V Lately the growth of the organic agriculture sector has increased. Research by Ecovia Intelligence shows that 2.7 million farmers in 178 countries work in the manufacturing sector, and the global market is 80 billion euros. Production has increased by 15% since 2015, respectively, there was an increase in jobs by 12.8%.
The most popular sector is crop production, whose crops are grasses, legumes, oilseeds and cereals.
Each country has its own data. According to Ecovia Intelligence, Australia, China and Argentina have the largest organic areas; Germany, France and the USA are the countries that develop and consume organics the most; organic milk production is in Germany, China and the USA.
The cost of "organic"
The price of organic production costs is higher, by about 1.3-1.6 times. This value is associated with the cost of nature feed and land rent. The price of ordinary milk is 50% less than the price of milk in the segment. The market for organic dairy products is valued at $18 billion and continues to grow. Most budget countries organic products are Denmark, Sweden, Luxembourg and Australia.
The concept of an organic product
Firstly, to practice organic, you must have a certificate issued by government agencies. There may be several such organizations in a country, so the legislation is in force in 89 countries and clearly monitors that the term “organic product” is not used without a certificate.
There is important rules that must be adhered to in order to obtain a certificate:
1) organic products
- No use of synthetic chemicals
- the Earth should have a rest from pesticides and food additives from 3 years
2) milk production
- No growth promoters
- treatment without antibiotics
- free grazing and milking of cows
The review is very serious. The inspector takes samples of feed and products, as well as land. Care, light and product quality are checked. It will take 3 to 5 years for a farm to become organic.
Crisis or salvation?
Producers are willing to pay more for organic milk than for classic milk, so farmers are forced to switch to the organic market. It takes time
and costs increase during the transition, but in the long run, this is a good opportunity to keep the business afloat.
Competition
Of course, small farms are not competitors for large-scale business. Aurora Organic Dairy largest company for the production of organic products in the United States. The company owns 15 thousand cows, where 4400 on the largest farm and 900 on the smallest one. The company's processing facilities and all its farms are certified by the USDA National Organic Program. Therefore, the requirements of the production of 120 days a year, keeping the cows free-range must be met. To provide hay for the animals during winter, Aurora Organic works with 100 independent farmers. The company has 700 employees, where farmers - 63%, and 30% work in processing. In 2019, Aurora Organic Dairy has plans to open a second plant in Missouri. The company manufactures products under the Cosco and Walmart brands.
The origin of organics in Russia
The organic sector in Russia is only gaining its popularity. Residents are distrustful of the classic milk, asking questions about the care and quality of the product, about the composition of animal feed.
“In Russia this year, the law on organics was adopted, which regulates the main provisions in the organic food industry, so everything is just beginning for Russia,” says a marketing specialist in FMCG and agro-industrial complex Olesya Samoshina.
Work on the consideration of the bill on organic agriculture has been conducted in the Russian State Duma since 2017, in the summer of 2018 Vladimir Putin signed the law. The document will enter into force at the beginning of 2020. According to Oleg Mironenko, with the advent of official legislation, any labels “eco”, “bio” and “farm product” will be illegal without a document confirming the contrary. “Such labels are marketing tricks, such products are not organic at all - only certification confirms organic origin, often these are tricks of false producers who claim to make organic. With the adoption of the law on organics, we will finally be able to protect the consumer from low-quality goods, the principles of organic production will be clearly defined,” says Mironenko. According to him, new law needed, to a greater extent, not by producers, but by consumers.
“People will no longer get confused by a lot of obscure terms and will know exactly what they are buying,” says Mironenko.
The organic market in Russia has great potential, but the prospects and growth rates directly depend on the economic situation in the country, experts are sure.
“As you know, all business is controlled by sales, we see that in the current conditions the demand for organic milk in Russia is growing, everything more people become consumers of this type of milk, so we positively assess the prospects for growth and development of this market,” says Mironenko.
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On January 1, 2020, the law "On Organic Products" comes into force in Russia. Only manufacturers that do not use pesticides and antibiotics, food additives, flavor enhancers, etc. will now have the right to the term "organic". In addition, they must undergo mandatory certification and be included in the relevant state register.
In fact, this is the first attempt to establish the rules of the game in the Russian market of healthy food, which is growing rapidly. According to Euromonitor International forecasts, this year sales of such products in Russia should exceed 900 billion rubles. The ideologists of organic agriculture, which accounts for only 0.7% of this market, hope that the law will give a new impetus to the development of the industry. But their plans may be hindered by a drop in income and the desire of Russians to save on food, as well as competition with farm, eco- and bioproducts, since consumers hardly distinguish between these concepts.
