Organic Farming Flourishing Despite Soaring Food Prices
May 24, 2011
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Paris. Even during a period of rising food prices and economic uncertainty, Damien Bignon, a poultry farmer in the Paris region, cannot meet the demand from local markets and stores for his organic eggs.
At the Ferme des Beurreries near Feucherolles, west of the French capital, Bignon employs five people overseeing 3,000 chicken on 432 acres. He also produces organic cereals for his own feed and other clients and wheat to sell to a neighboring mill.
Bignon thinks he could comfortably expand to 12,000, matching the number of chickens on the farm in 1990 before its conversion to organic operations. But he is determined to manage carefully any growth to maintain quality, keep customers satisfied and not crowd out other local farmers. He charges 2 euros ($2.82) for a half-dozen eggs — about twice the cost of factory-farmed eggs at a French supermarket.
“The issue for us is retaining that success without falling into the traps of industrialized agriculture,” he said.
“There’s risks in organic becoming a mass market.”
Sales of organic foods appear robust across Europe and the United States despite weak economic conditions and rising inflation. The strong sales are attracting more interest and activity from investors, who see potential in mergers through economies of scale, especially in Europe’s more fragmented market.
In December, Compagnie Biodiversite, French owner of Lea Nature, which supplies organic food, health products, textiles and cosmetics through large retail channels, announced its purchase of a large stake in Ekibio, another French player. That alliance makes it the nation’s second-biggest organic food specialist, behind Distriborg, which is owned by Dutch group Royal Wessanen.
In Britain, Abel & Cole, which operates a home delivery service for organic products and has been owned by a private equity firm since 2007, is seen by analysts as an acquisition target, perhaps for a supermarket chain.
And New York-based Hain Celestial, which makes organic food, drinks and personal care products, this year bought Danival, a French organic producer, as well as GG UniqueFiber, a Norwegian natural foods company.
Many farmers and analysts expect the sector to remain strong in coming years, helped by increased public awareness of environmental and potential health benefits, better organization and production techniques, new demand from emerging markets and those periodic public scares attending events like the recent nuclear plant radiation leaks in Japan.
Another theory is that, as with the luxury industry, the core consumers, typically with high disposable incomes, are less affected by hard times.
“Overall, it’s very surprising how stable the organic markets have been even in this critical economic situation,” said Urs Niggli, director of FiBL, an independent nonprofit research institute focusing on organic agriculture in Switzerland. He predicted sales would accelerate in coming years, assuming economic growth picked up.
Organic Monitor, a market research firm and consultancy based in London, estimates that the global market for organic food and drink products in 2009 was $55 billion, 5 percent more than in 2008 and more than double the level in 2000.
Significantly, the financial crisis and recession slowed the rate of growth in some countries, while the trend continued.
In the United States, sales of organic food reached $26.7 billion last year, according to the Organic Trade Association. That was a 7.7 percent increase from 2009, which itself was 5.1 percent higher than 2008. The United States has now overtaken Europe to become the largest market.
European sales grew 3.9 percent in 2009 after double-digit growth in previous years, according to Organic Monitor. In France, a late starter, and in Sweden and Belgium, sales in 2009 expanded more than 15 percent, according to FiBL. British sales contracted in the face of weaker consumer spending and fewer product lines at large stores, while the German market, Europe’s largest, was stable after a period of strong increases.
According to the Agriculture Department, certified American organic farmland grew 127 percent from 2002 to 2007 and then by 12 percent from 2007 to 2009.
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