ORGANIC PERSPECTIVES
August 1998

Inside This Issue:
1. National Organic Program (NOP) Update - Final Comment Count In
2. A Success Story - 1998 Organic Seminar & Showcase in Japan
3. Danish Organic Production Subsidies
4. Resources for Exporters - Overseas FAS Web Sites
5. Health Food, Vegetarianism, and Related Trends in Europe
6. Organics in USDA's National Commission on Small Farms Report
7. Organic Research Now Available on the Internet
8. Upcoming Events

1. National Organic Program (NOP) Update - Final Comment Count In
The final count on comments received on the NOP proposed regulation stands at a USDA record of 275,603 comments. Sixty-three percent or 173,718 comments were form letters or postcards sent in by organizations or as part of a write-in campaign. All comments can be viewed at the NOP home page.

2. A Success Story - 1998 Organic Seminar & Showcase in Japan
In late July, the fourth in a series of annual organic seminar/showcases sponsored by the Western U.S. Agricultural Trade Association (WUSATA) and the Mid-America International Agri-Trade Council (MIATCO) was held in Tokyo and Osaka. The Southern U.S. Trade Association (SUSTA) also participated for the first time this year.

More than 20 U.S. industry representatives traveled to Japan for the event, and 31 U.S. companies participated. Record-level attendance reflects the sustained interest in organics in the Japanese market. The sessions attracted key decision-makers such as importers, distributors, food manufacturers, retailers, government, associations, and researchers. Attendance in Tokyo: 28 for the press conference, 275 for the seminar, and 205 for the product showcase. The event moved to Osaka later that week, attracting 144 people for the seminar and 85 for the product showcase.

According to seminar/showcase organizers, the organic food market is one of the fastest-growing food segments in Japan. Demand for organic soybeans is strong, and according to industry estimates, may account for as much as 10 percent of Japan's total soybean imports in 1998. The U.S. has an excellent reputation for shipping quality soybeans and the presence of 14 U.S. organic soybean suppliers at the event attracted a number of inquiries. Demand for organic fruits, vegetables and processed grain/corn products is growing at 20 percent annually. Long-standing concerns about food safety among the Japanese is translating into increased demand for organic foods. Organizers noted the seminar was helpful in clarifying that the term "organic" refers to a production process rather than a food safety claim.

Seminar attendees expressed interest in the following issues: status of the National Organic Program; current enforcement procedures; quality/safety measures; retail trends; overall supply availability; availability of products such as soy and grain not made from genetically modified organisms (GMO's); and availability of products for food service.

Such events are an excellent, cost-effective way for U.S. companies to showcase their products overseas. For those able to participate in person, the showcase provides an opportunity to learn first-hand about a target market, make important personal contacts and, in many cases, come home with solid sales leads. They also generate a lot of publicity and interest that lasts beyond the event itself. Organizers of this event note that a preliminary poll of U.S. participants indicates that $3.3 million in sales are expected in the next year as a result of this event. To date, more than 18 news items have appeared or are planned in the Japanese press covering this event, which may result in additional inquires and sales.
Source: Minnesota Trade Office Trip Report, August 1998.

Building on their success, organizers are planning a similar program on organics in Europe next year. To learn more about the regional trade associations, visit their web sites: MIATCO, WUSATA, SUSTA.

Note: The comparable organization for the Northeast region is the Eastern U.S. Agricultural & Food Export Council (EUSAFEC), located in Philadelphia. They are developing a web site.

3. Danish Organic Production Subsidies
The Danish Government has supported organic farming through producer subsidies since 1987. The Danish budget in 1997 for organic subsidies was $21.8 million (144 million Danish Kroners (DKK)). Combined with outstanding applications for 1997 (78 million DKK), the actual budget amounted to $33 million (222 million DKK). However, the total amount actually paid to producers in 1997 was $10 million (66 million DKK).

The number of Danish organic farmers has been trending steadily upward. In 1997, the number of organic producers jumped by 45% or 459 farmers to 1,486. The increase is attributable to increased consumer demand and the improving profitability of organic farming. Press reports indicate that organic farming is 15-20% more profitable than conventional farming.

