The Australian Organic Industry: A Summary pot

The Australian Organic Industry—A Summary
A
The Australian Organic Industry
A Summary
DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY
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The Australian Organic Industry
A Summary
BRS/All Organic Book.FA 24/11/04 10:12 AM Page B
Foreword
There is no doubt that consumers—here and
overseas—are increasingly interested in knowing
more about where and how the food they buy
is produced.
This has helped boost the appeal of organic food—so much so that there is now a significant
and growing number of certified organic and biodynamic operators in Australia, representing
rural industries as diverse as grains, horticulture, viticulture, meat, dairy, wool and coffee.
So far there has been very little data published on the organic industry. The Australian Bureau
of Statistics and the Australian Bureau of Resource Economics collect regular and detailed data
on Australian agriculture. However, this data does not distinguish between conventional and
organically grown produce.
This study represents a pioneering effort towards achieving reliable data for the organic
industry. Not surprisingly, the study highlighted the inherent problems associated with
collecting data on organic agriculture—largely because of the extensive range of products
produced, the variable size of the farms involved and the different levels of information
collected by the various certifying organisations.
This report can play an important role by helping to lay the foundation for a uniform data
collection system for the organic industry in this country. Collecting reliable data—data that
spans several years—will help the industry develop the strategic plans and marketing
strategies that it needs to promote industry growth.
As the Parliamentary Secretary for Agriculture, Fisheries and Forestry I look forward to working

closely with Australia’s organic industry in the coming years.
Senator the Hon. Richard Colbeck
Parliamentary Secretary to the Minister for Agriculture, Fisheries amd Forestry
The Australian Organic Industry—A Summary
© Commonwealth of Australia 2004
This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review.
Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgement of the source
is included. Major extracts or the entire document may not be reproduced by any process without the written permission
of the Executive Manager, Food and Agriculture Business, Australian Government Department of Agriculture, Fisheries
and Forestry, GPO Box 858, Canberra ACT 2601.
ISBN 0 642 53955 3
A copy of this summary and the full industry profile are available from the Department’s website at
/>For further information, please contact:
Food Policy and Communications Section
Australian Government Department of Agriculture, Fisheries and Forestry
Email:
Phone: 02 6272 4161
Fax: 02 6272 4367
Disclaimer
The views expressed in this publication are not necessarily the views of the Australian Government. This publication is
made available on the understanding that the Australian Government is not thereby engaged in rendering professional
advice. Before relying on material in this publication, users should independently verify the accuracy, currency,
completeness and relevance of the information for their purposes and obtain any appropriate professional advice.
References to information, organisations and products mentioned in this publication or associated with those mentioned
do not constitute endorsement by the Australian Government of those organisations or any associated product or service.
Readers should note that the Australian Government Department of Agriculture, Fisheries and Forestry has not
investigated the nutritional qualities, health effects or environmental impacts of organic processes or products, or the
financial performance of organic businesses.
The Australian Government Department of Agriculture, Fisheries and Forestry seeks to publish its work to the highest
professional standards. However, it cannot accept responsibility for any consequences arising from the use of the

information herein. Readers should rely on their own skill and judgment in applying any information for analysis to
particular issues or circumstances.
The Australian Organic Industry—A Summary
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The Australian Organic Industry—A Summary
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Contents
About this publication
This publication summarises the key findings of a study conducted in 2003 and 2004 that provides
a snapshot of the organic industry at this time. It is designed to provide general information to current and
prospective producers, processors, distributors, exporters, retailers, consumers, certifying organisations,
industry associations and others interested in the organic industry.
The Australian Government Department of Agriculture, Fisheries and Forestry commissioned the study
to help remedy the lack of data available on the organic industry.
Acknowledgements
Staff in the Department of Agriculture, Fisheries and Forestry’s Food Policy and Communications Section
managed the project and compiled this summary.
The Department would like to thank, for their contributions to this work:
• Dr Darren Halpin, Central Queensland University
• Jackie Parkinson, Central Queensland University
• Dr Martin Brueckner, Curtin University of Technology
• Amarjit Sahota, Organic Monitor
• Assoc. Prof. Stewart Lockie, Central Queensland University
• Peter Donaghy, Central Queensland University
• Gary Hullin, Austrade
• Australian Quarantine and Inspection Service
The Department would also like to thank the organic certifying organisations that provided data, the
Organic Federation of Australia for instigating and assisting the project. Front and back cover photographs
were provided by the Biological Farmers of Australia, the National Association for Sustainable Agriculture

Australia and Tim Marshall.
All organic producers included in case studies have received grants from the Australian Government’s
New Industries Development Program. The Department thanks those producers included in case studies.
Other publications from the Food Policy and Communications Section include:
Australian Government Department of Agriculture, Fisheries and Forestry 2004, Australian Food Statistics
2004, report prepared by ABARE, Canberra.
Smith, L and Dawson, P 2004, Food Exporters’ Guide to Indonesia, Australian Government Department
of Agriculture, Fisheries and Forestry, Canberra.
Spencer, S 2004, Price Determination in the Australian Food Industry: A Report, Australian
Government Department of Agriculture, Fisheries and Forestry, Canberra.
BRI Australia Ltd 2003, The Australian Baking Industry: A Profile, Australian Government Department
of Agriculture, Fisheries and Forestry, Canberra.
Food News Bulletin (published quarterly), produced by the Australian Government Department
of Agriculture, Fisheries and Forestry, Canberra.
The Australian Organic Industry—A Summary
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The Australian Organic Industry—A Summary
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Introduction 1
What is organic farming? 2
On the farm 6
On the road 13
In the factory 17
In the shop 20
In the home 26
Over the sea 30
Further information 38
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1. Farm-gate sales volumes from certified organic farms in Australia, 2003 9
2. Three-year projected changes in certified organic production, % of farmers,

by product, 2003 9
3. Estimated national farm-gate receipts from sale of certified organic production,
by state, 2003 10
4. Estimated national farm-gate receipts from sale of certified organic products,
by product category, 2003 11
5. Average organic price premiums, by product 21
6. Average price premiums for selected organic product groups, by state 22
7. Average price premiums for sales channels, by state 22
8. Prevalence of certifying organisation logos, by state 23
The Australian Organic Industry—A Summary
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The Australian Organic Industry—A Summary
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1. Distribution of certified organic farms by state, 2003 7
2. Estimated proportions of certified organic farms producing different products, 2003 8
3. Nature of information exchange with supply chain partners 14
4. Cooperative or collaborative arrangements among organic farmers 15
5. Primary source of organic food purchases 26
6. Organic consumption by education level 27
7. Organic consumption by income 27
8. Motivating factors behind food choice 28
9. Volume of certified organic exports, 1999–2003 30
10. Volume of certified organic exports by product group, 2003 31
11. Total certified organic export volume by destination, 2003 32
Figures Tables
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Introduction
The modern organic movement began in Europe around the 1920s, when a group of farmers

and consumers sought an alternative to the industrialisation of agriculture. Of key importance
to these farmers and consumers was caring for the soil and natural processes upon which
agriculture depends, including not using inputs such as artificial fertilisers and synthetic
chemicals. A leading figure at the time was the Austrian thinker, Rudolf Steiner, whose ideas
led to a system of cultivation known as biodynamic.
In the middle of the 20th century enthusiasts brought organic techniques from Europe to
Australia, a place with very different climate, soils and density of settlement. With growing
consumer interest in how and where food is produced, organic food has become more popular.
Products offered only through health food stores or food cooperatives in the 1970s and 1980s
spread to the corners of supermarkets in the 1990s. Organic products now occupy prime shelf
space in the big chain supermarkets and present export opportunities for Australian
producers.
Organic farms extend from market gardens clustered near Australia’s big cities, to dairy farms
scattered along the East Coast to vast cattle stations in the outback. But the organic industry
in Australia is more than the sum of its farms. It is composed of processing facilities, logistics
operations, wholesalers, retailers, exporters, certification organisations and a range of other
individuals and organisations.
Organic products are a small but diverse range of products—including fruit, nuts and
vegetables, meat from various animals, dairy products, cereals, oilseeds, plant and animal
fibres, and health and body care products. The products may look like their conventional
equivalents, but differ in the way they have been produced.
The Australian Organic Industry—A Summary
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produce and to protect consumers and organic producers from others misrepresenting their
produce as being organic. It also provides a guide to farmers contemplating converting
from conventional to organic production.
The standard sets out specific requirements for organic production, conversion and
natural resource management. The standard includes lists for the allowable inputs for soil
management, pest and disease control, and animal health. It also specifies the conditions

