What’s next for NZ’s growing organic food market?

By Fiona Stephenson

Some of New Zealand's top players in the growing organic food market want us to get a bigger share in the global boom.

Spending on organic products in New Zealand now adds up to $217 million a year. About $167 million of that rings through supermarket tills each year, up 127% since 2012.

Organic shoppers will have seen this change ourselves. First we had a few specialty products to choose from. Then there was an organics shelf. Then came the organics aisle. Today organic products nestle right up against their chemically-enhanced competition all over the shop. Perhaps in the future we will see a specialist ‘chemical food’ aisle, then a shelf…

Research from Colmar Brunton found two out of three Kiwis report buying organics at least some of the time. This shows that people at least think they should tell researchers they buy organics, which is good.

But seven out of 10 of those people drew a blank when asked for a brand or organisation that was leading the way on sustainability. So there’s still plenty of work to do.

Commonsense Organics supplies fresh organic produce and environmentally sustainable, fair trade products and foods. The firm has five stores in the Wellington region, one store in Auckland, and also sells online.

Marion Wood, managing director, explains how values are shifting.

“People are beginning to recognise that they are paying for the so-called ‘externalities’ of conventional farming,” she says. “For example, there has been outrage recently at the lack of swimmable rivers in Aotearoa-New Zealand because of intensive farming, particularly dairying.”

Organics are now a $250 million export for New Zealand, up 11% on 2012. Grapes, apples and kiwifruit are among the top exports. Add this to domestic spending and we are looking at a market nudging up towards the half billion mark. It has increased by nearly a third in three years.

Some Kiwi organic food businesses are not just exporting product. They are taking their knowledge overseas to play in new markets.

Ceres organics is now the largest distributor of organic food in Australasia. It has more than 360 certified organic products in its range. It started in 1982 as an organic veg stall at the Michael Park Steiner School in Ellerslie. It now employs 150 people distributing to major supermarkets, health food and organics stores. It works with suppliers and distributors around the world.

One of those Ceres’ overseas investments is in Organic Latin America. It’s a rice processing and distribution company in South America. In five years the company has risen to become the largest organic rice exporter out of South America.

Noel Josephson, managing director, says: “The ‘conscious consumer’ revolution has seen a big increase in the number of people wanting to eat unadulterated food. People are seeking to be more in harmony with the earth. The internet has aided this desire to know and uncovered the practices of industrialised food, which has shocked many people.”

But it’s not all good news. The value of exports in organic processed foods and ingredients is down 15% on 2012. Organic wine and honey exports are in decline, as is seafood.

The potential is there, and it’s vital that we do more to make the most of it. In 2014 the global market for organic food was estimated at $US80 billion. Global organic sales have more than tripled this millennium. The signs are that organic food buying will continue to increase. There is increasing concern about provenance, quality and the supply chain impacts of food production. This is especially true of the Millennials and Gen Y demographics.

The United States, Germany and France are all key export markets for New Zealand organics. But demand for organic food is also on the increase in China.

So how are things likely to develop from here?

All the companies SBN spoke to agreed that one of the biggest barriers is securing supplies of fresh produce to keep up with demand.

Marion says: “There has been minimal support for the development of organic agriculture and none at all under this government.  Instead organic farmers are subsidising the pollution and greenhouse gas emissions from conventional agriculture.  That means that until recently it has not been commercially viable to farm organically in Aotearoa-New Zealand.

“As a nation we are still trying to apply 20th century ‘fixes’ to 21st century challenges.  So we invest in irrigation, but we need to invest in crops that show resilience to drought conditions – and organic crops do.  We invest in intensive dairying, and convert arable crops to build up this intensity. Then we are dumbfounded by the collapse in dairy prices.”

Another challenge Noel identifies is that less scrupulous players may continue to cut corners.

“There is still greenwash out there, and stretched claims that misrepresent food as natural and healthy,” he says.

Another major issue was the lack of adequate regulation around the word ‘organic’ in New Zealand. As the term has not been defined by law here, it can be misused, confusing shoppers. They need to look out for badges like Biogro to be sure of independent verification.

Chris Morrison is instrumental in All Good Organics, is a former chair of Biogro and is on the board of the Soil and Health Association. He is optimistic about the potential, but also damning about the lack of support.

“I believe there is enough demand from Northern hemisphere consumers to have the bulk of our food and beverage exports being high value organic. But there is no government support for this and we continue to focus on commodities.”

SBN works with Good Food Businesses on restoring and enhancing our food system. If you’d like to find out more, please contact us. You can read all about it in the related article on the Good Food Network in this week’s newsletter.