The Canadian Organic

Sector

Canadian Organic Growers (COG)Canadian Organic Growers (COG)

Canada Organic Trade Association (COTA)

Laura Telford &

Matthew Holmes

� COG is a not for profit charitable organization with 11 chapters across the country and four affiliated regional organic organizations

� Funding comes from members, governments, foundations and publications salesfoundations and publications sales

� COG’s mandate is to lead local and national communities towards sustainable organic stewardship of land, food and fibre while respecting nature, upholding social justice and protecting natural resources.

� Membership-based not for profit organization founded as North American in 1985, now distinct U.S. and Canadian affiliates

� COTA represents Canadian organic sector members from producers through to retail

◦ Strong representation of processors/brands and exporters

◦ also represents non-food and emerging organic sectors (aquaculture, textiles & fibre, cosmetics)

� Funding comes from members and program delivery, workshops and other events

� COTA’s mission is to promote and protect the growth of organic trade to benefit the environment, farmers, the public and the economy

� Canada Brand partner

� Organic Agriculture Centre of Canada

� Organic Federation of Canada

� Canadian Organic Growers

� Canada Organic Trade Association

� Canadian Health Food Association

� Regional Associations:� Regional Associations:◦ COG Growers of Organic Food Yukon

◦ COABC

◦ Organic Alberta

◦ Manitoba Organic Alliance & COG Organic Food Council of Manitoba

◦ Organic Council of Ontario and 6 ON COG chapters

◦ Table Filière, FABQ, Equiterre

◦ ACORN, COG NB

� Organic agriculture is a holistic production system designed to optimize productivity and encourage diversity in the agro-ecosystem, including soil microorganisms, plants and animals

� The principal goal of organic production is to develop enterprises that are sustainable and harmonious with the environment

� No synthetic chemicals including pesticides, fertilizers, hormones, and antibiotics

� No genetically-modified organisms (GMO’s)

� No irradiation

No sewage sludge� No sewage sludge

� No synthetic processing substances, aids and ingredients, and food additives including sulphites, nitrates and nitrites

� Water source protection

� Soil protection

� Biodiversity protection� Biodiversity protection

� Climate change

mitigation

� Organic farmers have lower input costsSource: Leopold Center for Sustainable Agriculture

Average Returns LTAR IOWA 1999 - 2001

600

0

100

200

300

400

500

600

C-Sb

Conv

C-Sb-O

Org

C-Sb-O-A

Org

Production System

US $ per acre Corn

Soybean

Oat

Alfalafa

� Organic products command a price premium

� Diverse crop rotations can reduce financial risk

� Improved organic matter and microbial activity � Improved organic matter and microbial activity mean improved yields and crop quality during poor weather years�organic farms are highly resilient

Organic agriculture is:

� practiced in 160 countries

� 1.8 million farmers� 1.8 million farmers

� 37 million ha of land

� $55 million in sales ($U.S.) in 2009

Source:

International Federation of Organic Agriculture Movements

Certified Organic Farms in Canada 1992-2009

3000

3500

4000

4500

3914

Source: COG Certified Organic Production reports

data collected and analyzed by Anne Macey

0

500

1000

1500

2000

2500

3000

92 93 94 95 95 97 98 99 00 01 02 03 04 05 06 07 08 09

Source: Certified Organic Production in Canada 2009

Anne Macey for Canadian Organic Growers

800

1000

1200

0

200

400

600

YK BC AB SK MB ON QC NB NS PEI NF

Source: Certified Organic Production in Canada 2009

Anne Macey for Canadian Organic Growers

Organic Hectares in Canada

600000

700000

800000

0

100000

200000

300000

400000

500000

2003 2004 2005 2006 2007 2008 2009

Source: Certified Organic Production in Canada 2009

Anne Macey for Canadian Organic Growers

300

350

400

450

500

0

50

100

150

200

250

300

YK BC AB SK MB ON QC NB NS PEI NF

Source: The Nielson Company for AAFC, Feb 2009

� $2 billion through all retail channels

� 925.8 million sold through conventional retail

� 100% increase from 2006 (OACC: $1 billion)� 100% increase from 2006 (OACC: $1 billion)

� Estimated direct to consumer sales of $400 million

� Estimated other channel sales $712 million

Packaged & Prepared (15%)

Meat, Fish, Poultry (1%)

Beverages (18%)

Dairy & Eggs (13%)

Bread & Grains (12%)

Fruit & Vegetables (41%)

Source: The Nielson Company for AAFC, Feb 2009

Interesting to note

the top four

categories are

Canadian, or

products we are

highly competitive highly competitive

in: in both

production &

manufacturing

Source: The Nielson Company for AAFC, Feb 2009

$50,000,000

$100,000,000

2007 2008

2009 2010

$154,387,967 in 2009

$147,177,274 in 2010

Source: StatsCan and AAFC HS Code Data, December 2010

$0

$50,000,000

Source: The Nielson Company for AAFC, Feb 2009

Source: The Nielson Company for AAFC, Feb 2009

We lack data on exports�Beginning this month we will have U.S. data on

imports from Canada

Principal organic exports (and capabilities)�wheat, cereals, pulses

�oilseeds, soy, flax �oilseeds, soy, flax

�maple syrup

�berries

�wild crops, wild rice (mushrooms)

