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Consumer Trends and Organic Regulations – International Perspective Organic Farming Systems Hort 390.

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1 Consumer Trends and Organic Regulations – International Perspective Organic Farming Systems Hort 390

2 Whole Foods Market® Organic Foods Trend Tracker 2004 survey, October Conducted by Synovate in August 2004, the survey of 1,000 U.S. consumers showed more than half (54 percent) have tried organic foods and beverages, nearly one in 10 using organic products regularly or several times a week. Reasons cited for buying organic foods were they are better for the environment (58 percent), better for their health (54 percent), and better for supporting small and local farmers (57 percent). In addition, 32 percent believe organic products taste better, while 42 percent believe organic foods are of better quality.

3 The Hartman Group, Organic Food & Beverage Trends 2004: Lifestyles, Language and Category Adoption, August Sixty-six percent of U.S. consumers report they use organic products at least occasionally, according to The Hartman Group's report, Organic Food & Beverage Trends 2004: Lifestyles, Language and Category Adoption. That number is up from 55 percent in A surge in periphery organic shoppersthose who buy organic products only occasionallyhas been largely driven by increased access to organic products in mainstream markets, heightened concern about health, gradual emergence of organic alternatives in mainstream brands, and an increase in information sources. Lifestyle, rather than demographics, is driving organic purchases.

4 An online poll of 1,000 U.S. households conducted during the week of Nov. 4, 2002 – CONT. eBrain Market Research, The majority of those buying organic products purchased them from their local grocer or a traditional supermarket chain, 29 percent cited a farmers' market as the source, and 21 percent bought organic products at a specialty grocer such as Whole Foods Market or Wild Oats. Also, 14 percent indicated they bought organic items at their local Wal-Mart or Target super center, reinforcing the fact that organic foods play a role in everyday American households. Twenty percent said they would pay approximately 20 percent more for organic foods, while 67 percent said that price was a barrier to their buying these products.

5 An online poll of 1,000 U.S. households conducted during the week of Nov. 4, 2002 eBrain Market Research, found that 58 percent had purchased a food item labeled organic. Of those participating, 32 percent said it was somewhat or very important that their food is organic, while 67 percent indicated organic food would become more common in the future. /./

6 Industry Statistics and Projected Growth ( Organic farming is practiced in approximately 100 countries throughout the world, with more than 59 million acres now under organic management. Australia leads with approximately 24.6 million acres, followed by Argentina, with approximately 7.4 million acres; both have extensive grazing land. Latin America has approximately 14.3 million acres under organic management, Europe has more than 13.5 million acres, and North America has nearly 3.7 million acres. The World of Organic Agriculture 2004-Statistics and Future Prospects, February

7 cultural creatives as a market force: Defy traditional market segment categories (gender, ethnicity, income) May be 50+ million in the US or more (some estimate 1 in 4) Largely invisible, many related interests, not just food

8 The Cultural Creatives: How 50 Million People Are Changing the World, New York: Harmony Books, October, 2000 by Paul H. Ray, Ph.D. and Sherry Ruth Anderson, Ph.D.Paul H. Ray, Ph.D.Sherry Ruth Anderson, Ph.D.

9 Also called the LOHAS market sector (Lifestyles of Health and Sustainability) Sustainable Economy (green building, industrial goods, renewable energy, alternative transportation) Healthy Lifestyles (organics, dietary supplements, nutritional products) Ecological Lifestyles (home and office products, recycled fiber products, eco- tourism) Alternative Healthcare (holistic disease prevention, complementary medicine, acup8uncture, homeopathy, naturopathy) Personal Development (mind, body and spirit products, CDs, books, tapes, seminars, Yoga, fitness, weight loss)

10 Comparison of EU and US Standards US NOP and EU 2092/91 Similarities and Differences As of July 2002 Reprinted from The Organic Trade Association's website at

11 European Standards - codified June 1991, the Council adopted Regulation No. 2092/91 on organic production of agricultural products. In 1999, the Council extended its scope to cover organic livestock production. Rules are complex, and define a method of production, regulate labeling, processing, inspection and marketing, including import of organic products from non-member countries.

12 History…. IFOAM (International Federation of Organic Agriculture Movements) set up in 1972, to bring together organizations from all over the world. Adopted basic standards for organic farming and processing in These are not binding, but provide valuable guidelines. Other European movements have includes Biodynamic, in the late 1920s in Austria and Germany (Rudolf Steiner) Organic Farming in England, based on theories developed by Albert Howard in Biological agriculture, developed in Switzerland by Hans-Peter Rusch and Hans Miller.