Traditionally, the primary beneficiaries of the Danish organic subsidy program have been dairy farmers. However, in order to expand organic pork production, the Danish Government broadened the program in 1997 to include farms without milk quotas.

Under the existing program, Danish organic farmers receive a basic subsidy of $30 per acre for a total of five years along with a $12-per-acre conversion subsidy during the first two years. Farmers who farm in areas designated as "sensitive" (wetlands) receive an additional $30-per-acre subsidy for five years. Farmers without a milk quota that have only plant production receive a $120 acre subsidy for the first two years followed by a $72 subsidy in the third year. As of 1997, pork producers receive an additional $120 per acre subsidy for five years. Total subsidies paid to producers, including the EU per hectare premium, the environmental protection subsidies, and the organic production subsidies, can not exceed DKK 5,000 per hectare (approximately $300 per acre).
Source: Attache Report DA8012.

4. Resources for Exporters - Overseas FAS Web Sites
Many overseas FAS offices maintain their own web sites. Although the sites do not specifically address organics, many contain valuable country-specific information for U.S. exporters on a host of topics such as importer lists and other contacts, local trade shows, import laws and regulations, and in some cases, insights into the culture of the host country.

FAS post web sites are accessible under Individual Post/ATO Home Pages. Post web pages cover, among others, Austria, Chile, China, European Union, France, Dominican Republic, Germany, Ghana, Hong Kong, Italy, Mexico, the Netherlands, Russia, Singapore, Taiwan, UK and the Caribbean Basin.

5. Health Food, Vegetarianism, and Related Trends in Europe
Several posts have sent in reports this year about the growing market for health food and other related products that often share shelf-space in specialty shops and on supermarket shelves with organic products. Some of these products may also contain organic ingredients. The typical consumer of health foods is 25 to 40 years old, well educated, and enjoys a higher than average disposable income--a profile similar to that for consumers of organic food. Following are some highlights from these reports.

• Health Food Market in Italy - Most Italian health food imports come from northern Europe, particularly the Netherlands, Germany, and England. U.S. health food products sold now in Italy include snack foods, breakfast cereals, sports drinks, vitamins, supplements, dried foods, and mixed nuts. The Italian health food market is estimated at U.S.$600 to 900 million annually. U.S. companies interested in tapping into this market should attend the SANA Health/Natural Food Show which is being held this year in Bologna, September 11-14. FAS and the Department of Commerce manage an American Foods Pavilion at the show. Source: Attache Report IT8713.

• Vegetarian Food in the Benelux - Vegetarianism is growing at a rate of 15 to 20 percent per year in the Benelux. Chilled meat substitute meal components constitute 90 percent of the market. Most of the growth is among consumers who are trying to reduce, but not necessarily eliminate, meat from their diets. Vegetarian products are available in supermarkets, natural foods shops (where most of the vegetarian products offered are also organic), and health food shops. Main export opportunities are in the chilled products sector.

• Health, Dietetic, & Functional Food in the Benelux - Functional foods are defined as food products developed to have a specific positive influence on health; mostly prevention of future illness, treatment of illness or enhancement of some physical capability. The market for health, dietetic and functional food is more developed in the Netherlands than in Luxembourg and Belgium. Most supermarkets in the Netherlands have a health food section. Other channels include specialty shops, drugstores and pharmacies. Total sales of natural and health food in the Netherlands is estimated at U.S.$220 million.

6. Organics in USDA's National Commission on Small Farms Report
Approximately 94 percent of U.S. farms are classed as "small" (gross annual receipts <$250,000), but they receive only 41 percent of all farm receipts. Over the years, the structure of U.S. agriculture has changed towards large-scale farms and vertically integrated operations, in part due to government policies and programs which encourage concentration.

In July 1997, Secretary Glickman appointed an interagency group to examine the status of small farms in the United States and to determine a course of action for USDA to recognize, respect, and respond to their needs. In January 1998, the National Commission on Small Farms released their findings which include eight policy goals and recommendations for preserving small farms in America. Following are the sections relating to organics and sustainable agriculture.

