Global hunger for Australian organics grows

Exports of Australian organic products increased by 13 per cent during the last year, yet the volatile Chinese market is thought to be behind a drop in dollar value.

The Australian Organic 2019 Market report, launched today, shows tonnage exports grew by 13 per cent from 2017 to 2018 with more than 30,000 tonnes of organic produce and products exported to 61 different countries. However, the overall dollar value of Australia’s global export market decreased from $715 million in 2017 to $685 million in 2018.

The US leads the way for demand with almost 40 per cent of organic exports by tonnage certified by ACO Certification and NASAA Certified Organic, followed by China (11 per cent), New Zealand (8 per cent), South Korea (8 per cent) and Singapore (6 per cent).

The Australian Organic Market Report 2019, which contains industry insights conducted by the University of New England, along with consumer insights from 1,025 Australians, compiled by market research group Mobium, also highlights export growth in a number of key markets.

In particular, there has been significant new growth in the New Zealand market, displacing Japan from the top five list, due to the high tonnage of imports of Australian non-alcoholic drinks. South Korea has also displaced Japan with dominance in the import of Australian processed animal feedstuffs. Singapore, with its strong wealthy middle class, has also emerged as a growing importer of Australian export organic products representing 32 per cent of the dairy products and 10 per cent of the baby foods.

“Now a $2.6 billion-dollar industry, the Australian organic industry is reacting to significant international trends, as consumer demands for convenience-based products increase,” said Australian Organic general manager Niki Ford. “The growing interest in our products from other countries is very encouraging given that these past twelve months have been particularly harsh on our agricultural industry. It’s a testament to our organic industry that we have demonstrated growth in some agricultural sectors regardless of the obstacles.”

The US continues to be the most important export destination in terms of share of total tonnage with a growth of 11 per cent since 2017. US leading authority on natural products, Bob Burke of Boston-based Natural Products Consulting, said for many in the US, the perception of Australia being a health-conscious, clean living environment has a lot to do with the drive in demand for our organic products, particularly when it comes to beef.

“The notion that Australian organic beef is mostly grass fed without antibiotics or hormones, is of high quality and tastes great is highly appealing,” he said. “US consumers are also really interested in supply chain transparency. Plus, Americans are still largely a nation of meat eaters. Whilst there has been solid growth in ‘plant-based meat’ the category is still a tiny slice of the animal protein market. Most US consumers still enjoy meat and, whilst they might be consuming a little less of it, they are now wanting to choose higher quality products more than ever.” 

The growing organic New Zealand market has been pegged at one to watch with it expected to experience strong growth of sales of organic packaged food and beverages in the coming years. New Zealand consumers increasingly consider organic products safer and healthier than conventional products, which is contributing to sales growth along with new product launches. Organic dairy and organic non-cola carbonates have seen some of the highest sales value growth rates among the organic packaged food and beverages categories in recent years.

Organic packaged food and beverages in New Zealand are projected to continue recording strong growth in the near term, driven by consumers’ increasing health and wellness concerns and new product launches. The major factor affecting the market in recent years would be the establishment of a mandatory organic certification scheme, should the government choose to do so in coming years, potentially affecting the ease with which products can be labelled as organic and the overall shape of the market. Among organic packaged food categories, dairy is projected to register particularly strong sales value growth in coming years, and coffee is projected to grow at one of the fastest rates among organic beverages categories.

NEXT PAR OR BREAKOUT BOX:

The report also identifies what other top buying countries covet the most when it comes to our organic products:

Americans – Beef and lamb
Chinese – Baby food and formulas
New Zealand – Non-alcoholic beverages
Koreans – Soya products
Singaporeans – Fruit and vegetables
Norwegians – Wine
Thailanders – Bread and bakery
Japanese – Nuts
Singaporeans – Fruit and vegetables

Overall the dollar value of Australia’s global export market has decreased from $715 million in 2017 to $685 million in 2018, which is thought to be due to certain unavoidable market forces, particularly when it comes to the lucrative Chinese market.

David Thomas, President of the Australia China SME association, and CEO of Think Global Consulting which facilitates business opportunities between the two countries, says there are a number of reasons for this and feels organic exports to China will soon be on the rise once more.

“There have been changes to e-commerce regulations, impacting on ‘daigous’ – intermediaries who buy Australian products on behalf of Chinese customers and send them to China. This, along with increasing the costs of compliance and product registrations, plus China-Australia political tensions, has had a short-term impact on Australia’s organic export numbers. However, I expect this to turn around quite quickly simply due to the imbalance in demand and supply.

“Demand will rise again as China’s growing middle class, and in particular aspirational Millennials have both created a massive market for consumer products globally. Living in a polluted environment with a growing awareness of health and wellness, they place a high premium on organic products from countries which they regard as clean, green, well-regulated and clearly authentic.”

Thomas feels that the price of organic baby formula, and China’s almost insatiable demand for baby food and formulas will only escalate. “It’s going to take a while for our manufacturing capacity to keep up with the demand so, in the meantime, this is driving up prices. But we can’t be complacent as other countries such as New Zealand are also focused on this market and are hot on our heels.”

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