13 Organic agricultural products may be imported into the EC: Without additional certification if from a country on the Article 11(1) list: Argentina, Australia, Czech Republic, Hungary, Israel, and Switzerland. All other countries (including the U.S. and Canada) must provide certification documentation for each shipment. Once in the EC, there are no further barriers.

14 National Standards in the U.S. became effective in Canada has proposed standards released for comment Sept. 2006, with implementation goal of Dec Mexico has no national standards yet.

15 Both systems are similar and share the following: –Third Party Certification –Audit Trails –Annual Inspections –Accreditation –Materials Lists –Defined Conversion Periods –Sustainable Farm Plan

16 Cultural and political differences are substantial Cultural – while States in the US use one language and have similar cultures, EU member States have differing languages and cultures. Political – Federal laws supercede State laws in the US while the EU consists of 15 sovereign State governments, each of which can grant exceptions to established EU 2092/91 rules and regulations

17 Some cropping standards differ Agriculture Conversion Period – Conversion (transition) periods as written in the EU Regulations may be interpreted as shorter than the three-year, no exceptions, rule found in the US. –US – requires a three year conversion period with no exceptions –EU – generally requires two years for annuals and three years for perennials, with some exceptions Buffer Zones – The US requires buffer zones, the EU does not require buffer Zones

18 Manure Restrictions –The EU has load limits on manure applications for livestock and other organic cropping operations, while the US requires minimum periods prior to harvest. –US – manure must be composted if applied within 120 days of harvest –EU – manure from organic farms is preferred and load limits on a per acre basis are required

19 Livestock regulations contain potential barriers to US / EU trade Slaughter - US regulations call for transition from the last third of gestation for slaughter stock and one year for dairy, while the EU regulations contain reduced conversion periods and are species specific. Livestock husbandry - The US has general requirements for livestock husbandry practices while the EU requirements are highly prescriptive including minimum slaughter ages per species. Milk production. May be certified as organic in the U.S. after 12 months on 100% organic program whereas EU rules allow for organic production at 6 months. Organic feedstuffs - In-Conversion allowances (30-60%) of transitional and conventional feedstuffs for organic livestock production in the EU are not found in the US (requiring 100%). Healthcare - No antibiotics or hormones are allowed in the US, however, the EU does include exemptions for synthetic veterinary medicines and allows for treatments up to 3x per year

20 Processing The US observes detailed handling regulations where EU processing regulations are referenced in EU inspection regulations, and the certifier verifies organic compliance.

21 Labeling requirements are similar "Organic" - both agree that at least 95% of the ingredients must be organic. "Made With" – both agree that 70% of the ingredients must be organic. In theEU the remaining 30% must be on published lists of "not commercially available ingredients." This list is subject to interpretation by the certifier or Member State. "Below 70 %"- EU does not allow organic to appear anywhere on the label. US allows identification of organic ingredients on the information panel in products containing 50% or more organic ingredients. Percent organic declarations in the US are not mandatory, but in some EU situations declaration may be required. Under EU regulations, "transition to organic" labeling is allowed. In the US, such labeling is not allowed.

22 Materials and the materials process Materials generally must be listed in the EU, while in the US natural materials are allowed unless prohibited and synthetics are prohibited unless allowed Materials process - the US requires published criteria and is based on a public process including scientific reviews and NOSB hearings. The EU publishes rulings based on Member State requests.

23 Accreditation Federal authority dictates accreditation and the USDA accredits certifiers. Accreditation in the EU is by designated accreditation bodies and peer review. Each EU Member State is responsible for ensuring that certifiers operate according to the inspection requirements laid down in Annex III.

24 Import Authorizations US umbrella certification allows shipping to all of the US. Under EU rules, Transaction Certificates will be required with each shipment after November, 2002

25 Access to Markets US -Federal authority – Access to all states EU – does not guarantee access to the 15 sovereign States

26 Total Organic Sales (1999/2000) US Organic Exports Per capita organic consumption Germany$ 2 billion$ 22.7 M$ 22 Italy$ 880 M($ 15 M?)$ 13 France$ 877 M$ 0.5 M$ 13 UK$ 819 M$ 41.9 M$ 8 Denmark$435 M$ 8.7 M$ 57 Netherlands$ 350 M$ 15.1 M$ 23 USA$ ~9 billion??$ 33

27 Figure 1Figure 1: Acreage under Organic Cultivation in European Countries in 1999 US certified organic area in 2000 was 2,029,073 acres.

