Organic agriculture generates tangible benefits for both producers and consumers. But it also produces wider public benefits, and it should therefore be a common concern to help the organic sector develop better and faster, rather than just leaving it to market forces

Bernet, Thomas

Willer, Helga

English

Organic Eprints

29 eCOLOGY & FARmING | 3-2012ThomaS BeRneT & heLga wiLLeROrganic agriculture generates tangible benefits for both producers and consumers. But it also produces wider public benefits, and it should therefore be a common concern to help the organic sector develop better and faster, rather than just leaving it to market forces.The global organic food market was worth € 45 billion in 2010. The mar-ket for organic food has been growing at double-digit rates in many countries over the past decade, although the recent financial crisis has caused a certain slow down in some places. The largest mar-kets are the United States and Germany with € 21 billion and € 6.6 billion respec-tively in 2011, both showing a growth rate of 10 per cent growth within that year. Other countries, like Denmark and Switzerland, have reached considerable organic market shares, with 6 per cent and more of the total food market. There are other countries where the organic market is still relatively undeveloped although it has a high potential. Yet, for all countries, the same question comes up: How can we most effectively develop organic markets so as to multiply the benefits for producers and consumers? Here are some principles and tips for this endeavour.Understanding the market development processIt is important to remember that markets develop and undergo important changes over time. We can differentiate four main stages in organic market development, which relate to different levels of maturity and are characterised by specific exter-nal and internal factors (see Figure 1):Stage 1: The development of organic systemsOrganic production systems are establis-hed within a country. Pioneers establish not only a new production system but also distribution and sales channels to target specific customers. In richer coun-tries (e.g. Western Europe, North Ame-rica, Australia, the Arabian Gulf), these How to stimulate organic market developmentMarket strategies in different stagesmARketING30 3-2012 | eCOLOGY & FARmING               pioneers are often farmers with a strong commitment to implementing and pro-moting more sustainable farming practi-ces. In poorer countries (i.e. Africa, Asia, South America), foreign companies often act as pioneers, establishing organic farming in response to international mar-ket demand for organic produce. Since any start-up is difficult, these pioneers face plenty of challenges in developing not only their own business, but also the services needed to make their busines-ses prosper in the future. Stage 2: An emerging organic marketThe supply of organic products is expan-ding slowly but steadily. In countries, where produce is primarily domestically sold, direct selling systems (e.g. farmers selling directly to consumers) often appear alongside organic food shops. The latter are often specialised health food stores selling other healthy pro-ducts, including non-food items. As con-sumers request a more continuous sup-ply of a growing number of organic pro-ducts, there is a clear incentive to broa-den and expand production. This can encourage the launch of an early range of organic processed products, which help to upgrade the image of organic products (e.g. through improved labelling and packaging). In countries where orga-nic production is export focused, the incentive to expand organic production mainly comes through demand from the international market. Since this demand is usually much bigger than the supply, there is a clear incentive to strengthen the different support services (i.e. orga-nic extension, input provision, and certi-fication). Stage 3: A growing organic marketAs consumer awareness and market demand grows in countries that have developed an internal niche market for organic products, organic retailing deve-lops further. Supermarkets introduce organic product lines and more specia-lised trading and processing companies emerge, further boosting organic market development. At this stage, organic pro-duction is clearly stimulated by growing demand. Organic produce is clearly dif-ferentiated in the market as superior, and becomes more widely promoted in the retail sector, especially supermarkets, whose market share grows especially fast in countries where the organic mar-ket is developing. This leads to a main-streaming as the volume, continuity of supply and diversity of available products increases considerably. In countries, where export has been the main driver for organic production, the domestic retail sector often starts to ‘discover’ and sell organic products. This is especially true for countries that produce final retail products i.e. labelled products for final consumption. For example, in Serbia, one can often find frozen organic ber-ries and fruit juices in ordinary domestic supermarkets: both of which are impor-tant exports. Stage 4: Maturing organic marketAs organic food gains in reputation it becomes an integral of the national retai-ling scene. High-end supermarket chains often include organic products as part of their own differentiation strategy and to boost the company image. Such retail competition helps to consolidate the market for organic products at the top end of the market, involving both fresh produce and a wide range of conve-nience