Terminology confusion
Russians are increasingly concerned about their own health. According to Nielsen, more than 84% of them changed their eating habits: 53% reduced fat intake, 65% sugar, and 67% increased the proportion of natural and organic foods in their diet. useful products. A wide range of healthy food has already become an important factor when choosing a store for 62% of consumers.
Head of the Association of Companies retail Sergey Belyakov, referring to Gfk data, notes that 28% of Russians are very likely to buy a farm product, and 22% - a product marked "bio", "eco" or "organic". Andrey Golubkov, a representative of Azbuka Vkusa, believes that, in addition to the global trend towards healthy eating, only the Russian factor played its role - the concern of citizens about the quality of products.
It is the issues of quality and compliance of a particular category of products with healthy nutrition standards that concern market participants. The executive director of the National Organic Union, Oleg Mironenko, considers the concept of “farm products” to be the most vague. According to him, their production is not regulated in any way, and the quality may not differ from industrial counterparts. “The presence of the prefix “bio” on the etiquette indicates the content of bifidobacteria in dairy products, their release is already regulated by the relevant state standard. There are also regulations in the legislation for standardizing production for compliance with environmental standards,” continues Mr. Mironenko.
It is impossible to unequivocally judge the quality of this or that approach to production, Boris Akimov, co-owner of the LavkaLavka cooperative, objects. According to him, most farmers also strive for natural farming principles, without resorting to chemicals and pesticides. At the same time, they often use local technologies and recipes in production, which makes it possible to create a product that is not available in other regions, continues Mr. Akimov.
The confusion in terminology is a feature of the Russian market. According to Oleg Mironenko, in European countries the concepts of bio, organic and eco are identical and refer to the same products. Andrei Golubkov believes that in Russia norms and criteria should be established for all healthy products, including farm products.
Everyone competes
According to Mr. Akimov, the majority of consumers in Russia in any case perceive farm products, "organics" and the assortment of "Vkusvill" simply as natural and healthy food, so all market participants can be considered competitors, and manufacturers' interest in the segment is growing.
Deputy Chairman of the Board of "Rusprodsoyuz" Dmitry Leonov points out that many companies that have not previously been represented on the market are introducing "eco-bio" into the assortment. Thus, the Rusagro group of ex-senator Vadim Moshkovich, a producer of sugar, butter, meat and mayonnaise, plans to enter the segment of vegetable drinks with the Normula brand. Interest in the category in the group was explained, among other things, by the growing trend towards a healthy lifestyle. A major producer of meat and sausage products, the Cherkizovo group of the Mikhailov family, in a report for 2018, also announced plans to enter the healthy food segment, without going into details. interested in the market and international companies: In 2018, Coca-Cola, a vegetable analogue of Adez milk, was brought to Russia. And PepsiCo is preparing to start selling chilled gazpacho soups under the Alvalle brand here.
There is also growing interest in organic farming. According to Oleg Mironenko, in 2018 the union received about 30 applications from new companies, and this year their number may exceed one hundred. Crocus Group developer Aras Agalarov (ranks 54th in Forbes ranking with a fortune of $1.8 billion) started growing organic apples in the Moscow region.
So far, the most prominent player in the organic products market in the Russian Federation is the AgriVolga holding of the top manager of Interros and the general director of the Rosa Khutor resort, Sergei Bachin. AgriVolga produces dairy and meat products in the Yaroslavl Region and operates the Ugleche Pole. Organic Market. As follows from the Unified State Register of Legal Entities, Tatyana Volkova, the ex-general director of Capital LLC associated with the holding, also owns 51% and heads Organic Expert LLC, which certifies producers according to organic standards. In AgriVolga they say that they are not connected with Organic Expert.
Health Sellers
The healthy food trend stimulates not only manufacturers, but also retail chains. According to Knight Frank, over the past three years, the largest growth in Moscow was shown by grocery retail in healthy food formats and farm products. In 2015–2018, the number of outlets increased by almost 3.5 times, to 714 stores. The largest player is Vkusvill, which managed 480 facilities at the end of the period. Among its competitors are Myasnov (200 points), as well as Garden City, LavkaLavka, Fresh Market 77, Middle Hills and Coal Field. Organic Market”, each of which had up to ten stores. So far, the format is best represented in the capital market. According to Victoria Kamlyuk, director of street retail at Knight Frank, the proportion of healthy lifestyle adherents in Moscow is especially high due to a wider range of products and better customer satisfaction.