28 Consumer Trends and Organic Regulations – International Perspective PART II. Organic Farming Systems Hort 390

29 Figure 15Figure 15: UK Farms and Acreage under Organic Cultivation The United Kingdom has a long tradition in organic farming, with the foundation of the Soil Association in 1946 being a major milestone. Throughout the decades, the Soil Association has retained its status as the leading organization in the countrys organic movement. Despite an early start, the organic movement in the UK has been stagnating for a long time, compared to other major European countries.

30 The Retail Market For a long time the United Kingdom has been one of the countries with the lowest percentage of organic sales in relation to overall food sales. In 1997 organics accounted for only 0.7%, in contrast to at least 1% or more in other comparable markets. Per capita consumption ($7.67) was second lowest of comparable EU countries. UK health food shops and specialist organic and natural food stores have never played as significant a role as, for example, in France and Germany; In the seventies and eighties, farmers had to sell their products mainly through direct on-farm sales. Today, the more direct sales activities like farm gate sales, farmers markets and box schemes account for 15% of the retail sales. In 1981, Safeway, a major multiple, began to sell some organic products. By 1993 the four biggest supermarket chains Tesco, Sainsburys, Safeway, ASDA, as well as the smaller multiple Waitrose, sold some organic groceries and produce, very early in comparison to most other European countries

31 Organic Retail Sales by Outlet Type in the UK in 1999

32 Retail Value of Main Organic Product Categories in the UK in 1999 Shares of Imported versus Domestically Grown Organic Products in the UK in 1999 Source: Soil Association [35]

33 Consumer Buying Patterns and Attitudes toward Organic ProductsConsumer Buying Patterns and Attitudes toward Organic Products - UK The UK is the country where the BSE (bovine spongiform encephalopathy or mad cow disease) scandal had the most profound impact on consumer attitude, as the disease originated in the UK. During the height of the BSE crisis, the Soil Association reports of 12,000 incoming calls per week by concerned consumers. Study on consumer behavior and attitudes; commissioned by the Soil Association and conducted by MORI in June 1999.

34 Consumer Buying Patterns and Attitudes toward Organic ProductsConsumer Buying Patterns and Attitudes toward Organic Products - UK O the 641 organic consumers sampled, more than half (53%) state as the main reason why they buy organic health/better for me, while the absence of chemicals/pesticides is perceived by 48% as imported. A high percentage of organic consumers (43%) believe that organic foodstuff tastes better, and for one third the absence of genetically modified organisms (GMOs) is cited as the overriding reason to buy organic. Environmental concerns are only for 25% a major incentive, the same percentage of consumers who cite animal welfare as a reason to buy organic. Interestingly, the main reasons that would consumers animate to buy more organic foodstuffs are decrease in price and increase in availability and range (57% and 56% respectively), while UK or locally produced would only motivate 16% to buy more organic food. Better information is important for 21% in a decision to increase purchases of organic foodstuff. According to the study, there is much support in the general public (83%) for organic farmers receiving grant support, and 20% believe the amounts should be increased. Study on consumer behavior and attitudes; commissioned by the Soil Association and conducted by MORI in June 1999.

35 Germany: Development of Organic AgricultureDevelopment of Organic Agriculture Germany is one of the countries with the longest tradition in organic farming, with its earliest roots dating back to the end of the 19th century. During this time, the so-called "Reformbewegung" (reform movement) developed its philosophical view of the connection between the health of the soil, the growth of plants and the health of mankind. Reformhäuser" or reform shops were established where it was possible to buy the goods that were grown according to this view. In 1924 Rudolf Steiner outlined the principles of biodynamic agriculture and in the mid-thirties the Müller-Rusch biological-organical method gained ground. However, all these movements remained marginal and the reform shops were the only places where organic products were to be found. In the early seventies, organic farming became more popular, and a plethora of small, independently owned Bioläden and Naturkostläden (organic food shops and natural food shops) spread throughout the country. They were solely dedicated to selling organic products, and their customers were mostly dedicated, even zealous supporters of organic farming and alternative sales structures. The mostly independent Bio- and Naturkostläden continue to be the main force in terms of selling and promoting organic products.

