of Burgess Farms said, “The organic market in 2022 was tough due to inflation and the cost of living crisis, but in 2023 organic sales returned to a more positive trajectory and are heading in the right direction.
“Organic growers need to be rewarded with fair prices and supported by effective environmental schemes that balance environmental outcomes with food production. When you look at places like Denmark and Germany, growers are supported in a more proactive manner by government.”
Organic market 2023 highlights
- Organic supermarket sales returned to growth after a dip in 2022 and now worth £2 billion up 2.7%
- Independent retail is buoyant with sales rising 10% to £475 million.
- Food service, which saw exceptional growth in 2022 of 156%, remained stable in 2023.
- Home delivery faced a tougher year after its phenomenal growth during the pandemic, however, online is continuing to be a strong performer – 22% of all supermarket organic sales are made through this channel
- Organic certified beauty and wellbeing is now worth £136 million – a decline of 8% – although there were positive successes such as mother and baby care which grew 65%
- Organic certified textiles saw sales grow 8% to £100m
Organic farming
The amount of UK organic land grew by 0.4%, remaining flat at 3% – despite a growing organic market. This compares with Europe where the latest figures show that organic farmland grew by 5.1% to 16.9 million hectares or 10.4% of total farmland in 2022.
Many of 2022’s issues for farming continued into 2023, with farmers feeling the impact of raised energy and fuel prices. Additionally, government funding for organic farming was heavily scrutinised in 2023. Delays to the Organic Support Payment scheme in Wales made the future of nature-friendly farming unclear.
However, the update to the Sustainable Farming Incentive in June expanded on available funding. UK devolved governments have now committed to rewarding organic farming through new and existing funding policies, providing some reassurance for nature-friendly farmers.
There was some good news from Scotland, where organic land grew by 6% – fuelled by government funding to fulfil their pledge to double the amount of organic farmland by 2026.
With a growing market, organic farmers are looking to scale to keep up with demand.
Organic sales
Sales of organic fresh produce have slipped in supermarkets as retailers have price-matched Aldi on conventional lines. This appears to have exaggerated the price premium on organic products making them look more expensive to customers.
Farmgate prices for organic should attract a modest premium to reflect the high environmental and animal welfare standards required by organic assurance. However, new information comparing the farmgate premium to the price customers pay in the supermarket for organic suggests that some premiums being charged by retailers are significantly out of kilter and warrants closer scrutiny.
Supermarket pricing in other major markets including many EU countries have reduced the relative premium and unlocked growth in core organic lines. Highlighting a real opportunity for UK retailers to make organic more affordable for shoppers.
Cullen said, “Food is not a particularly profitable sector, the recent Competition and Markets Authority investigations have been clear. Of course, every player in the supply chain needs to make a profit but when price is the biggest barrier to scaling the most sustainable and trustworthy farming system we have, there need to be more questions about what it would take to achieve economies of scale. We are undertaking thorough research to understand fully what is happening and how this is impacting organic sales.”
Organic For All
The whole organic sector is coming together around the Soil Association Group’s vision of ‘Organic For All’ which was launched to the industry last November.
Cullen said, “We have spent the last few months getting our heads together to understand the barriers and what is required to make organic accessible, affordable and available to all. The next stage is to engage with government and supply chains to build a shared plan. We are getting some of the major retailers and organic brands around the table, they are a vital part of the solution.
“We are committed to collaborating with the supermarkets to share and develop this kind of innovation as we come out of the cost of living crises to rebalance the price and availability of organic foods to drive further strong demand and unlock the benefits for people, nature and the planet.”