Organic meat market growth sparks supply shortage

By Ahmed ElAmin

- Last updated on GMT

Related tags: Organic food, Meat, Bovine spongiform encephalopathy

With demand for organic foods continuing to strengthenacross the
globe, organic meat supply shortages and price hikes are expected
to continue, according to a new report.

Soaring demand for organic meats is causing global supply totighten, said Organic Monitor in a report released this week.

The situation means North American processors are having to look overseas for supplies to meet the growing demand for all things organic. The undersupply is alsoboosting prices for supplies across a range of meats.

Consumer demand for organic beef has surged since the firstcases of bovine spongiform encephalopathy (BSE) were reported in US andCanadian herds in 2003, the analyst stated.

A number of countries are reporting undersupply due toorganic meat production, which has not kept pace with demand.

The most adversely affected region is North America wheresupply has been unable to meet demand since the US Department of Agricultureput in place the National Organic Program (NOP) in 2002, the industry analystsaid.

This means US processors have been importing organic meatproducts from Latin America, Australasia and Canada. Imports are increasing ata fast rate with the volume of non-American organic pork doubling in 2005alone, Organic Monitor stated.

Western Europe is also experiencing acute supply shortages,the analyst noted.

Meanwhile the production of organic meat has not kept pace with the rising demand in a number ofcountries.

The organic beef and pork segments are the most adverselyaffected with prices rising across Europe. Danish Crown, the largest producerof organic pork, has reported a 36 per cent price rise compared to last year,the analyst stated.

In Europe British retailers have started offering fixedcontracts to organic meat producers to secure supply, the report stated.

Sainsbury's and Tesco are giving meat producers contractsthat guarantee fixed prices over five years.

"Although the initiatives are gaining acceptance byorganic farmers, imports will continue to play an important role because of lowdomestic production levels,"​ Organic Monitor stated.

Like the US, organic meats are imported from a number ofcountries into the UK.

Organic meat supply is also tightening in regions like LatinAmerica and Oceania. Countries like Brazil and Australia have export-gearedmeat industries with organic meats playing an increasingly important role.

Friboi, a leading Brazilian producer of organic beef, isexpecting export sales to triple this year.

High global demand is leading new organic meat producers tospring up in countries like Chile and Nicaragua.

Organic meat sales in North America increased by 51 per centin 2005, making it the fastest growth area in the segment, the analyst stated. Mostgrowth is occurring in the US organic beef market which has doubled each yearsince BSE was first reported.

Organic beef sales are projected to reach $13bn his year --double the sales of four years ago.

Organic products still account for less than two per cent ofthe food sales in the US, and organically certified land is only 0.3 percent ofthe nation's farmland.

However, the number of acres certified as organic surged by74 percent between 1997 to 2001, according to a study by the US Department ofAgriculture's economic research service.

Legislation passed in 2003 allows farmers to label meat anddairy products as organic without using 100 percent organic feed if the priceof organic feed was more than twice that of conventional feed.

"Althoughconsumer confidence in conventional beef has largely remained intact, BSE haselevated consumer awareness of organic production methods,"​ said Organic Monitor in a previous report. "Organicmeats have become popular as they are made from animals that are not givenantibiotics, growth promoters or synthetic feeds. Many consumers perceive themto be safer and more nutritious than conventional meats."

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