for processing organic products, such as keeping certified produce separate from
conventional produce.
Producers must be capable of satisfying the requirements of the standard for at least one
year before products can be labelled as organic in-conversion. Producers must then continue
to meet the specified requirements for a further two years before being permitted to use the
term organic.
In 2003, there were about 2340 certified organic operators in Australia—including farmers,
processors, exporters and retailers.
Certifying organisations
Certifying organisations inspect operators annually to ensure they comply with the National
Standard. They are also authorised to issue organic produce certificates on behalf of the
Australian Government.
An AQIS-approved organic certifying organisation must undergo an annual audit of its
documented system. AQIS also audits the inspection system of certifying organisations
at various organic farms, processors, wholesalers and exporters.
AQIS and industry has established Administrative Arrangements outlining the administrative
policies and operational procedures for certifying organisations. These arrangements cover
requirements including objectivity and integrity, structure and training, sanctions and
penalties, inspection and certification and export requirements.
Currently, there are seven AQIS-approved organic certifying organisations in Australia:
• Australian Certified Organic
(Biological Farmers of Australia)
Phone: 07 3350 5706

The Australian Organic Industry—A Summary
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The Australian Organic Industry—A Summary
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What is organic farming?
The basic principle of organic farming is achieving high yields of produce and food of high

nutritional quality without the use of artificial fertilisers or synthetic chemicals.
Organic farming emphasises the use of renewable resources, the need for conservation
of energy, soil and water resources and the maintenance of environmental quality. Animal
welfare is also an important consideration. Products or by-products that are derived from
genetic modification technology, treated with ionising radiation or that interfere with the
natural metabolism of livestock and plants are not compatible with the principles of
organic agriculture.
Biodynamic agriculture is similar, with some additional requirements for preparing the soil and
growing conditions.
Certification
The study that this publication is based on considered only those producers and products
that were certified organic or biodynamic.
Within Australia, the Australian Quarantine and Inspection Service (AQIS) is responsible for
the organic inspection and certification system, in collaboration with seven approved certifying
organisations. This co-regulatory system was set up in the early 1990s to ensure buyers of
organic products could be confident that certified produce was grown and processed according
to organic or biodynamic principles. The system is underpinned by Commonwealth legislation
and the National Standard for Organic and Biodynamic Produce (National Standard).
The Export Control (Organic Produce Certification) Orders 1997, made under the Export Control
Act 1982, require every person who produces or manufactures organic produce for export
to be certified. For the domestic market, certification is optional. However, the Trade Practices
Act 1974 and the various state and territories’ fair trading laws provide legal protection against
misleading and deceptive practices. The National Standard provides the relevant guidelines
for labelling organic and biodynamic products.
The National Standard was first published in 1992. The third edition was published in 2002.
The standard aims to harmonise requirements for the production and labelling of organic
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CASE STUDY
Barambah Organics
Ian and Jane Campbell of Barambah Organics near Murgon in Queensland produce,

process and market certified organic milk. Their movement into organic production
was born from a long family interest in sustainable agriculture and the need to create
a point of difference for their products.
“Customers are often surprised by the unique taste of our milk. It comes from
a balanced and healthy diet for the cows on our chemical-free broadacre pastures,”
said Ian.
Soil health and weed control are important considerations and are carefully managed
with compost manures and lime. Being organic also means that cows are treated
only with natural remedies such as homeopathy and minerals to boost their strength
and vitality.
Ian and Jane also became involved in processing and marketing their own products
about five years ago. They found that there is a lot to learn about running a paddock-
to-plate supply chain, including hiring staff and building strategic partnerships.
Employment problems, particularly recruiting and training the right people, proved to
be a significant issue for the business. Barambah Organics’ much larger involvement
across the supply chain meant the business required a new range of skills and people
with expertise in milk processing and financial management, as well as traditional
farm management.
Ian and Jane also found that finding the time to actively market their products was
a significant challenge.
“We formed a strategic
alliance with a coffee
chain and it has proven
a winner,” said Ian. “Half
our business stems from
that alliance. They’re
buying it for its quality
because it enhances the
taste of their coffee.”
Adapted in part from the

Department of Agriculture,
Fisheries and Forestry 2004,
Made in Australia: Taking Stock,
Number 3, Series 3, pp.10–12.
• Bio-Dynamic Research Institute (Demeter)
Phone: 03 5966 7333
• National Association for Sustainable
Agriculture Australia
Phone: 08 8370 8455

• Organic Food Chain
Phone: 07 4637 2600

• Organic Growers of Australia
Phone: 02 6622 0100

• Safe Food Production Queensland
Phone: 07 3253 9800

• Tasmanian Organic-Dynamic Producers
Phone: 0408 171 473

Regulatory mark
Following the agreement of certifying organisations,
AQIS has recently developed an ‘Australian Government
Certified’ regulatory mark. The mark does not replace the
logos of certifying organisations but will help provide greater
assurance for consumers wishing to purchase certified organic
and biodynamic produce. While the mark is voluntary, its use
is governed by formal conditions enforced by AQIS.

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The Australian Organic Industry—A Summary
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How many organic farmers are there?
There were an estimated 1511 certified organic farms in Australia in 2003, not including
in-conversion, pre-certified or deferred farms. It is estimated there will be a 20 to 30 per cent
increase in the number of certified farms within one to three years as in-conversion producers
come on stream.
Where are the farms?
About three-quarters of certified organic farms were estimated to be in New South Wales,
Queensland and Victoria. Figure 1 shows the distribution by state in more detail.
Figure 1 DISTRIBUTION OF CERTIFIED ORGANIC FARMS BY STATE, 2003
Source: certifier data, n = 1095 (including in-conversion).
What area do the farms cover?
Based on the survey data, the estimated area of certified organic farmland in Australia
in 2003 was 7.9 million hectares. This is about 1.7 per cent of Australia’s agricultural area.
Approximately three-quarters of the area under organic production was estimated to be
in Queensland, mainly in extensive beef grazing lands.
It is worth noting that some organic farmers did not have all their land certified organic.
A further 600,000 hectares of non-certified land was estimated to belong to organic farmers.
What do organic farmers produce?
Organic farms produce a wide variety of products. The survey indicated that the most common
product categories were fruit and nuts, vegetables, beef and cereals. The survey only collected
data on the product types shown in Figure 2.
On the farm
1
About the data
Data on organic production was obtained from two sources. As a first step data was gathered

from organic certifying organisations. The National Association for Sustainable Agriculture
Australia, Biological Farmers of Australia/Australian Certified Organic, Tasmanian Organic-
Dynamic Producers and Safe Food Production Queensland provided data.
The data gathered from certifiers has a number of limitations. Firstly, only the certifying
organisations that charge a levy based on sales were able to supply data on farm production.
The data that was provided is not consistent and often incomplete. In addition, the data
does not take into account any products not sold under a certifying organisation’s label.
Any producers who were customers of more than one certifying organisation may have
had their products double-counted.
In order to fill some of the gaps in the data, a telephone survey of 397 organic farmers was
conducted in June 2004. The survey excluded those farmers in the process of converting to
organic production or preparing for certification. The survey data has weaknesses as some
survey respondents had difficulty supplying production and financial information on the
telephone. Moreover, the data is based only on a sample of organic farmers. Therefore it relies
on the assumption that those surveyed are representative of the broader organic population.
Regardless of limitations, the data presented here will help bring a better understanding of the
structure and performance of the organic industry. The researchers believe that, to improve
communication and planning, the industry needs to collect and analyse data in a consistent
manner over several years.
The researchers compiled the following estimates on the organic industry in Australia in 2003
by extrapolating from the data gathered from organic certifying organisations and the survey
of 397 organic farmers.
1 This section is a summary of ‘Chapter 1 A farm-level view of the Australian organic industry’ by Darren Halpin
in The Australian Organic Industry—A Profile, 2004. Please refer to this chapter for detailed discussion of the
sampling method, survey methodology and basis for extrapolation.
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The Australian Organic Industry—A Summary
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NSW

