36 2-2013 | ECOLOGY & FARMING

The global market for organic food and non-food production

Peter Brul

ING baNk (NoT kNowN as The

‘GreeNesT’ of baNks) reporTs ThaT

The DuTch orGaNIc markeT Is GrowING fasTer ThaN The chINese ecoNomy

Calculating the value of organic chains

Despite a recession and difficult eco-

nomic conditions in the two main

markets for organic products, Europe and

the United States, the market share and

volume of organic products has continued

to grow in recent years. The worldwide

acreage of organic land is also growing.

However the relationship between the two

is not always straightforward.

The world’s organic market is made up of

a number of segments. By far the most

important market is that for food and bev-

erages. Western Europe and North Amer-

ica account for more than 95% of the

world market for certified organic foods.

The consumption of organic products per

head is more or less the same in the USA

and north-western Europe, around €57

per person in 2011. In Europe as a whole

the average was €24 per person, but in

Denmark and Switzerland it was more

than €130. Other markets, such as Brazil,

China, Russia, Turkey and the Middle East

are growing strongly, but only make up a

small part of the entire market. Almost all

countries apart from the US, Canada and

north-western Europe are net exporters of

organic products.

Organic farming is regulated by law in the

US and Europe, so the statistical data on

acreage and turnover in organic foods

are pretty reliable. This is much less the

case for the markets for organic textiles

(mainly cotton) and cosmetics and well-

ness products. These markets are also

quite large and have grown fast over the

last ten years.

MARkEts

Organic cotton is mainly certified through

the Global Organic Textile Standard (GOTS).

The number of facilities certified by GOTS

increased by 11% in 2012, growing from

2,714 facilities in 2011 to 3,016 facilities

in 2012. The countries with the most pro-

cessing facilities are India (with 1062 certi-

fied), Turkey (400) and China (252). Market

demand in Europe grew by more than 20%

for the second year in a row.

India is by far the largest producer of organ-

ic cotton, producing just over 100,000 tons

of cotton fibre in 2010-11 on nearly 250,000

hectares of certified land. The top ten cus-

tomers of organic cotton through the Textile

Exchange are mainly large textile retail

chains: H & M (Sweden), C & A (Belgium),

Nike, Inc. (USA), Inditex (Zara) (Spain), Adi-

das (Germany), Green Source (USA), Anvil

(USA), Target (USA), Disney Consumer Prod-

ucts (USA) and the Otto Group (Germany).

Table 1 (based mainly on figures from the

Textile Exchange) shows the growth in the

global organic textile market over the last

five years.

Wellness

The third significant market segment is for

cosmetics, skin care and widely used natu-

ral medicines such as arnica, neem and

echinacea. This segment is also not covered

by the regulations and there no clear dis-

tinction between ‘natural‘ and organic prod-

ucts. Some large producers consistently use

organic ingredients, and this is an integral

part of their corporate identity and their

brands, but there is no organic label on the

packaging. According to market researcher

Textiles

Less than 30 years ago, the first certified

organic cotton was grown, spun and then

woven into t-shirts and other products.

Now there are more than two hundred

thousand organic cotton growers around

the world and the market is worth approx-

imately €5.65 billion. Organic cotton is

grown in 22 countries: the leading ten (in

rank order) are India, Turkey, Syria, Tanza-

nia, China, United States, Uganda, Peru,

Egypt and Burkina Faso. Textiles are not

regulated under European organic legisla-

tion and this almost inevitably means that

the data are far less reliable than for food-

stuffs. In addition to organic cotton there

is a range of environmental and sustain-

ability labels for cotton. Large textile com-

panies often mix organic and conventional

cotton. They bring the products to the

market without organic certification to ful-

fil their own overall sustainability criteria.

The textiles industry is also under con-

siderable pressure to significantly reduce

pollution. Conventional cotton cultivation

involves intensive pesticide use, cot-

ton is a large consumer of scarce water

resources and the processing of cotton

(including bleaching and dyeing) involves

extremely polluting processes that dye

rivers in developing countries red, blue

or purple, depending on the fashions of

the day. Only a few of the environmental

improvements in the textile industry are

associated with certified organic produc-

tion; far more improvements come in

small steps or are made by the industry’s

own environmental labels.

ECOLOGY & FARMING | 2-2013 37

38 2-2013 | ECOLOGY & FARMING

Calculating the value of the organic chain

FiBL produce pretty reliable global organ-

ic statistical data every year. According

to their latest report there were 37 million

hectares of certified organic land in 2011

in 162 countries. One hectare of organic

land thus represents a retail value of

almost $1900. However there is a huge

difference between intensive production

in countries where the organic markets

are strong and low input production in

exporting countries. For example, the

Dutch organic market is worth around

€750 million, the sector exports around

€550 million worth of produce a year

and imports account for €300 million. So

Dutch production has a retail value of

about €1 billion, grown on 47,400 ha. This

gives a retail value per ha of a little over

€ 20,000. One hectare of organic wheat

provides around €1875 for the farmer and

around € 27,000 retail value (9000 x 800

gram loaves of bread). In north-western

Europe and the USA, which make up more

than 95% of the world market there is a

strong link between production and market

value. Virtually all organic produce is sold

as certified organic products, unless the

quality is poor or there is temporary over-

production of certain products.

Some segments are still hidden

In many other regions, the link between

organic production and organic market-

ing is weak or almost non-existent. Only a

part (sometimes a small part) of the total

production goes into organic export chains.

For example, a family farm in Ethiopia pro-

duces all the food for a large family, and

will use less than 20% of the land for their

cash crop, coffee. The domestic market

for organic produce is almost non-existent.

But in neighbouring Kenya, there is a

small organic market, with shops, farmers

markets and consumer groups. Organic

produce sold on these local markets is gen-

erally not certified by third party certifiers,

as this would increase the prices too much

without adding much value. So both these

forms of organic production and market-

ing are totally under the statisticians’ radar,

suggesting that the organic market is larger

than we generally believe.

In 2011, the gloBal market

for organIc Products

was 70 BIllIon dollars

Kline & Company, the total market for nat-

ural cosmetics and natural care products,

(including organic ones) was 26.3 billion

in 2012, twice the size it was in 2005.

This is about 12% of the total market

of €210 billion, i.e. €160 billion. Organic

cosmetics account for around 3% of the

total global market in 2012. The German

natural cosmetics market alone is worth

€815 million. Sales grew rapidly until 2010

(by 11% in 2010 but only 2.5% in 2011

and stagnated last year). However with a

market share of 6.5%, it is still a signifi-

cant market.

70 billion dollars

Taking these three segments into account

we can calculate that the global organic

market was worth some US$70 billion or

€54 billion, 84% of which is accounted

for by food and drink. The organic food

market is still growing, the textile one

probably not, because of lower yields in

India and the cosmetics segment is grow-

ing slowly, probably because of the reces-

sion in Europe. According to the Organic

Trade Association’s 2012 Organic Industry

Survey the U.S. organic industry grew by

9.5 per cent overall in 2011 to reach $31.5

billion in sales. Of this, the organic food

and beverage sector was valued at $27.4

billion, while the organic non-food sector

reached $2.2 billion.

Table 1:

The global organic textile market in US$

Year 2008 2009 2010 2011 2012

Market $3.2 billion $4.3 billion $5 billion $6.2 billion $7.4 billion