Large retail chains are also paying more and more attention to the development of green product categories. The areas of fresh zones are expanding, separate racks and zones for farm products are allocated in the “shop-in-shop” format, Sergei Belyakov lists. Auchan says that in 2018 the assortment of the Bio department grew by 150 SKUs due to local suppliers and imports. Azbuka Vkusa intends to increase the share of healthy food products from 25% to 80% within three years. Perekrestok (part of the X5 Retail Group) plans to expand its range of ecological products under its private label, says chain director Dmitry Medvedev. Now under STM “Market. Zelenaya liniya” there are about 160 items of dairy products, cheeses and baby food. The Eco.Bio.Vegan department operates in 14 Globus hypermarkets with an assortment of 1.2 thousand SKUs, and the offer is expanding, says a representative of the network.
As Victoria Kamlyuk points out, the big chains' focus on healthy eating could limit the growth potential of specialty stores. Points will continue to open, but the pace will be low, Mr. Mironenko echoes. According to his forecasts, the structure of sales of organic products in Russia will be built by analogy with the world, where about 50% of such products are sold through the largest networks.
organic growth
Oleg Mironenko is optimistic about the market development prospects. According to his estimates, in Russia, about 25% of the population can be attributed to potential regular consumers of "organic", and in ten years, annual sales in this segment of the healthy food market alone can grow to € 5 billion. The geography is also expanding, the expert says. Two years ago, more than 90% of demand came from Moscow and St. Petersburg, and the rest - from the regions, and today the share of these cities has dropped to 80% and continues to fall, says Mr. Mironenko.
But Victoria Kamlyuk warns that the further pace of development of the healthy food market in the Russian Federation will largely depend on the availability of products. For comparison: LavkaLavka sells Belper Knolle cheese for 240 rubles. for 100 g. A similar variety in Vkusville is presented at 198 rubles. per pack 130 g. The cost of a similar product in Ugleche Pole. Organic market" - 310 rubles. for 130 Mrs. Kamluk emphasizes that Russians' consumer confidence indexes have begun to decline again. According to Nielsen and The Conference Board, in the fourth quarter of 2018, the consumer confidence index of Russians dropped from 67 to 65 points, and worries about rising food prices came to the fore: the share of consumers concerned about this issue increased by 12 percentage points (p. to 35%, reaching a maximum since mid-2016.
On April 4, Rosstat reported that the index of consumer confidence of Russians in the first quarter increased by 1 percentage point. But, Boris Akimov notes, the decline purchasing power and a significant drop in income. Today, 10% of the largest food producers receive 90% of all preferential loans from the state, which allows them to keep relatively low prices, Mr. Akimov explains, while farmers do not have access to cheap financing, which is why their products are more expensive. In addition, according to Boris Akimov, the price is also affected by extremely small production volumes: the share of artisan cheeses on the market does not exceed 1%.
Oleg Mironenko agrees that organic milk in Russia can cost twice as much as industrial milk, but he believes that the situation will change. Today in Russia, only about 100 companies are certified according to organic standards - this is a drop in the ocean for a market with a population of 145 million people, he points out. At the same time, the expert continues, a significant share in the cost is formed due to the import of biological preparations and fertilizers. In general, Mr. Mironenko predicts, with the development of the market, organic products in Russia will cost an average of 15-30% more than industrial ones. Dmitry Leonov is confident that serious success in the development of the healthy food market in the Russian Federation can be achieved only with an increase in living standards.
The market for organic products in Russia and the world is growing many times faster than the rest of the food retail. Despite the high risks, this direction is already profitable now, and subsequently the market volume will only grow.
Photo: David Williams/Bloomberg
World practice
By 2020, the global market for organic products will grow by 16% and amount to €143 billion, according to the study "Prospects for the development of organic agriculture in Russia" by SBS Consulting analysts. According to them, the growth in consumption of organic products is twice the growth rate of the food market as a whole.
The principle of organic farming involves fertilizing the land, controlling weeds and pests using exclusively natural substances and methods. Also, organic farming implies the rejection of the cultivation of genetically modified species.
The leader among countries in the consumption of organic products - the United States - occupies about 43% of the market. The top five also includes Germany (11%), France (9%), China (8%) and Canada (3%). These countries account for more than 70% of the organic market in the world.
