The recession has taken its toll on Canada’s certified organic sector, but the worst may already be over.
The number of Canadian certified organic farms peaked at 3,914 in 2009. Then the recession hit and that number fell 4.5 per cent nationwide, with a 16 per cent plunge in Saskatchewan, once home to the largest number of organic farmers. Manitoba dropped five per cent, and Alberta 11 per cent.
High conventional commodity prices may have lured some farmers to drop their certification, said Matthew Holmes, executive director of the Canadian Organic Trade Association.
But for those who opted to stay organic, better times may be on the way, he said.
“The irony that we’re seeing right now in the marketplace is a serious, serious supply crunch with major bottlenecking starting to happen with the traders,” Holmes said at a recent international trade workshop hosted by the Manitoba Organic Alliance.
“Prices are starting to go up in organics.”
Anecdotal reports suggest there’s a continued exodus from organic farming on both sides of the border, and Holmes said the sector must find ways to convince farmers to take a longer-term view.
Despite three years of high unemployment and economic turmoil brought on by the subprime mortgage crisis in 2008, the U.S. market for organic food is still the world’s largest at $29 billion per year, said Massachusetts-based organic markets consultant Katherine Dimatteo.
The sharp growth in sales of organic products, 15 per cent in 2008 alone, slipped to just two per cent in 2009 but was up another nine per cent in 2010 — a recovery that outpaced overall markets in the country. Sales of organic food account for just four per cent of the total market, but grew eight per cent in 2010 — far above the 0.6 per cent increase in conventional food sales that year.
“We’re a very strong market in the United States,” said Dimatteo. “We are also a net importer because we are not keeping up with demand.”
Despite the recession, the fortunes of some organic marketers have soared. Organic Valley, a farmer-owned co-operative, raked in $750 million in sales in 2011, and Hain Celestial Group, with over 30 brands, clocked 23 per cent revenue growth over the previous year.
Four out of 10 American shoppers say they are buying more organic food, but the 23 per cent who say they never buy organic has stayed the same.
Among those who say they always buy organic, there has been a shift away from “corporate” organic towards supporting farmers directly by buying more local and artisan foods, said Dimatteo.
In Germany, the market for organic food is worth $9 billion per year, making it the world’s second largest, said Anne-Sophie Hottiaux, Canada’s agri-food commissioner in Dusseldorf, who appeared by audio link.
In the country where discount shopping behemoth Wal-Mart failed spectacularly a few years ago, a rash of food safety scandals have sparked greater suspicions about industrial food production, and GMO products have never been accepted by consumers.
The German economy has also suffered from the recession and ensuing European financial crisis, but the market for organics continues to grow, albeit at a slower pace, she said.
Germans spend about 70 euros per capita on organic food per year, and 46 per cent cite health concerns as their reason for shopping organic.
In Germany, about 7.3 per cent of all farms, or 22,000 in total, are organically certified, but high domestic demand means the country must import supplies from Italy, Romania, Russia and Kazakhstan.
Canada is viewed favourably there, she added, but a “maple syrup syndrome” means that most Germans have a low awareness of Canadian value-added products.