Policy Goal #3 - Promote, Develop, & Enforce Fair Competition & Open Markets for Small Farms - Recommendation 3.16 calls on USDA's Rural Business-Cooperative Service to assist the development of cooperatives that will primarily benefit small farm operators and support development of value-added agriculture. Examples cited of value-added agriculture include organic grains, natural beef, free-range chickens, food-grade corn and other such pursuits that will bring producers higher prices.

Policy Goal #6 - Emphasize Sustainable Agriculture as a Profitable, Ecological & Socially Sound Strategy for Small Farms - Recommendation 6.3 calls on USDA agencies to develop a coordinated communications effort on organic farming to coincide with the publication of the final rule implementing the National Organic Program (NOP). The campaign should target (1) consumers to explain what organic food is and how it is produced; and (2) producers to explain the new standards, inform them about how to make the transition from conventional to organic production, and indicate where to get information and assistance. Recommendation 6.5 calls on USDA's Cooperative State Research, Education, & Extension Service to encourage land-grant universities to offer courses in sustainable agriculture and organic farming.

Policy Goal #7 - Promote Development & Enforce Fair Competitive & Open Markets for Small Farms - Recommendation 7.10 calls for funding of the NOP at $2 million annually to support implementation and on-going administration. Currently in fiscal year (FY) 1998, the NOP is funded at $819,000. Although not finalized yet, both the House and Senate versions of the FY 1999 appropriations bill call for $1.5 million for the NOP.
Source: A Time to Act--A Report of USDA National Commission on Small Farms, USDA, January 1998.

For more information, including full text of the report, visit the Commission web site. Also, USDA's Small Farm Program recently published a "Small Farm Resource Guide."

7. Organic Research Results Now Available on the Internet
"Emergence of U.S. Organic Agriculture--Can We Compete?" was the theme of a session at the American Agricultural Economics Association annual meeting held August 2 -5 in Salt Lake City. To obtain a copy of the papers presented, contact Luanne Lohr at: llohr@agecon.uga.edu or access the full text at http://agecon.lib.umn.edu/aaea.html

Search on "Klonsky" and click on "View the Abstract."

• The Organic Farming Research Foundation's (OFRF's) new web site is up and running. OFRF gives grants for organic research and conducts a biennial survey of U.S. certified organic farmers. Summaries of survey results for 1993 and 1995 are available, and the 1997 results are expected in the near future.

8. Upcoming Events
1998
****September Is Organic Harvest Month**** (OTA promotion).
Sept. 9-13 - Natural Products Expo East, Baltimore, MD.
Sept. 11-14 - SANA '98, Bologna, Italy ( health, organic, and natural foods)
Sept. 14-22 - American Food Festival - Taipei, Kaohsiung & Taichung, Taiwan. (an organic seminar will be given in each city).
Nov. 6-9 - BIOCULTURA, Madrid, Spain (organic and diet food products)
Nov. 16-21 - IFOAM General Assembly, Argentina.

1999
January - Ecological Farming Conference, Pacific Grove, CA.
Feb. 18-21 - Bio Fach, Nuremburg, Germany (organic products)
March - BIOCULTURAL, Sevilla, Spain (organic and diet food products)
Mar. 9-14 - Natural Products Expo West, Anaheim, CA.
Aug. 1-3 - Organic Farming Research Foundation Conference, Oakland, CA..
Oct. 16-18 - DIETEXPO '99 (Health/Dietetic/Organic Trade Show), Paris.
Oct. 20-24 - Natural Products Expo East, Baltimore, MD.

This newsletter was compiled by HTP's Organics Staff:
Janise Zygmont-Analysis: zygmont@fas.usda.gov (202-720-1176); FAX(202-720-3799)
Kelly Strzelecki-Marketing: strzelecki@fas.usda.gov (202-690-1341); FAX (202-690-3346)

Last modified: Tuesday, May 08, 2001