36 Number of Organic Farms and Acreage under Organic Cultivation Until 1990, the number of farms devoted to organic agriculture remained below 1,000. The enactment of the EU rule 2092/91 for organic agriculture in 1991 triggered an rise in the number of farms and the acreage under organic cultivation that is still going on today. Since 1994, Germany has experienced a steady increase in organic acreage and number of farms. In fact, the number of organic farms increased almost tenfold during the last decade and is now in the area of 9,500 farms, the third largest number of organic farms in any European country (see figure 10). The total organic acreage is more than 1,000,000 acres, second only to Italy.

37 Sector Shares of Retail Outlets in Germany in This figure clearly demonstrates that specialist organic shops (Bioläden and Naturkostläden) account for the lions share of sales; together with Reform shops and farm gate sales they hold 64% of the retail sales. In the last decade, however, a substantially new development has taken place: large supermarket chains have entered the organic marketplace. Pioneered by the smaller companies Tegut (Alnatura) and Tengelmann (Naturkind), gradually most of the major multiples either created their own private organic labels or started selling a wide array of organic products or both.

38 Consumer Buying Patterns and Attitudes toward Organic Products A study was conducted to probe consumer attitudes and behavior towards organic products by the Sinus Institute in The study found that: 44% of consumers came from a liberal-technocratic environment 27% came from an alternative environment 6% came from a conservative environment 9% belonged to a variety of backgrounds

39 In a study conducted for the CMA in 1996 with updates in 1999: 74% of customers claimed that health reasons for their key influence for purchases of organic food, followed by environmental considerations (51%), higher nutritional value (29%), and better taste (20%). The same survey found that 56% of consumers were prepared to pay a price premium of more than 15%, 33% a price premium less than 15% and 11% did not want to pay any premium for organic goods.

40 A more comprehensive survey of the GfK, Germanys biggest market research company, revealed that the earlier classifications of organic consumers is not valid any more. It rather appears that organic consumers display an apparently contradicting behavior. For example, food miles are given as a consideration for purchase decisions with preference for locally grown produce, but a keen interest in ethnic dishes is also displayed; the demand for best possible quality is not directly in line with the desire for low prices, and health considerations are not necessarily compatible with the drive for convenience food. "For example, it would not seem absurd for an individual consumer to have a healthy breakfast with muesli, yogurt and fruit, a fast-food lunch, and a celebratory dinner with lobster and champagne."

41 The Netherlands: Development of Organic Agriculture Traditionally a major agricultural producer for a wide range of conventional produce, processed food and flowers for the European market. Also known for its extremely intensive cultivation methods with an unparalleled density of greenhouse cultivation. Major gateway for the import of agricultural commodities with a sophisticated network of importers, packers and re-exporters. The scale of organic production, however, is small, currently accounting for only somewhat more than 1% of the total agricultural land (figure 13). The Netherlands nevertheless plays a major role in manufacturing, packing and importing and exporting organic products. Distributors operating on a European scale are most likely to be found in the Netherlands.

42 Figure 13Figure 13: Number of Organic Farms and Acreage under Organic Cultivation in the Netherlands

43 Government programs to stimulate organic ag conversion The overall development of organic agriculture in the Netherlands during the last years has been fairly slow. In acknowledgment of this fact, the Dutch Ministry for Agriculture in 1996 launched a plan (Plan van Aanpak Biologische Landbouw) to stimulate organic agriculture. It included the allocation of $27 million in subsidies and tax benefits for conversation, marketing and related purposes, one of which is a national educational campaign on organics. In spring 2000 an extension of this plan with an additional allocation of $8 million was announced, with major emphasis on demand stimulation, creation of reliable supply chains and the broadening of the available organic assortment.

44 Figure 14Figure 14: Shares of Organic Food Sales by Retail Outlet Type in the Netherlands Figure 14 needs to be taken with a grain of salt. What is clear is that with the entry of Albert Heijn the market share of the multiples is soaring, with a market share increase of approximately 10% in the year Most of the 380 health food and specialist organic shops are run independently, with only one franchising scheme in place, Natuurwinkel/De Groene Winkel/ Gimtel. Together they account for about 70 stores. In 1999, there were approximately 20 major organic farmers markets and the number is still, if slowly, increasing.