28%
QLD
26%
VIC
20%
SA
10%
WA
9%
TAS 5% NT 2%
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Table 1 Farm-gate sales volumes from certified organic farms in Australia, 2003
Product Estimated Australian total
Organic sold as organic Organic sold as conventional Est. % volume sold as organic
Beef (kg live weight) 11 544 824 4 676 113 71.2
Sheep and goats 1 733 697 3 239 156 34.9
Pork (kg live weight) 106 780 5 320 95.2
Poultry (kg live weight) 57 545 6 650 89.6
Eggs (dozen) 384 960 0 100.0
Milk (litres) 15 048 000 9 235 454 62.0
Cereals (grains, pulses, 41 848 15 713 72.7
oilseeds) (tonnes)
Vegetables (tonnes) 109 141 299 99.7
Fruit and nuts (tonnes) 19 508 6 361 75.4
Source: farm survey data, n=397.
Table 2 shows how the organic growers surveyed expected to change their production over
the next three years. Except for the producers of eggs, poultry and cereals, most survey
respondents expected to increase their production. The low level of increase reported for
cereal production may be significant given that feed availability is a continuing limitation
to expansion in poultry, egg, milk and other livestock production.

Table 2 Three-year projected changes in certified organic production, % of farmers,
by product, 2003
Product Increase % Decrease % Stay the same % Don’t know % Total %
Pork 80 0 20 0 100
Fruit and nuts 72 7 17 4 100
Vegetables 69 9 16 6 100
Milk 58 0 33 8 100
Beef 53 15 23 8 100
Sheep and goats 52 16 26 6 100
Cereals 45 18 29 9 100
Poultry 43 57 0 0 100
Eggs 39 17 44 0 100
Source: farm survey data, n=397.
Figure 2 ESTIMATED PROPORTIONS OF CERTIFIED ORGANIC FARMS PRODUCING DIFFERENT PRODUCTS, 2003
Source: farm survey data, n = 397.
Each farm may produce multiple commodities.
Cereals include grains, pulses and oilseeds.
It is very common for one organic farm to produce a number of different commodities. Some
common patterns are identifiable from the survey, including livestock production of various
kinds and cereals and/or wool production. Fruit and vegetable production is also a very
common combination. Conversely, milk, sugar, coffee and tea producers tend not to produce
multiple products on their farms.
Data from the certifying organisations indicated that a significantly higher proportion of farms
than shown in Figure 2 were certified to produce fruit and nuts, vegetables, cereals and sheep
in 2003. This suggests that some producers limited production in some areas during 2003,
most likely because of the drought.
Table 1 shows the estimated volumes of selected organic products sold by certified organic
farms. Because of the volatility of supply and demand, some organic produce is sold as
conventional produce.
The Australian Organic Industry—A Summary

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The Australian Organic Industry—A Summary
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0
5
10
15
20
25
30
35
40
45
Fruit and nuts
Vegetables
Beef
Coffee beans
Tea
Cereals
Sheep and goats
Wool
Eggs
Milk
Poultry
Pigs
Sugar
Percentage of organic farms
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Table 4 Estimated national farm-gate receipts from sale of certified
organic products, by product category, 2003

Product category Frequency Estimated national
sum of receipts $
Beef 61 52 349 101
Vegetables 89 24 384 964
Fruit and nuts 107 21 373 875
Cereals (grains, pulses and oilseeds) 46 17 565 525
Milk 8 7 410 000
Sheep and goats 21 2 915 387
Eggs 13 795 755
Pigs 4 745 750
Poultry 6 353 337
Total 355 127 893 694
Source: farm survey data, n=355.
Data does not include on-farm processing or organic products sold as conventional.
What are the costs of organic production?
The survey asked farmers about the costs of organic farming. Most of the farmers who
converted from conventional farming agreed that the financial rewards of becoming a certified
organic producer were greater than the financial costs. They disagreed that the input costs
of organic farming were higher than those of conventional farming.
How do farmers become organic?
The farm survey indicated that 62 per cent of organic farmers converted their operations
from conventional farms. The remaining 38 per cent started farming as organic producers.
The majority of livestock and broadacre farmers had converted an existing farm to organic
production. This pattern is different from fruit and vegetable producers, where around half
started up organic farms. Relatively new enterprises in Australian agriculture, such as coffee
and tea production, have a larger proportion of growers starting up as organic rather than
converting an existing enterprise.
What are the characteristics of organic farmers?
There is a perception among some observers that the organic industry is populated by part-
time or hobby farmers. This was not borne out by the farm survey. About 77 per cent of organic

farm operators stated that their farm business was their main occupation.
One-third of farmers surveyed had a university degree or higher level of academic
achievement. More than 40 per cent were from a non-farming family background. One-quarter
of the survey respondents were women. The average age of organic farmers was 51.
What is the value of organic production?
The national value of farm receipts from the sale of organic produce was estimated to be
$140.7 million in 2003. This was calculated by asking each survey respondent to estimate
the average annual receipts from their property and the percentage of that accounted for
by sales of certified organic products. The results have been extrapolated to obtain a total
estimate for Australia.
Table 3 Estimated national farm-gate receipts from sale
of certified organic production, by state, 2003
State or territory of farm Estimated total sum of receipts $
Qld 59 314 339
Vic 32 415 970
NSW 28 836 545
SA 11 893 084
WA 6 236 720
Tas 1 890 616
NT 82 320
Total 140 669 594
Source: farm survey data, n=309.
Data includes organic products sold as organic and sold as conventional.
In addition to total receipts, organic farmers were asked to estimate their receipts from the
sale of specific organic products. The extrapolated results are shown in Table 4. Given that the
Table 4 data does not include organic products sold as conventional, on-farm processing and
only specific product categories, a greater difference would be expected between the total
$127.9 million reported here and the total $140.7 million reported in Table 3. It is important
to note that these figures are estimates and not exact data and therefore either or both figures
may be over or underestimated.

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On the road
2
Supply chain relationships
In the early days, organic producers sold directly to consumers through roadside stalls,
farmers’ markets and vegetable box arrangements. As the organic market has grown and
diversified, supply chains have become more complex; involving a number of supply chain
businesses. The organic farmer’s relationships with supply chain businesses, and the flow
of information between them, has become crucial to sustaining a demand-focused industry.
The farm survey looked at the relationships organic farmers have with six types of business
customers in the supply chain:
• agents, brokers and distributors
• processors
• wholesalers
• retailers
• food service customers
• export consolidators.
The survey looked at who the farmers deal with in selling their product, what feedback they
receive from their supply chain partners and whether the relationships are formal (a contract
or some other written agreement) or informal (a handshake subject to renegotiation for
each sale).
The survey firstly indicated that while most organic farmers supply product direct to the
consumer, on average this is only a small proportion of total sales. Most organic product
reaches the consumer via supply chain intermediaries. The most common group that organic
farmers deal with are processors. Meat, milk and cereals are usually sold by this route. Poultry,
where farmers often have their own processing facilities, and eggs are commonly sold direct