The leaders in terms of consumption per capita are the countries of the European Union. It is here that people tend to add healthy foods to their diet and are ready to overpay for it - a similar product produced in the traditional way is 30-40% cheaper. According to SBS Consulting experts, consumption is still far from saturation, this market will grow as the cost of organic products will decrease.
Until 2010, the main factor limiting the development of the market was the low rate of introduction of land for organic farming - they simply did not exist. By 2017, already 1.4% of all world arable land was given over to organic farming. In a number of countries, the share of such land reaches 10% of all agricultural land.
Organic market in Russia
The demand for organic products in Russia is many times greater than the supply. Thanks to this, a high premium to the price is also maintained: in Russia it reaches 300%. The main consumers of organic products are wealthy segments of the population who are ready to overpay for a "healthy diet". Therefore, all participants in the chain - from farmers and importers to retail chains - remain in profit due to the high margin.
Subsequently, the authors of the study assure that the premium to the cost will decrease due to the growth of domestic production, the normalization of legislation and the increase in citizens' awareness of organic products. In the future, the markup on the cost of products produced in the traditional way will drop to the level of developed countries (about 15-50%).
In general, in Russia, the demand for organic products is growing faster than the global one - by 23% per year. Despite such rates, the share of organic products in Russia still accounts for only 0.1% of the entire food market of the country. As noted in a study by SBS Consulting, only 1% of Russians buy organic fruits and vegetables. Experts expect this share to grow in the future.
Advantages of organic farming in Russia:
- organic products have a high margin;
- low cost labor resources thanks to which domestic producers can be highly competitive in international markets;
- a large number of inexpensive fertilizers are presented in Russia;
- logistically, Russia is much closer to the European market than China;
- Russia has a high export potential - even now every third manufacturer is an exporter.
- high risks associated with the dependence of the crop on natural conditions;
- mass demand for more expensive products is localized only in developed countries;
- the need for investments, special equipment and staff skills;
- lack of seeds and planting materials. In Russia, the share of imported seeds for organics is 30-90%;
- lack of qualified personnel;
- weak support from the state.
The organic agriculture sector in the world has been developing at an accelerated pace in recent years. According to the research company Ecovia Intelligence, 57.8 million hectares of arable land on the planet are allocated for organic farming, 2.7 million farmers work in the production sector in 178 countries.
So far, of the total volume of milk produced in the world, certified organic milk is only 0.9%, or 7 billion liters. However, experts are confident that organic production has great prospects. Moreover, the production of products with the “organic” label is always carried out by small farms for the sake of survival, but also by mega-complexes. How this market works, Milknews tells in a new review.
80 billion euros for organic
In recent years, the organic farming market has been constantly growing along with the increasing interest of buyers in new products. Market research firm Ecovia Intelligence estimated the global organic market in 2016 at $89.7 billion (approximately €80 billion). Since 2015, the area of agricultural land producing organic food has increased by 15%, while the number of farmers employed in the sector has increased by 12.8%.
Most of the cultivated land in the organic sector is given over to crop production, the most popular crops are cereals, herbs, oilseeds, legumes and spinning.
The leading countries differ in different indicators, according to Ecovia Intelligence:
Most of the land for organic agriculture is occupied in Australia, Argentina and China, where farms are dispersed over large areas;
The most active market in general in terms of sales is developing in the USA, Germany and France, these countries have the most organic consumers;
Most organic farmers live in India, Uganda and Mexico, farmers in these countries do business on small plots of land;
Most organic milk is produced in the USA, China and Germany.
Prices for the organic logo
Due to the complex certification system, organic producers receive more profitable terms from processors. On average, a liter of such a product at the farm level costs 30% more than classic milk. This is also why, according to KPMG, certified organic milk makes up less than one percent of the total volume of raw materials produced in the world.
As a rule, the costs of agrarians for organic production are 1.3-1.6 times higher than the average. This is due to additional costs for natural feed (from 45% to 82% above average), land rent (7-71% more). Usually organic farms 35-90% less than classical farms, milk yields lag behind industrial values by 34%.
The retail price of milk in the segment can be 50% more than regular milk, yogurt - 42%. Researchers from the IMACR Group estimate the total market for organic dairy products at $18 billion, it has added 8% since 2010. Organic products are more expensive than classic products, so it is logical that the sector is developing fastest in countries with a high standard of living. So, in Switzerland, the average resident spends 274 euros per year on organic products. Denmark, Sweden, Luxembourg and Austria also ranked in the top five for the largest per capita organic budget. The same countries also retain the largest share of organic production in the total agro-industrial complex market - about 9% per state.
What is an "organic product"?