45 Consumer Buying Patterns and Attitudes toward Organic ProductsConsumer Buying Patterns and Attitudes toward Organic Products - Netherlands One major difference between the Netherlands and most other European organic markets where spending for organic products has increased much faster has been that occasional and selective buyers have not increased their organic purchases at the same rate as in comparable countries. In a study of the Landbauw-Economisch Institut (LEI) of the Netherlands consumers were categorized in five segments: Heavy buyers of organic food (1%) Selective purchasers of organic food (4%) Occasional purchasers of organic food (34%) Non-purchasers aware of organic quality represented by EKO-label (55%) Non-purchasers of organic food unaware of organic quality as represented by the Eko-label. (6%) The heavy buyers are dedicated to buying at farmers markets, at farm gates or in health food shops, while selective purchasers buy some organic products on a regular basis, but their purchasing decision is strongly influenced by convenience, availability, and price. Occasional purchasers who are well aware of the differences between organic and conventional agriculture tend to exclusively shop at supermarkets, therefore, their selection is restricted to what the preferred supermarkets have to offer.

46 Development of Organic Agriculture in France The organic movement in France established itself in the early seventies, carried by a strong philosophical and ideological background. The first organic standards in France were published by the producers association Nature et Progrès in In 1980 approximately 40% of Europes organically cultivated land was located in France.

47 Number of Organic Farms and Acreage under Organic Cultivation in France After 1980, Frances position as a leader in organic agriculture deteriorated steadily until the mid-nineties, owing to virtually non-existing government support, stagnating demand, an inefficient manufacturing and processing sector and an immensely splintered and professionally poorly developed distribution system. At the same time there was a pronounced rise of organic agriculture in Germany, Italy and Switzerland, Austria and Denmark due to substantial subsidies for organic producers in those countries. The "Plan Pluriannuel de Developpement et la promotion de lAgriculture Biologique", launched by the French Ministry of Agriculture in 1997, calls for the conversion of 2,47 million acres (1 million hectares) of farmland and increasing the number of organic farms to 25,000 by the end of year thus quintupling the number of farms and acreage within 8 years. The plan calls for subsidies in the amount of approximately 10 million EURO to advance organic farming, distribution and sales.

48 Figure 8: Organic Food Sales by Retail Outlet Channel in France in 1999

49 Figure 9: Sector Shares of Organic Food in France in 1996 In contrast to most other European countries, where produce and dairy tend to play a larger role, cereals dominate as the main product category in France (figure 9). Apart from consumer preference this is mainly attributed to the widespread availability of bread, baked goods and cereals in health food shops, more than 4,000 small bakeries, and the supermarkets, which initially emphasized this product category. The next important product category with 25% is vegetables.

50 Consumer buying patterns - France: In a study in 1995 an INRA-Crisalide study [19] in France determined four major customer groups for organic products: "Nostalgics", a rather conservative and mostly elderly part of the population preferably concerned with foods produced according to "our ancient standard" and who tend to grow their vegetables in their own backyard "Ideologists", zealously idealistic to "revolutionary militants" (the politically correct of the organic movement) for whom the purity of the standards has to be held above all else and any deviation is regarded as almost a crime "Health conscious", among them a large number of young mothers who are especially concerned for their babies and young children, who have severe time restraints and wish to buy all their foodstuff in one place, but are only willing to pay a limited premium for organic food "The fashionable crowd" with the highest amount of disposable income, looking for high-end products in every regard (healthy, organic, good taste, first-class appearance, hip). While there are no exact numbers with respect to those four categories of customers, it is undisputed that the first two categories of customers are rapidly diminishing and the second two categories even more rapidly increasing.

51 For American exporters, however, France is not an easy target market and few companies aim at the French organic market. Compared to Germany, The Netherlands, and the United Kingdom the US exports only a small amount to France. There is probably a variety of reasons responsible for this occurrence. Certainly language is among them, as a variety of trade sources reported that there is a substantially higher language barrier that needs to be overcome when making "cold calls" or negotiating specific issues with French counterparts than with Dutch or Germans. Not only is the probability of encountering an English-speaking partner much lower, many sources also reported that it appears to be more difficult to start negotiations. Also, when organic trade relations between Europe and the US started to get established in the early nineties, the French market was in a stagnation phase and overall imports where very low, so there was not much room to develop trade ties. In addition, there is not much knowledge about the French market among US organic companies, and few of them visit SIAL in Paris or any other of the specialized organic trade fairs.