to specialist retailers and health food stores. Fruit, vegetables and nuts are most frequently
sold through agents/distributors, or directly to wholesalers and retailers.
2 This section is a summary of ‘Chapter 2 Organic food supply chain relations and collaborative marketing’
by Darren Halpin in The Australian Organic Industry—A Profile, 2004.
CASE STUDY
Kialla Pure Foods
Kialla Pure Foods is one of Australia’s biggest processing
businesses dedicated to organic foods. It grows, manufactures
and sells bulk and value-added organic grain products to
Switzerland, the United Kingdom, Italy, Germany, the United
States, New Zealand, Taiwan, Hong Kong, Japan, Malaysia and
Indonesia—as well as to Australian supermarkets. Demand for
their products has grown so much that Kialla is supplied by about 250 growers, spread
from Emerald in Queensland to the South Australia-Victoria border. More are needed.
The organic farming model used at Kialla is based on green manuring.
“The two most important elements are organic matter in the soil and the soil’s
biological life, or biomass,” explains owner Graham McNally (pictured above and
below). “So our cropping regime is based around two cash crops, winter and summer,
interspersed with green manure crops. The green manure we grow in the winter cycle
is fenugreek, a legume that produces 93 kilograms of nitrogen per hectare. The
summer crops are rotated with mung beans and cereal buckwheat which are good
for phosphorous.”
To build up the soil’s biomass, cattle are also included in the rotations because rumen
bacteria are needed for the soil.
“Before we started biological farming our soil was like plasticine. Now it’s lovely
and friable and the soil moisture retention is much higher,” said Graham.
The manager of the manufacturing side of the business, John Egan, indicates the
company could sell much more grain into the international market if more growers
were prepared to make the switch to organic production. However, he says it requires
a total commitment because reliability of supply is crucial to keeping hard-won

markets.
The company has been active in product
research and development and in 2002
received a grant from the New Industries
Development Program to build a dedicated
organic maize mill.
Adapted from Brad Collis 2003, Ground Cover, issue 44,
with the kind permission of the Grains Research and
Development Corporation.
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Collaborative marketing
Inconsistent supply is one of the organic industry’s major obstacles to growth. Collaboration
between farmers could capitalise on market opportunities, increase sales volumes and
improve the efficiency of distribution and marketing. Types of collaborative arrangements
include grower cooperatives, group packing sheds, group value-adding companies, grower
networks and other marketing groups.
The survey showed that a significant majority of producers are not involved and have no plans
for any type of collaboration with other farmers. On average, across all commodity groupings,
between 5 to 10 per cent of organic farmers are already collaborating, 20 to 25 per cent are
interested in future participation and 65 to 70 per cent are not interested in collaboration
in the future. There is greatest interest in future participation among beef, cereals and fruit
and vegetable growers and least interest among egg and poultry producers.
Figure 4 COOPERATIVE OR COLLABORATIVE ARRANGEMENTS AMONG ORGANIC FARMERS
Source: farm survey data.
Data is an amalgamation of survey responses that were split according to the type of collaborative arrangement.
According to the researchers, the apparent low level of collaboration is likely to limit the

industry’s capability to supply the volume, range and consistency of product necessary
to capture domestic and export markets. Reliance on vertical chain relationships may limit
the industry to niche markets until very large growers come into production.
The survey suggested that most organic farmers deal with only one type of supply chain
business. Fruit, vegetable and nut producers were the most likely to supply multiple
businesses along the supply chain. However this was only around 30 per cent of the
respondent producers.
In terms of information exchange, the survey indicated that retailers are generally the best
at keeping growers informed about the quality, prices and acceptance of their produce.
The exception is milk, where processors provide extensive feedback to producers. The
relationships between farmers and supply chain businesses are predominantly informal,
except for milk production.
Figure 3 NATURE OF INFORMATION EXCHANGE WITH SUPPLY CHAIN PARTNERS
Source: farm survey data.
A = They buy my product, but I don’t know what happens afterwards.
B = They give me some feedback on what the market is looking for and how well my product is received.
C = They keep me informed of all the issues with the product including margins, quality, and market feedback.
The Australian Organic Industry—A Summary
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The Australian Organic Industry—A Summary
15
0
10
20
30
40
50
60
70
Agent/distributor/

broker (n=154)
Processor
(n=93)
Direct to wholesaler
(n=125)
Direct to reltailer
(n=93)
Direct to food service
trade (n=9)
To export consolidator
(n=5)
Percentage of respondents
A B C
0
10
20
30
40
50
60
70
80
90
100
Percentage of responses
Current
Future intention
Not interested
Beef (n=86)
Sheep and goats (n=31)

Pig (n=5)
Poultry (n=7)
Cereals (n=56)
Vegetables (n=127)
Eggs (n=18)
Milk (n=12)
Fruit and nuts (n=156)
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 14
In the factory
3
This section looks at the role of processors, wholesalers and distributors involved in the
organic industry. It is based on interviews conducted with over 20 companies in early 2004.
Those interviewed were generally committed and optimistic about their role in the organic
industry.
Processed organic food in Australia
As the demand for organic products has grown, there has been a marked increase in the range
of processed organic foods.
Many products are processed on the farm. Some farmers add value to their products to sell
them in niche markets while others operate boutique food businesses on the farm. Examples
of farm processing include making yoghurt, cheese, honey, olive oil, wine, chocolate-coated
nuts and confectionery, and preserving or juicing fruit and vegetables.
Beyond the farm-gate, a range of companies process organic foods such as breakfast cereals,
noodles, pasta, flour, meat portions and burgers, dairy products, juices, shelf-stable groceries,
oils, jams, sauces and salad mixes.
These processors tend to be either big companies with a small organic unit or small companies
that are supplied by a few organic farmers. In the big companies, organic champions seem
crucial to the development of an organic product line. Smaller companies are often driven by
a sense of mission. While this does not mean commercial considerations are discarded, it does
show that there is also an ethical base for building the industry. Above all, most processors
that were interviewed felt that for organic lines to be successful there is a need for the entire

supply chain to work together.
Challenges of supply for organic processing
While the supply of organic raw produce to processors is generally sufficient for current sales
levels, it is not enough to deliver reliably and consistently, nor to enable processors to meet
latent demand. Sometimes the inputs for processing have to be imported. This suggests that,
overall, demand for organic foods exceeds supply, even though there are reported surpluses
associated with seasonal fluctuations and a relatively undeveloped organic supply chain.
3 This section is a summary of ‘Chapter 3 Beyond the farm-gate: the perspectives of processors, wholesalers and
distributors in the organic industry’ by Darren Halpin and Jackie Parkinson in The Australian Organic Industry—
A Profile, 2004.
CASE STUDY
Inglewood Farms
The success of Inglewood Farms lies in
much more than a passion for organic foods;
it also comes from a dedication to
commercial realities and professionalism.
Operated by brothers John and Clive Wylie
at Inglewood in South East Queensland,
Inglewood Farms is an industrial scale
producer of organic chicken.
They use a vertically integrated “closed
loop” production system, growing their own
organic grain, milling the feed, producing,
processing, marketing and distributing the
product and composting the waste as fertiliser
for crops. Their move into organic chickens was born from a need to produce a non-
commodity, branded, value-added niche product to capture better economic returns.
They responded to this idea by confirming with six months of intensive market
research and feasibility studies that there actually was a market for their proposed
product. At first the company used outsourced providers to perform many business

functions.
“One of the most important things was to invest in our own equipment and service
delivery, as this allowed us to vertically integrate our business and control product
quality,” John Wylie said.
“A commitment to professionalism and quality is absolutely vital because being
organic is simply not enough. Our product must also be of the highest quality.
“If I had my time over again, I would invest in our own equipment and services sooner
to get the product right. This allows us to produce a professional, industrial-scale
product that the market will pay attention to, rather than a cottage industry-type
product.”
John believes the real challenge now is to control supply chains and grow the market
segment, not compete with other organic producers. Inglewood Farms’ organic chicken
is experiencing market growth in double digit figures, domestically supported by their
own sales team. The company is undertaking market research for possible expansion
into Japan and Korea, further underlining the importance of having a demonstrated
market as well as a quality product.
The Australian Organic Industry—A Summary
16
The Australian Organic Industry—A Summary
17
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 16
maintain price premiums. It was also considered that as volumes increased, premiums would
inevitably decline for some products. This long-term reduction in premiums will require
a transparent understanding of price premiums among supply chain partners.
Processors indicated that processing capacity is not a constraint on the growth of organic
products. Rather, growth is limited by the difficulties sourcing inputs of the right quality, price
and volume. This discourages investment in product development, brand building and
manufacturing technology.
Costs of organic processing
Organic standards require special regimes for separating organic products from conventional