In order for the same dairy product or farm to be called organic, a business needs to have a special certificate. Usually such documents are issued by special agencies accredited government agencies. For example, there are about 55 such organizations in the United States. Commercial use of the term “organic” without a certificate is prohibited. Legislation in this area is successfully operating in 89 countries around the world.
Requirements for organic products differ from country to country, but in general they are similar: the use of synthetic chemicals, including fertilizers, antibiotics, pesticides, food additives, GMOs, is prohibited in production. Land in such industries must be free from chemicals for three or more years.
For milk production on a separate line rules for keeping animals. Cows on organic farms must be free-range and milked. For the treatment of animals, it is forbidden to use antibiotics, it is impossible to stimulate the growth of cows with hormones.
Typically, such farms are subject to serious inspections. Inspectors come to the farms, taking samples of land, feed and products. Supervisory organizations check everything - from the amount of natural light in the barn to the quality finished products. As a rule, on the websites of accredited organizations you can always find how to adapt your farm to organic production. On average, the transition of a farm from classic to organic takes from 3 to 5 years.
Organics will save the farmer from the crisis?
In a study published by KPMG, experts determined that the popularity of the vegetarian trend, the growing supply of plant-based milk substitutes and consumer concerns about lactose content in dairy products increase competition in the market. In addition, new alternatives to classic milk are constantly emerging - fortified milk, products without A1 beta-casein or from cows that are only free-range. Producers are also under pressure from volatility selling prices, which remains on the market for recent years. Under these conditions, the transition from industrial production to organic helps some growers stay afloat.
Organic milk production for many farmers in progressive countries at some point became a tool for survival in an ever-changing market. So, in July 2018, the Australian newspaper ABC published the story of the family farm of a resident of the state of New South Wales, Paul Egget. He said that he had to switch to organic production in order to keep the business. Egget now has 220 Jersey cows and is certified organic. “Producers no longer want to drink milk for $1 per liter, they are happy to buy organic product for $3,” the farmer told reporters. According to him, the transition from classical production took three years. During transition period Eggett continued to receive a classic rate from processors and constantly increased production costs. However, as the producer notes, it was the change in direction that helped his family farm stay in business. “Organics isn't that hard if you follow all the rules,” Eggett noted.
Artem Belov, CEO of Soyuzmoloko, visited a small farm in Wisconsin this summer. Earlier Milknews about the level of dairy production in this state.
“North Wood Farm is a family farm with 110 heads, of which 45 are dairy cows, free-range in summer, stabled in winter, fed organic feed without GMOs, pesticides and synthetic fertilizers. The farm does not use antibiotics and does not buy sexted semen, the farm has three own bulls,” says Artem Belov about the farm.
According to him, the price of milk at the farm level is 55-57 cents, that is, about 35-37 rubles per liter, while the cost of production is almost no different from this figure.
Major players came to the organic
However, it is sometimes difficult for small organic producers to compete with large-scale businesses. “Large organic farms are actively developing in the country, with a livestock of 1,000 or more heads, it is difficult for small farms to compete, they go bankrupt, there is little direct support from the state - compensation for certification from the federals, no special support from the state. Sometimes it is possible to get support at the municipal level if such an initiative is supported by the residents of the municipality. According to farmers, Americans do not want local food, they want cheap food, so small local processing is not developing, ”explains the expert. The farm is now up for sale.
One of the largest organic factories in the US is located in Colorado - Aurora Organic Dairy. The total number of livestock on the company's farms is 15,000 cows, the largest farm has 4,400 animals, and the smallest farm has 900. The company's processing facilities and all its farms are certified by the USDA National Organic Program. A vertically integrated complex is obliged to fulfill all the requirements of organic production, in particular, to keep cows free-range at least 120 days a year. The enterprise has allocated 4856 hectares of land for pastures, 30351 hectares are used for growing animal feed. In addition, Aurora Organic works with 100 independent farmers to ensure that the animals are fully stocked with haylage during the winter. The company's farms and plant have 700 employees, 63% of which are farmers, 30% work in processing. In 2019, Aurora Organic Dairy has plans to open a second plant in Missouri. The company manufactures products under the Cosco and Walmart brands.
Farm video
In 2017, the Washington Post conducted a journalistic investigation and accused Aurora Organic Dairy of not complying with the National Organic Program. The correspondent of the publication visited the company's farms 8 times in August, September and October, but never found more than 100 cows on pastures, which is less than 10% of the total livestock.