52 Total Organic Sales (1999/2000) US Organic Exports Per capita organic consumption Germany$ 2 billion$ 22.7 M$ 22 Italy$ 880 M($ 15 M?)$ 13 France$ 877 M$ 0.5 M$ 13 UK$ 819 M$ 41.9 M$ 8 Denmark$435 M$ 8.7 M$ 57 Netherlands$ 350 M$ 15.1 M$ 23 USA$ ~9 billion??$ 33

53 Denmark Danish agricultural and environmental policies are among the strictest in the world. For example: no farm can have more than 500 animal units. If it has more than 250, it must prepare a statement describing how the activities of the farm impact the surrounding environment and what is done to minimize this impact. 65% of a farms cultivated land must be covered by crops throughout the winter so as to minimize fertilizer leaching. Organic agriculture in Denmark is generally practiced according to the EU 2092/91 regulations, with one important difference: individual farms must convert completely to organic, operations that have conventional as well as organic branches are therefore impossible on the farm level.

54 Until 1980, organic farming was practically non-existent in Denmark. In 1981 the private certification body LØI was established and promoted organic farming and marketing of organic products. In 1987 the Danish government established the certified Ø label (Ø standing for Økologisk, ecological in English) and began introducing support for organic farming through legislation, funding research and extension, and subsidies. The first action plan for the support of organic farming dates back to Although some of the quantitative goals of the plan have not been achieved in the envisioned time frame, it had nevertheless a profound impact on the growth of the Danish organic agriculture. The subsequent version of the organic Action Plan, published in 1999, calls specifically for putting "Denmark in the forefront of the development, production and sales of organic foods". One of the quantitative goals is to convert 10% of Denmarks arable land to organic by the year 2004, a goal that seems realistic considering the fact the by the end of the year % of all arable land will be converted to organic.

55 Number of Organic Farms and Acreage under organic Cultivation in Denmark More than 85% of Danish organic farms keep livestock, and a large portion of the organically cultivated land is used for fodder crops like grass and grains. Consequently, the dairy sector has been the single most important driving factor for organic sales. It is estimated that dairy products account for 65% of the total organic production value, followed by vegetables (20%) and eggs (10%).

56 Danish Domestic Organic Consumption in 1999 Danish Organic Production

57 Danish Consumers: Danish consumers are known as environmentally conscious and in consequence, environmental laws and regulations are very well developed, a major reason why organic consumption in Denmark is relatively advanced. Organic goods are bought in Denmark mainly because: They are perceived as being healthier They are perceived as being of better quality Out of concern for the environment Out of concern for animal welfare. It is widely believed that the well-informed, environmentally committed Danish customers will guarantee a continued growth in organic consumption, especially in the light the increasing availability of a broader organic product range the and widening concern about food safety.

58 Lessons Learned: European Examples History and culture play a significant role in when and how quickly the organic movement developed in each country. Having EU organic regulations in place helped move adoption of organic along faster, along with Gov. subsidies and goals for organic in many EU countries. Consumer reasons for buying organic are similar, but changing…. Trend is for more organic food to be sold through supermarkets, and % sold through other venues is changing (but is different in each EU country)

59 Mexico: In 2002, there were an estimated 534,000 acres of organic production, and 53,577 producers. This is an increase from 57,000 acres and 13,176 producers in Currently 98% of Mexican organic production is for export. 98.6% or organic producers were small farmers, which accounted for 69% of organic industry income.

60 Certification in Mexico: Currently, there are no government imposed requirements for importing organic products. There is a regulation NOM 037 which regulates organic production in Mexico, but in reality it isnt enforced, regulated, or even recognized. The only internationally recognized certifying agencies in Mexico are foreign certifiers. There are 14 certifying agencies in Mexico, including OCIA and Oregon Tilth for U.S. export crops. If importing organic crops to Mexico, many border control agents do not recognize organic certification and may require fumigation.