products, and for cleaning machinery and packaging. Despite these complications, processors
report that after any initial outlay for equipment, the running costs of processing organic food
are about the same as for conventional food. Transport and handling costs are higher because
of the need for segregation and inefficiencies arising from low volumes of organic products.
The role of processors, wholesalers and distributors
in the organic supply chain
Planning, communication and coordination are key challenges for organic supply chains.
Processors, wholesalers and distributors have often taken on roles as organic supply chain
facilitators, taking steps to deal with over and undersupply while maintaining prices and the
viability of the whole chain.
In the fruit and vegetable sector, wholesalers and distributors deal with a large number of
small growers, making communication and coordination difficult and costly. One wholesaler
helps coordinate supply by sending out requests and information to farmers on what to grow
and when, based on market demand. Another undertakes research to be shared with farmers
on managing barriers to production, such as weed control and crop nutrition.
Some meat processors have also set up mechanisms to help organic farmers and better
manage supply and demand. For example, one processor has helped farmers develop business
plans for their future growth. This operator also pays full organic prices to in-conversion
farmers to encourage new suppliers to come on board. One processor is undertaking a
brokerage role assisting farmers to sell their products to retail outlets. Another processor
maintains a system of tracking producers and their stock available for sale to ensure demand
and supply are more adequately matched.
In dairy, a cooperative distributor pools the organic milk supply from a group of producers
ensuring that manufacturers of value-added products have a reliable supply of organic milk,
both in terms of volume and quality.
Perspectives on the growth of the organic industry
Processors, wholesalers and distributors generally believe the organic industry is growing,
but perhaps not as fast as some had predicted. Some suggested the key to future growth is
promoting the principles and perceived health benefits of organic food. However, it was also
noted that there is some difficulty differentiating the added benefits of organic food given that

conventional Australian food is seen as clean, green and healthy.
Some companies indicated they would rather keep their outputs small and build their products
as unique and high quality, not high volume. By retaining a niche status organic products can
The Australian Organic Industry—A Summary
18
The Australian Organic Industry—A Summary
19
CASE STUDY
MiEssence skin care products
ONE Group, in Queensland, is producing
a range of certified organic skin care products
and cosmetics. The range was launched in
2002 under the brand name MiEssence
TM
,
with skin care, personal care, oral care and
hair care products. More recently the company
introduced an organic cosmetic line, assisted
by a pilot commercialisation project grant
under the New Industries Development
Program.
ONE Group has focused its marketing on the
niche market of consumers who are already
looking for healthy alternatives, rather than
directly competing with the major players
in skin care and cosmetics.
“The easiest market penetration for us is health food shops,” explained Alf Orpen,
the group’s joint director. “They represent the highest acceptance without too much
product explanation.
The company has undertaken a market education campaign to explain its principles

to customers. This campaign includes a corporate newspaper and articles for health
magazines. The education campaign has led to the cosmetics line and an extensive
mail-order business.
The company is looking to United States markets. MiEssence is currently the only
Australian skin care product range to meet the stringent organic certification
requirements of the United States Department of Agriculture.
Participating in industry networks has been a key factor in the company’s success.
Queensland’s Australian Organic Institute Inc, a group of certified organic growers,
processors and wholesalers, and the New Industries Development Program have
provided valuable assistance during the development of the business.
Adapted from Australian Government Department of Agriculture, Fisheries and Forestry 2003,
Made in Australia: Markets, Number 2, Series 3, pp.16–17.
From left: John Hunter, Narelle and Colin
Chenery and Alf Orpen are joint
directors of ONE Group
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 18
Table 5 Average organic price premiums, by product
Product Weighted national average %
Spaghetti (plain wheat) 287
Hard cheese 178
Extra virgin olive oil 158
Minced beef (standard quality) 152
Muesli 141
Wholemeal flour 129
Beans 120
Zucchini 119
Rump steak 103
Carrots 100
Pork cutlets 94
Pumpkins 93

Brown onions 77
Plain flour 76
Whole chickens (for roasting) 73
Potatoes (unwashed) 66
Tomatoes 64
Sweet potatoes 61
Soft cheese 51
Lettuce 46
Lamb chops (mid-loin chop) 44
Chicken eggs 41
Rolled oats 40
Fresh milk (full fat) 35
Fruit yoghurt 34
Baby food in glass jars 32
Apples 31
Plain wholemeal wheat bread 29
Natural yoghurt 23
Minced pork 20
Oranges 17
Wheat biscuit cereal 11
Average 80
Source: Retail survey data
In the shop
4
This section presents the results of a retail price and promotion study conducted in late 2003
and early 2004, which involved over 70 shops in six capital cities. The range of organic
products in Australian retail outlets was found to be generally patchy and inconsistent.
Cheese, sugar and breakfast cereals were perhaps the only exceptions. Even those stores
claiming to be stockists of organic food had a narrow range. The researchers suggested that
this cannot be explained by seasonality alone and points to larger coordination problems in

the organic supply chain.
What are the retail prices of organic products?
Organic products usually sell for higher prices than conventional products. The price premiums
attached to organic products at the retail level do not guarantee nor indicate price premiums
for producers but they are nevertheless used as signifiers of a viable and potentially lucrative
industry. The retail survey found that the average price premium for a basket of organic
products compared to a similar basket of conventional products is 80 per cent. Table 5 shows
the premiums for a range of organic products.
4 This section is a summary of ‘Chapter 4 The retail pricing, labelling and promotion of organic food in Australia’ by
Darren Halpin and Martin Brueckner in The Australian Organic Industry—A Profile, 2004. Please refer to this chapter
for detailed dicussion of the sampling method, survey methodology and weighting process.
The Australian Organic Industry—A Summary
20
The Australian Organic Industry—A Summary
21
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 20
Do high prices deter consumers?
Surveys conducted in 2000 and 2001 showed that 28 per cent of respondent Australian
consumers were unwilling to pay any price premium at all for organic products. Between
18 and 21 per cent more were unsure if they would pay a premium (Sofres T 2001, The Organics
Market Briefing Paper, unpublished report). A representative of one supermarket chain told
the researchers that ordinary consumers would not be prepared to pay a price premium above
15 per cent for organic foods. Expanding sales from the dedicated to the general consumer
may depend on a drop in prices.
Product placement
The study found that packaged organic goods are distributed throughout supermarkets, not
placed in dedicated organic sections. Even so, organic products are often concentrated in the
health food aisle.
Messages on the shelf
Communicating to consumers that an organic product has special qualities is very important

to gaining a price premium. The key way of making consumers aware that a product is organic
is by labelling and the use of certifying organisation logos. Retail products have a large range
of logos from Australian and international certifying bodies. Table 8 reports the prevalence
of certifying organisation logos across all products by state. No products were identified
as certified by Safe Food Production Queensland.
Table 8 Prevalence of certifying organisation logos, by state
Certifying organisation SA % WA % Tas % Vic % Qld % NSW %
ACO 42 48 26 42 66 74
NASAA 36 23 26 29 10 14
BDRI/Demeter 12 17 8 26 5 3
TOP 0 0 26 2 0 0
OGA 5 0 4 1 8 0
OFC 0 1 1 1 6 0
International 5 11 9 0 5 9
Total 100 100 100 100 100 100
Source: Retail survey data
ACO —Australian Certified Organic
NASAA—National Association for Sustainable Agriculture Australia
BDRI—Bio-Dynamic Research Institute
TOP—Tasmanian Organic-Dynamic Producers
OGA—Organic Growers of Australia
OFC—Organic Food Chain
The price premiums for organic products vary considerably within product groups, from one
product group to another and from place to place. Table 6 shows that overall New South Wales
tends to have smaller price premiums than other states. Fruit and vegetables have higher
premiums in Queensland, Western Australia and South Australia, while meat products have
higher premiums in Victoria and dairy products have higher premiums in Tasmania and
Queensland.
Table 6 Average price premiums for selected organic product groups, by state
Product SA % WA % Qld % Tas % Vic % NSW %

