FDBusiness.com

Sales of organic products in the UK fell 5.9% to £1.73b in 2010 with the rate of decline slowing significantly throughout the year, according to the Organic Market Report just published by the Soil Association. The outlook for 2011 is cautiously optimistic.

Despite fragile consumer confidence in the wider economy, the report shows positive signs of resilience and recovery for the organic sector overall. The biggest success stories were sales of organic beef (up 18%), organic baby food (up 10.3%) and organic textiles (up 7.8%).

The Organic Market Report shows that shoppers spend more than £33m a week on all things organic, and that 86% of households now buy organic products. Dairy products and fresh fruit and vegetables are the most popular categories, accounting for 30.5% and 23.2% of sales respectively.

Sales of a wide range of products started growing again in 2010, including butter, yoghurt, beer and cider, herbs and spices, pulses and packet soups.

Although sales through multiple retailers fell by 7.7%, to £1.25b, Waitrose and Marks & Spencer anticipate modest growth for 2011, while Tesco, Sainsbury, Morrisons and the Co-operative predict level sales year on year. Multiple retail accounted for 72.3% of the organic market in 2010. Sales through independent retailers and catering accounted for the remaining 27.7% of the market, falling by 0.75% to £480m.

Organically managed land decreased by 0.6% to 738,709 hectares and now represents 4.2% of UK farmland, equivalent to more than the combined area of Somerset and Wiltshire. The number of UK organic producers fell by 4.2% to 7,567 in 2010, from a record high of 7,896 the previous year.

Production of organic vegetables and organic milk both fell in 2010 but cereal production is on the increase, buoyed by high grain prices and strong demand for milling wheat.

Poultry and egg production are set to fall in 2011 because of a combination of faltering consumer demand, high feed prices and the cost implications of impending changes to the EU organic regulations.

Roger Mortlock, deputy director of the Soil Association, comments: “There is powerful evidence that consumers who care about the diverse benefits of organic will stay loyal, even during these tough economic times. Given the current uncertainties in the UK and global economy, it would be rash to make any predictions for the future organic market. But the instability caused by climate change, population growth and resource depletion mean that business as usual in food and farming is not an option.”