61 Organic consumers in Mexico: There are two distinct markets (1) the alternative hippy, Buddhist, or vegetarian consumer, or those with special dietary needs or healthy issues, and (2) upper-middle and upper-class who are health conscious, understand organic benefits, and have the resources to purchase. The average Mexican consumer doesnt know what the term organic means, the requirement, or why it is beneficial. Some equate the word with chemicals or trash, because two common terms are quimicos organicos and basura organica (organic chemicals and organic trash). Other terms used to convey the organic concept of biologico or ecologico. Since US standards require the use of the word organic for certification, this is what is used in labeling. What matters to most consumers is price, price, and price.

62 Canada The organic industry has been growing at 15 to 20% annually for the past decade, with approximately 3670 certified organic farms in 2004 producing $986 million in retail products. The most significant international markets are the EU and the U.S. The EU has a mandatory organic standard, and requires that all countries exporting to the EU be on an approved third-country equivalency list by Dec. 31, Currently, multiple organic standards are used to certify products as organic in Canada. Producers frequently pay multiple fees for several different certification systems. The National Organic Program (NOP) in the US currently accredits Canadian certification bodies for export to the U.S. It is anticipated that USDA will recognize the Canadian regulation as equivalent to their own, which would allow increases access to the US market.

63 Sources: Organic Trade Associations Export Study for U.S. Organic Products to Asia and Europe By Organic Insights, Inc. Dr. Winfried H. Fuchshofen and Silke Fuchshofen, December 2000 OTA Market Overview: Mexican Organic Market By Landry consulting LLC, April 2004 Regulatory Impact Analysis Statement, Canada Agricultural Products Act Vol. 140, No. 35, Sept. 2006

64 Some Agricultural Statistics US population 281 million US land area 9.17 million km2 Density = 31 persons/km2 Kansas Population = 2.48 million KS land area = 212,093 km2 Density = 12 persons/km2 Number of farmers in the US is 2.2 million (0.78%) Currently 0.2% of US farmland is certified organic. (In some European counties, is as high as 10%) [data from USDA website] Population of Argentina = 37 million AR land area = 2.78 million km2 Density = 13 persons/km2 BUT 11 million live in Buenos Aires Density of 14,800/km2 in Capital Density of 15/km2 in rest of Buenos Aires Province Ag population of 4 million (11%) Currently, 344,870 ha certified organic (1.27% of arable acres)

65 Missiones Province City of Buenos Aires Bariloche – Province of Rio Negro El Bolson, also in Rio Negro

66 Some Sustainable Agriculture Organizations ROAM – Red de Agricultura Organica de Missiones PSA – Programa Social Agro-pecurio Universidad Internacianal de Andulucia (in Spain), Director of the program Agroecologia y Desarrolla Rural Sostenible en America Latina y Espana is Eduardo Sevila Guzman. Four Ph.D. students examined the possibilities for Brazil. The province Rio Grande de Sul is now considered the kitchen of the world for sustainable agriculture policy. Two years ago a progressive/socialist government was elected, and passed a policy; Libre de transgenicos. (organismos geneticamente modificados, or OGM)

67 Status of Organic Regulations In the US, the 1990 Farm Bill authorized the National Organic Standards Board to develop regs. Final rule released in early 2001, takes effect in the fall of 2002 defining certified organic production, processing, and labeling. Currently about 31 state and private programs have certified organic labels, will have to be approved under the NOSB rules. Rules are similar to IFOAM, but not identical. Resolution passed June 3, 1992 defining certified organic production, by SENASA (Servicio Nacional de Sanidad y Calidad Agroalimentaria - National Service of Public Health and Agricultural Food Quality) Rules designed to be compatible with the IFOAM guidelines (allows export to Europe) Labels include (6): Argencert, Ambiental S.A., Aproba, A.P.P.R.I., MOA, and OIA.

68 Organic Production Of the 344,870 ha in organic production, 18,483 ha in crops, and 326,387 ha for the production of animals. Organic production includes cereals and oilseeds (62%), fruit (22%), horticultural (6%) and other (10% = cotton, sugar cane, aromatic herbs, amaranth and yerba mate) Organic production of livestock is mostly beef, but also some sheep, wool, and poultry. Note: though the regulations state that you must be certified to be organic, many are not. Some practice ecological production. No label for bio-dynamic yet?

69 Provinces with Certified Organic Production: La Pampa 42% Buenos Aires 16% Santiago del Estero 12% San Luis 9% Cordoba 7% Entre Rios 4% Others 10% (including Missiones, Rio Negro, Corrientes, Sante Fe, Mendoza, San Juan, Catamarca, Salta and Tucuman.





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