Meat 33 19 56 nd 92 65
Fruit and vegetables 76 88 91 24 68 53
Dairy 48 44 98 122 59 57
Total average 64 90 99 83 115 56
Source: Retail survey data
nd = no data.
Table 7 shows the relationship between price premiums and sales channels. Supermarkets
have higher price premiums in Tasmania, Queensland and South Australia.
Table 7 Average price premiums for sales channels, by state
Channel SA % WA % Qld % Tas % Vic % NSW %
Supermarkets 87 75 102 112 56 48
Other retail outlets 52 92 94 79 122 64
Source: Retail survey data
Why are organic products more expensive?
There are a number of reasons why organic products are priced more highly than conventional
products. It is often claimed that organic production methods are more labour-intensive and
the yields for crops, fruit and vegetables are often below those of comparable conventional
products. Additionally, organic products require dedicated processing, storage, handling and
distribution chains, which can increase costs. However, the vast fluctuations in price premiums
across and within states, and across and within different sales channels, suggest that existing
premiums are only loosely based on such considerations.
The researchers observed that price premiums are largely driven by what stores are able
to charge and the kind of clientele they serve (committed organic buyer versus general
consumer). Availability of organic products was found to be at its greatest in high-income
areas or in areas with a perceivably high quality of life. This suggests that high premiums
are being charged to a clientele with a disproportionately high willingness to pay due
to high-income levels or lifestyle preferences.
The Australian Organic Industry—A Summary
22
The Australian Organic Industry—A Summary

23
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 22
CASE STUDY
Organic Fish
Tim Jones and Anne Montgomery
(pictured below) are producing
some of Australia’s first certified
organic fish at their silver perch
fish farm near Grafton in New
South Wales. They currently have
four earthen dams and plan to
establish more dams over the
coming years.
“Our stocking densities are about
half that used in conventional
farming,” said Anne. “This helps
optimise water quality and ensure
the health of our fish. The perch
are fed certified organic feed,
which is around 50 per cent more expensive than conventional feed.”
Most fish are sold to restaurants and direct to consumers through local producer
markets.
“A lot of thought has gone into identifying the markets for what is a very special
product, and we spend a lot of time cultivating personal contacts with buyers and
potential purchasers. Meeting chefs, making them fully aware of our product and
receiving their comments has been the main focus of our visits in various parts
of Australia,” said Anne.
Tim and Anne have also sold their fish to restaurants in Japan. With the assistance
of the New Industries Development Program and Austrade they were able to visit
Japan and meet potential buyers. They hope to eventually sell up to 50 per cent

of production to Japan.
To make exporting and retail sales more profitable, they are developing a retail pack,
probably with vacuum packing. They are also attempting to determine the shelf life
and quality of their product under different storage and handling conditions.
Adapted in part from the Department of Agriculture, Fisheries and Forestry 2004, Made in Australia magazine:
Investing in People, Number 1, Series 4, pp.2–4.
The researchers noted that, in the absence of any systematic promotion of organic products
in Australia, consumers are likely to have a poor understanding of organic products and
certification processes. The proliferation of labels would therefore seem counterproductive.
They suggested that a single Australian organic label would assist market growth. European
research credits part of the success of countries like Denmark in promoting organic agriculture
with the existence of a single well promoted organic label with high levels of consumer
recognition (Hamm U, Gronefeld F & Dalpin D 2002, Analysis of the European market for
Organic Food, vol. 1, Ceredigion, University of Wales).
The researchers found little information to explain or promote organic products in shops.
There are few if any banners, pamphlets or shelf signs. The only arguments put to consumers
are usually on the product labels. About 40 per cent of all products sampled had a sales
argument on their label. Most of these emphasise the chemical-free nature of the product and
the perceived environmental merits of organic farming. However, the researchers felt that the
fine print on labels is unlikely to shift consumer sentiment and raise sales in a large way. They
suggested that the organic industry, in concert with retailers, should make an effort to better
explain what organic means and the significance of certified organic labels.
The Australian Organic Industry—A Summary
24
The Australian Organic Industry—A Summary
25
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 24
What are the characteristics of organic consumers?
The national survey showed that organic food consumers are more likely to be women
(44 per cent of women claimed to have consumed some organic food compared to 34 per cent

of men). The research also suggests that organic consumers are well educated and have at
least middle-level incomes. However, there were many people who claimed to consume
organic food who did not fit this pattern, suggesting that organic food consumption has
become more mainstream.
Figure 6 ORGANIC CONSUMPTION BY EDUCATION LEVEL
Source: National consumer survey, Lockie et al. 2002.
Figure 7 ORGANIC CONSUMPTION BY INCOME
Source: National consumer survey, Lockie et al. 2002.
In the home
5
This section on organic consumers comes from two 2001 surveys, one carried out nationwide
and one in Queensland (see Further information: Lockie et al. 2002, Donaghy et al. 2003).
Over 40 per cent of respondents to the national survey claimed to have consumed at least
some certified organic foods over the preceding 12 months. About 8 per cent claimed that
half or more of their total diet was organic. This suggests that about half the total amount
of certified organic food is sold to committed organic consumers while the rest is sold to
occasional organic consumers.
Where do consumers purchase organic food?
Figure 5 shows that among those who consumed at least some organic food, supermarkets
were the primary place of purchase. However, it also shows high levels of support for smaller
retailers and farmers selling direct to consumers through farm-gate sales or farmers’ markets.
Figure 5 PRIMARY SOURCE OF ORGANIC FOOD PURCHASES
Source: National consumer survey, Lockie et al. 2002.
Farmers = farm-gate and farmers’ markets.
5 This section is a summary of ‘Chapter 5 Who consumes organic food in Australia’ by Stewart Lockie and Peter
Donaghy in The Australian Organic Industry—A Profile, 2004. Figures 5–8 are based on data provided in this chapter.
The Australian Organic Industry—A Summary
26
The Australian Organic Industry—A Summary
27

42%
29%
16%
6%
2%
2%
3%
Supermarket
Greengrocers
Farmers
Butchers
Home delivery
Restaurants, cafés
Other
0
10
20
30
40
50
60
primary
Percentage
general education science education
tertiaryleaving certificate/
12th grade
trade certificate10th grade
0
5
10

15
20
25
30
35
40
45
50
less than $20 000
Percentage
$50 000 and over$35 – 49 999$20 – 34 999
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 26
CASE STUDY
Grandvewe cheeses
Grandvewe, based in
Tasmania, produces a range
of nine sheep cheeses along
with 16 cow’s milk cheeses.
Diane Rae and Alan Irish run
80 sheep, a cross-breed of
East Friesland and Dorset,
and the cheeses made from
their milk follow the great
traditions of Europe.
“Prior to leasing our onsite retail space we
had established distributorships in New
South Wales and Victoria and a sales base
in Hobart,” said Diane. “But the reality was
we didn’t have enough sheep cheese to service
these markets and there was no way we could

run enough sheep to do so.”
The couple planned and built a shop on their
farm with a New Industries Development
Program grant. Visitors can pat the sheep,
sample the product and talk to Diane about the
unique tastes of the cheeses and their organic heritage. They love the small scale
of the business—with their family working together on all aspects of production
and marketing.
As well as selling cheese from the farm, they also sell at low cost through the Internet
and maintain a mailing list of restaurants and private connoisseurs. Diane and Alan do
not see giving up their former distribution network as downsizing but as a refocusing
to make the business more profitable and sustainable. The money that used to be
swallowed up in distribution, transport and packaging stays in the bank.
The farm’s output has expanded, with increasing production of cow’s milk cheese and
a larger sheep herd. A selection of wines is also produced and sold from the farm.
Adapted from the Department of Agriculture, Fisheries and Forestry 2004, Made in Australia: Business
Sustainability, Number 3, Series 4, pp.2–4.
What are the motivating factors of organic consumers?
Figure 8 shows the level of motivation expressed by consumers on a range of factors believed
to influence consumption decisions. These were compared for consumers of organic and non-
organic products. The motivations of organic and non-organic consumers are similar, with the
only significant difference being that organic consumers rate the importance of factors such
as natural content, animal welfare, environment and health slightly higher.
Figure 8 MOTIVATING FACTORS BEHIND FOOD CHOICE
Source: National consumer survey, Lockie et al. 2002.
1 = not at all important, 5 = extremely important
The national organic survey also indicated that the people most likely to eat substantial
quantities of organic foods are motivated by the desire to eat what they believe is natural,
that is, produced without artificial chemicals and unnecessary processing. They want to eat
food that makes them feel good, physically and emotionally. Women and those responsible