�specialty products: hemp

�(cattle / beef, pork)

�(seed)

COTA is AAFC’s partner under AMP program

Key LTIS findings:

�Fresh fruit and vegetables dominate the organic food market in every country

�Dairy products are in high demand in all target markets�Dairy products are in high demand in all target markets

�Packaged and prepared convenience foods in all target markets have strong current demand and future potential

�Opportunities in all target markets for bulk ingredients to processors

�A fundamental shift in distribution is taking place that represents both opportunity and challenge for Canadian organic producers

GERMANY

� Largest organic food market in EU

� World’s #2 importer of agricultural products

� 2008 Sales - $8 billion

� Major shift in Germany toward consolidation and large scale retail

UNITED STATES

� World’s #2 market for organic food products

� 2008 Sales - $25 billion

� Fresh fruits and vegetables represent more than 36% of total organic demand, beverages and dairy products combine to make up another third

retail

NETHERLANDS

� Relatively small player in EU

� 2008 Sales - $836 million

� Major role as a distribution hub

� Home to three of five largest EU importers of organic food ingredients

another third

� Specialty retail an important channel with over 1/3 market share

� US remains the major export market for Canadian organic products

� Competent authority: CFIA

� OPR passed in 2006; in force June 30, 2009

� Stream of Commerce policy ends June 30, 2011

� Applies to products that cross provincial and international boundaries

� BC, MB and QC have enacted laws governing intraprovincial sales

� Regulation through reference

� Use of the label is voluntary

� Products containing >95% certified organic ingredients can label as organic + logo

� Products >70% organic can can be labelled with a percentage claim (70-95%)

� Products <70% organic can name organic ingredients in ingredients list

� Strict code of principles that govern farm and processing practices

� Two standards: CAN/CGSB 32.310 (principles) and CAN/CGSB 32.311 (permitted substances)

Developed by industry through a Canadian General � Developed by industry through a Canadian General Standards Board process in 1999

� Voluntary until 2009

� CGSB owns and maintains the standards through cost recovery

� AAFC paid for the development & maintenance up until June 2009

� CFIA has taken over the maintenance, but funding is now on hold

� In June 2009, these became legal standards through reference in the OPR

� SIC funded by CFIA to provide standards interpretation

� 5 recognized Conformity Verification Bodies (3 Canadian)

� 21 Certifying Bodies accredited by CFIA

Mandatory annual audits for operators� Mandatory annual audits for operators� farmers, processors, handlers

� optional for retail handling and processing

� 70 countries with regulations and/or standards; 480 certification bodies; very few trade agreements

� Canada–US Equivalency Agreement = world’s first full organic equivalency determination� Complements current trade and integrated markets

� Increased efficiency & reduced cost for operators

� Canada–EU Equivalency negotiations at advanced stage: mutual peer reviews conducted in May-June 2010, peer reports traded, the industry eagerly awaits results

both seals may be used

• “Imported” or “Product of X” in close proximity to the Canadian logo

• In Canada, organic label claims subject to official bilingualism

• Canada and U.S. have different requirements re: organic claims (e.g. “100%”),

language, country of origin, SKUs, grades, nutrition panels

• Absence claims less condoned in Canada

� Started 2006

� Working Groups

� Regulatory

� Markets Development� Markets Development

� Capacity Development

� Research

� Inadequate education effort for Canada Organic Label◦ Consumer confusion with other labels such as fair

trade, natural, local, hormone-free, etc.

� Markets may be reaching a plateau

� Number of producers transitioning may be declining due to market saturation declining due to market saturation

� Infrastructure (value-chain) challenges◦ Processing, Distribution, Co-packing

� International competitors have government funding for transition, standards, incentives

� Need for more markets data

www.OrganicBiologique.ca

• launched in Canada to

provide consumer basic info

on "Canada Organic"

standards, etc.

www.OrganicWeek.ca

• launched October 2010 to

promote and celebrate

organics in Canada, 250

partners across Canada

Globe and Mail special report

• industry-funded national media campaign

� $ for standards maintenance and industry input into harmonization agreements

� Educational campaign for Canada Organic label◦ it must come from government to convince them of

government oversight and enforcementgovernment oversight and enforcement

� Commodity-specific markets development

� National extension program

� A coordinated statistical approach to the sector ◦ domestic production, imports, trade, sales,

consumer attitudes

� Organic can deliver many of AAFC’s agro-ecological objectives

� Organic can deliver higher income to farmers

� Organic is the fastest growing food segment in the US, EU, and many developed markets

◦ massive potential in BRIC countries, Asia, etc. ◦ massive potential in BRIC countries, Asia, etc.

� The locus of control in agriculture is shifting from the producer to the consumer

� With strong standards, independent annual third party verification and government oversight, organic is well positioned to deliver food that consumers want to eat

Matthew HolmesExecutive Director

Canada Organic Trade Assoc.

Dr. Laura TelfordNational Director

Canada Organic Trade Assoc.

mholmes@ota.com

613-482-1717

Canadian Organic Growers

laura@cog.ca

613-216-0741