products. In some supermarkets, some organic products (e.g. eggs, fruits, vegetables, dairy products) may reach 15 or 20 per cent of the share of total produce sold. At the same time many food catering services and restaurants look to integrate organic produce as part of their standard portfolio in order to satisfy consumers’ search for top quality food.Approaches for stimulating the develop-ment of the organic sector Strategies to stimulate the organic mar-ket should consider the specific deve-lopmental stage in order to target those factors that most constrain the organic sector. But there is no single way ‘to do’ market development, it only can be stimulated. In practice, this translates into a need to coordinate different actors within specific actions that can create a ‘snowball effect’, by efficiently wor-king on those factors that add the most momentum to the development process. The key intervention areas that will need to be targeted will vary at different sta-ges of the development process. Never-theless, efficient stakeholder networking is of highest priority to boost capacity development within the sector.Facilitating capacity development throu-gh efficient stakeholder networkingWhereas in many of the pioneering countries, the organic market has gra-dually developed through the initiative of individuals or groups of farmers or other market actors, there are cases where the government or international donors have promoted the development of the orga-nic sector. In developing countries with good export potential, bigger companies involved in trading and processing orga-nic foodstuffs also are sometimes active in stimulating organic sector develop-ment.When comparing different organic mar-ket development processes and con-     31 eCOLOGY & FARmING | 3-2012texts in different countries, one common factor that influences successful organic market development is meaningful capa-city building among the actors directly involved in the organic business (e.g. far-mers, traders, processors, retailers), sta-keholders who provide essential services (e.g. extension, certification, inputs) and policy makers. Experiences in different countries show that this is best achieved when there are institutional arrangements in place that promote efficient stakehol-der involvement and networking. Such stakeholder platforms go far beyond knowledge and skill development. Inter-actions between chain actors not only lead to the sharing of business-relevant information but also generate other essential insights, trust-based relation-ships, and collective action. All these aspects contribute to creating a prospe-ring organic sector.The impetus for creating such a networ-king structure can come from different actors. In pioneer countries, it is usually the ‘organic actors’ who form their own platforms using them not only to learn from each other but also to build an advocacy platform for the organic sector. In other countries, (such as Saudi Arabia) the government takes a clear lead in initiating such a stakeholder platform, (in this case financially supporting different networks and the creation of the Saudi Organic Farming Association - SOFA). In other countries, such as Uganda, Tanza-nia, Albania, Ukraine and Serbia, interna-tional donors (e.g. Sida, SDC, GIZ) have stimulated such stakeholder interactions as part of special organic sector deve-lopment projects.ConclusionsThe demand for organic products has grown considerably, and is likely to grow further. Stakeholder platforms, able to plan and coordinate joint actions, can accelerate this process. Good facilitation of such stakeholder platforms is essential to focus and guide the definition and implementation of interventions in such a way that the different sector stakeholders are involved and have a sense of owner-ship. One very practical way to start this process is to undertake a survey of the organic sector and market chains. The findings of such a survey, together with the contacts established in undertaking it, can serve as an entry point for star-ting such stakeholder platforms. Where government officials can be involved, such survey findings can ideally be transformed into a National Action Plan for Organic Agriculture. Such an agreed action plan prioritises and guides the needed interventions and specifies the roles and responsibilities of the different stakeholders involved in the stakehol-der platform. Ideally, such stakeholder platforms are implemented in an early development stage of the organic sector, facilitated by a rather neutral government or non-governmental entity (Albania and Saudi Arabia are good examples here). When the organic sector is more deve-loped, such stakeholder platforms might grow out of the initiative of key actors present in this sector, such as organic producer associations, committed super-markets, research institutes and govern-mental entities (Switzerland is a good example here).  Ensure credibilityAbout the authors:Thomas Bernet is an agricultural economist specialised in market chain and market deve-lopment. He works at the International Division of the Research Institute of Organic Agriculture, FiBL. HYPERLINK ‘mailto:Thomas.bernet@fibl.org’ Thomas.bernet@fibl.org.Helga Willer works in the Communication Department of the Research Institute of Organic Agriculture, FiBL, Helga.Willer@fibl.org.mARketINGFigure 1:Main stages in organic market development.  Market size

Market strategies in different stages - How to stimulate organic market development

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