for household food provision were the people most likely to express these views.
Additional research conducted in Queensland in 2001 suggested that consumers place
importance on many of the qualities attributed to organic foods, but many believe these are
adequately supplied by conventional production systems. The aspect of organic production
that stands out for many consumers is the opportunity for better environmental management.
However, most people who are favourably disposed to the environmental claims of organic
production are unwilling to pay as much for these benefits as the price premiums often
attached to organic products. Confusion over the accuracy of claims about organic foods
and the reliability of labels also limits their consumption of these foods.
The researchers concluded that the key to increasing consumption of organic foods is to
promote the perceived environmental benefits and perceived natural methods of organic
production. In addition, the organic industry could explore ways to reduce the price difference
between organic and conventional foods without undermining the livelihoods of organic
producers.
The Australian Organic Industry—A Summary
28
The Australian Organic Industry—A Summary
29
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
religion
non-organic consumers organic consumers
natural content
price

animal welfare
fitness
polititcal values
familiarity
mood
health
sensory appeal
convenience
environment
weight control
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 28
Figure 10 shows the export volumes of different categories of products. As data is submitted
at various levels of detail it is only possible to show broad categories of products. For example,
some data is entered as carrots, lettuce and parsnips while other data simply states mixed
vegetables.
Figure 10 VOLUME OF CERTIFIED ORGANIC EXPORTS BY PRODUCT GROUP, 2003
Source: AQIS export data.
Indicative products
Cereals grains, pulses and oilseeds
Processed products muesli, flour, noodles, pasta and oils
Drinks and juices fruit juices, soy milk
Meat products beef (portions and burgers)
Wine red and white wines
Beverage and spices coffee and tea
Animal products milk, honey, eggs
Sugar sugar
Vegetables carrots, celery, onions, potatoes
Fruit and nuts apples, oranges, peaches, pears
Other plant material, seeds
Over the sea

6
Exports
Australian agriculture is a largely export focused sector. Around 80 per cent of Australia’s
annual agricultural production heads overseas in unprocessed and processed forms.
Australian organic producers similarly look to opportunities in overseas markets.
AQIS collates the only data available on organic exports from organic produce certificates that
are issued to producers by approved certifying organisations. The data only covers the volume
of organic exports, as there is no requirement for exporters to provide estimates of value.
Figure 9 shows the total volume of organic exports from 1999 to 2003. Exports grew rapidly
until 2001 and then dropped substantially. This decline is most likely related to the effects
of drought. Other factors that may have contributed to this decline include the increase in the
Australian dollar and the possibility that domestic demand has increased, diverting product
away from export markets. The researchers commented that there is not enough data to show
a long-term trend.
Figure 9 VOLUME OF CERTIFIED ORGANIC EXPORTS, 1999–2003
Source: AQIS export data
6 This section on exports and imports is a summary of ‘Chapter 6 Australian organic food exports and imports’ by
Darren Halpin and Amarjit Sahota in The Australian Organic Industry—A Profile, 2004.
The Australian Organic Industry—A Summary
30
The Australian Organic Industry—A Summary
31
0
5000
10000
15000
20000
25000
30000
35000

40000
37470
16195
4089
15770
774
1999
Standardised net mass ('000 kg or I)
2000 2001 2002 2003
0
200
400
600
800
1000
1200
1400
Cereals
Standardised net mass ('000 kg or I)
Other
Fruit and nuts
Vegetables
Sugar
Animal products
Beverage and spices
Wine
Meat products
Drinks and juices
Processed products
BRS/All Organic Book.FA 24/11/04 10:13 AM Page 30

It is not clear whether imports are replacing shortfalls in Australian production or competing
with domestic products. Certainly some products similar to those imported are produced
in Australia and even exported. The researchers argue that organic imports will continue to
increase unless Australian producers and processors build the capacity to compete with the
extensive product range, high quality and economies of scale of foreign manufacturers.
Market access
Access to international markets is crucial for Australia’s organic and biodynamic producers.
AQIS has successfully negotiated preferential access to the European Union, Switzerland
and Japan for all plant-based certified products. Australia’s national standard for organic and
biodynamic produce has been recognised as equivalent to the standard operating in these
markets. Negotiations for access for livestock products to the European Union and Switzerland
continue and a positive result is anticipated. Japan has only recently introduced a draft
standard to cover livestock and Australia will be making an application to the authorities
for preferential access once the standard has been finalised.
Another market of interest for Australian exporters is the United States with its considerable
consumer market. While two AQIS-approved certifying organisations are recognised by United
States authorities, AQIS is negotiating with the United States Department of Agriculture
for recognition of Australia’s organic export certification system. Once these negotiations
are finalised, all AQIS-approved certifying organisations will be able to certify suppliers
to this market.
Australian exporters also want AQIS to negotiate preferential access to the Republic of Korea,
China and Thailand, but these negotiations are in their early stages.
Prospective export markets
7
Japan
Organic food sales are being driven by a general demand for healthy foods and products
that can be traced back to the source. Tokyo and Osaka are the biggest organic produce
markets in Japan. Japanese consumers in these markets have a relatively high awareness
of environmental issues, want assurances about food health and safety and are prepared
to pay a premium for certified organic products. Organic Monitor (2003) estimated the

Japanese market at US $350 million in retail sales in 2002.
7 This section is a summary of Selected market summaries in ‘Chapter 7 Organic food in overseas markets’
by Gary Hullin, Austrade in The Australian Organic Industry—A Profile, 2004.
Figure 11 illustrates the destination of organic export volumes from Australia in 2003. About
70 per cent of export volume went to Japan, the United Kingdom, France and New Zealand.
Figure 11 TOTAL CERTIFIED ORGANIC EXPORT VOLUME BY DESTINATION, 2003
Source: AQIS export data.
Imports
The estimated value of organic products imported into Australia in 2003 was $13 million
(Organic Monitor 2004, The Global Market for Organic Food & Drink, forthcoming report no.
7002–40, Organic Monitor, London, UK). This estimate is based on interviews conducted
with key importers.
Over half of imported organic products are processed foods, such as biscuits, breakfast
cereals, muesli, chocolate, pasta, soups, coffee, tea and other beverages. Most global organic
food processing occurs in North America and the European Union and it is these two regions
that supply the majority of organic processed food imported into Australia.
Other organic imports include herbs, spices, grains, pulses, nuts, dried fruits, rice, honey,
sunflower oil and olive oil. Organic fruit and vegetables are mainly imported from New Zealand
to meet shortfalls in domestic supply. Apart from organic food and drinks, an increasing
number of organic personal care products such as skin care products, hair care products,
deodorants and soaps are imported into Australia.
Companies that specialise in distributing organic products or more commonly specialise in
health foods and natural products bring in about 85 per cent of organic imports into Australia.
Importers of organic food usually play a dual role, importing products and distributing them
to organic food retailers, health food shops and supermarkets.
The Australian Organic Industry—A Summary
32
The Australian Organic Industry—A Summary
33
0

200
400
600
800
1000
1200
1400
1600
Standardised net mass ('000 kg or I)
Other
Singapore
Malaysia
Netherlands
Italy
Germany
Switzerland
United States
France
United Kingdom
New Zealand
Belgium
Japan
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The top-selling organic products are fruit and vegetables (led by carrots, tomatoes and
onions), sausages, milk and meat. Sales of meat products are high but not growing. Organic
products are sold through a variety of channels—farm shops, cooperative shops, street
markets, organic retail chains, conventional retail chains, food service suppliers, mail order,
direct marketing and factory shops.
Austrade suggests that demand for various organic confectionery items is growing in Germany
and there is also potential for high quality, differentiated products.

The United Kingdom
The United Kingdom is the third largest organic market in the world, after the United States
and Germany. The value of organic sales in 2002 was about US$1.5 billion (Organic Monitor
2003). Most of the sales were unprocessed meat, fruit and vegetables. Organic food retails
mostly through supermarkets. There are also specialist organic shops, farm shops and home
delivery firms. Somewhat like the German market, some commentators believe that demand
in the United Kingdom for organic foods has peaked, with the rate of growth to slow over the
next few years.
Imports accounted for over half of organic food sold in the United Kingdom. Many domestic
meat producers are converting to organic production replacing some imported products.
Strongly performing segments include gourmet and specialty packaged and processed foods,
chocolate, coffee, juices and pasta sauces. These are some of the key areas of opportunity
for Australian organic food exporters.
According to Austrade, the main opportunities for organic products in Japan include soybeans
and soy-based products, corn, corn-based products, grains and flours, edible oils, meat and
fresh produce. However, with fresh produce, fumigation can result in the product being
certified non-organic. Organic products sell mainly through supermarkets, convenience stores,
restaurants and cafés.
Austrade notes that Japanese consumers generally demand high quality products. Mainstream
consumers are generally prepared to accept a 10 per cent premium on organic foods. Other
things to note about the Japanese market are that marketing can be costly, labelling laws
are complex, import duties on some products are high and exporters may have to commit
to long-term contracts.
The United States
United States consumers are becoming increasingly educated in the importance of a good
diet in maintaining health and wellbeing. This is helping to drive sales in organic foods.
A 2002 survey by the United States Food Marketing Institute showed that many Americans
believe that organic foods are more beneficial to their health than non-organic foods.
One estimate has suggested the US organic market was worth US$11 billion in 2002
(Organic Monitor 2003). The greatest demand is on the West Coast and in the North-East.

Organic foods have made major inroads into the mainstream consumer market, primarily
through independent natural food chains such as Whole Foods Markets, Wild Oats and
Wegmans.
The main organic food items sold in the United States include fresh produce, cereals and
grains, dairy products (yoghurt and long-life milk), dried pasta and health bars. Areas of
greatest growth are fresh produce, fresh meat, seafood and nutrition bars. Keeping up with
the demand for organic products from mainstream consumers has supermarkets adding
organic versions of many of their core product category items. No longer confined to fresh
produce and meat, opportunities for Australian packaged or processed organic foods exist
in categories ranging from dairy to breakfast cereals, salad dressings, soups and confectionery.
A further opportunity is to supply the food service industry, with white-tablecloth restaurants
increasingly adding organic versions of their popular dishes to menus.
Germany
Germany has a long tradition of marketing organic products. Germany is the largest and
fastest growing organic food market in Europe, with estimated retail sales of US$3.06 billion
in 2002 (Organic Monitor 2003).
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to negotiate the contract. Cattle are supplied within 14 days. Good communication
along the supply chain ensures accuracy, trust and a stable business environment
for all partners.
Simone Tully, the company secretary, said part of OBE Beef’s success is its large
supply base, which provides critical mass and the ability to meet customer delivery
demands. Also of high importance is the company’s close relationship with its
processor and distributors. OBE Beef’s processor has to be willing to accept high
producer involvement and have a demonstrated commitment to organic product,
and distributors have to be willing to assist in market development of organic beef.

Regular business trips overseas by OBE Beef’s directors and business manager
continue to provide many new business enquiries and market information. This
assists in the further development of supply chains.
OBE Beef and Stockyard are developing exclusive distribution contracts with highly
regarded companies in Japan and the United States that are committed to developing
long-term relationships with both their suppliers and their customers.
OBE Beef is committed to working with its supply chain partners in order to further
promote the benefits of organic production. This commitment is reflected in OBE
Beef’s willingness to participate in domestic and international forums. The company
understands that sharing knowledge provides a whole-of-industry benefit.
CASE STUDY
OBE Beef
OBE Beef Pty Ltd, founded in 1995, is an initiative by a group of more than 30 beef
producers in the Channel Country of outback Australia. The area that is collectively
owned by producer members exceeds seven million hectares and represents the
largest organic beef project in Australia, and possibly the world. OBE Beef producers
have been able to implement the change to organic management practices effectively
due to the unique location and low incidence of pest species.
The cattle graze on the Channel Country’s unique flora, including the many native
shrubs, herbs and grasses. This is what creates the distinctive taste of the beef
and forms the basis for the company’s successful brand image. Individual producers
researched the biodiversity of their properties and identified the native plants’
nutritional value, such as protein content, palatability and energy content. This
information helps determine stocking rates and preserve the ecosystem’s unique
and delicate balance.
Modern technologies, including light aircraft, computer communications, television
and radio telephones, enable OBE Beef’s entry into global and domestic food markets.
The company uses the Internet to conduct most of its business. Within a 24–hour
period, a client in Asia may request an order of beef by email. OBE Beef arranges
specifications, logistics and supply and then requests its logistics partner, Stockyard,

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Rural Industries Research and Development Corporation (ed.), Inaugural OFA National
Organics Conference 2001. Record of Proceedings, vol. 01/121, Rural Industries Research
and Development Corporation, Canberra.
/>Smith, P 2003, ‘Organic food, an Australian perspective’, Australian Food Statistics 2003,
Department of Agriculture, Fisheries and Forestry, Canberra.
/>Soil Association, United Kingdom

Wynen, E 2003, Organic Agriculture in Australia—Levies and Expenditures, no. 03/002,
Rural Industries Research and Development Corporation, Canberra.
/>Yussefi, M & Willer, H (eds.) 2004, The World of Organic Agriculture—Statistics and Emerging
Trends—2004, International Federation of Organic Agriculture Movements, Bonn, Germany.

See also the list of websites of AQIS-approved certifying organisations listed earlier.
Government websites and programs
Listed below are government websites describing programs or containing information that may
assist participants in the organic industry.
Australian Government
Department of Agriculture, Fisheries and Forestry

• Food Policy and Communications Section
/>For specific information on organics: click on Food Issues, then Organics.
• Australian Quarantine and Inspection Service
/>GrantsLINK

Business Entry Point

Further information
Department of Foreign Affairs and Trade 2004, Subsistence to Supermarket II: Agrifood
Globalisation and Asia, Volume III: Asian Agrifood Demand Trends and Outlook to 2010,
Canberra.
/>Donaghy, P, Rolfe, J & Bennet, J 2003, ‘Consumer demands for organic and genetically modified
foods’, presented to the 47th Annual Conference of the Australian Agricultural and Resource
Economics Society, 12–14 February 2003, Fremantle, Western Australia.
Hassall & Associates 1996, The Domestic Market for Australian Organic Produce—An Update,
no. 96/1, Rural Industries Research and Development Corporation, Canberra.
/>Kondinin Group (ed.) 1997, Organic Farming in Australia, no. 00/97, Rural Industries Research
and Development Corporation, Canberra.
/>Lockie, S, Lyons, K, Lawrence, G & Mummery, K 2002, ‘Eating green: motivations behind
organic food consumption in Australia’, Sociologia Ruralis, vol. 42, pp. 20–37.
McCoy, S & Parlevliet, G 2000, Export market potential for clean and organic agricultural
products, no. 00/76, Rural Industries Research and Development Corporation, Canberra.
/>National Organic Program, United States Department of Agriculture
/>Organic Federation of Australia
/>Organic Industry Export Consultative Committee 2002, National Standard for Organic and
Biodynamic Produce, 3rd edition, Organic Industry Export Consultative Committee, Canberra.
/>Organic Monitor 2003, The Global Market for Organic Food & Drink, Organic Monitor,
London, UK.
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