Washington Post investigation
Farm workers answered the journalist's questions that they did not know where the animals were now, perhaps they were being milked. In addition, newspaper observers handed over the Aurora Organic Dairy milk to the laboratory and found that the composition of the raw materials did not reach the indicators determined by organic milk. After a journalistic investigation, the USDA did a check, but found no serious violations.
This is not the first time that the company has become the center of scandals. In 2011, the Cornucopia Institute, an organization promoting fair organic production, sued Aurora Organic. As a result, the court ordered stricter control of the agricultural holding, and the company promised to correct all these violations.
For Russia, organic is just beginning
According to Ecovia Intelligence, organic farming in general and dairy production in particular are driving ever-changing consumer preferences. Buyers are concerned about the quality and safety of food, as well as its impact on the health of the body. Ecovia Intelligence's opinion is confirmed by IMACR Group. Consumers are concerned about the composition of animal feed, the issue of pesticides and hormones. Analysts note that by 2023 the market for organic milk will grow to $28 billion. An additional stimulus to the development of the sector will be a growing e-commerce channel.
In Russia, the organic sector is only gaining momentum, earlier Milknews about this in a separate article. The main driver of the domestic segment may be the recently adopted law on organic agriculture, says Olesya Samoshina, head of PR projects at Faros.Media and a marketing specialist in FMCG and agro-industrial complex. “In Russia this year, a law on organics was adopted, which regulates the main provisions in the organic food industry, so everything is just beginning for Russia,” she says.
Oleg Mironenko, executive director of the National Organic Union, agrees with Samoshina's opinion. “All over the world, the market for organic dairy products is growing and developing at an active pace, despite any crisis phenomena, in our country this market is also promising, although, as you know, we sometimes react to global trends with a delay,” he notes.
Work on the consideration of the draft law on organic agriculture has been carried out in the Russian State Duma since 2017, in the summer of 2018 Vladimir Putin signed the law. The document will enter into force at the beginning of 2020. According to Oleg Mironenko, with the advent of official legislation, any labels “eco”, “bio” and “farm product” will be illegal without a document confirming the contrary. “Such marks are marketing tricks, such products are not organic at all - only certification confirms organic origin, often these are tricks of false producers who claim to make organic. With the adoption of the law on organics, we will finally be able to protect the consumer from low-quality goods, the principles of organic production will be clearly defined,” says Mironenko. According to him, the new law is needed, to a greater extent, not by producers, but by consumers. “People will stop getting confused by a lot of obscure terms and will know exactly what they are buying,” says Mironenko.
Another driver of the Russian organic sector may be the growing trend towards a healthy lifestyle. “There is a lot of information that promotes a healthy lifestyle in all its manifestations,” confirms Mironenko. Olesya Samoshina agrees with his opinion. She believes that the main task of producers of organic dairy products is communication with the consumer. “The main thing is to educate the consumer about what real organic products are, how an organic product differs from marketing gimmicks,” she says.
Mironenko confirms that only through this channel the manufacturer will be able to justify the high price of the finished product to the consumer. “It can be difficult to explain to the buyer why you have to pay more for an organic product today. However, organic producers have their own reasons. First of all, we honestly tell customers how we make a product and why it gets those quality characteristics, which are not in the classical ones. Plus, we have research in our favor on how residual chemicals in products, including pesticides, affect human health,” the expert argues.
The organic market in Russia has great potential, but the prospects and growth rates directly depend on the economic situation in the country, experts are sure. “As you know, the entire business is controlled by sales, we see that in the current conditions the demand for organic milk in Russia is growing, more and more people are becoming consumers of this type of milk, so we positively assess the prospects for growth and development of this market,” says Mironenko.
So far, in Russia, projects on organic dairy products are rather targeted. Previously, Milknews worked with the veterinarian of the AgriVolga holding, which produces organic products under the Ugleche Pole brand. In 2018, the company announced its expansion: investors plan to invest 1.5 billion rubles in cheese production.
The market for organic products is rapidly developing all over the world. Organic products are gaining more and more recognition among various segments of the population. The market of organic products is most formed in the developed countries of Europe and in the USA. According to world studies, 97% of stable consumers are concentrated there.
According to the research company Ecovia Intelligence, 57.8 million hectares of arable land on the planet are devoted to organic farming: most of all in Australia, Argentina and China. The organic sector employs 2.7 million farmers in 178 countries.
The volume of the world market for organic products in 2018 reached 90 billion euros. The largest markets for organic agriculture are the US (40 billion euros), Germany (10 billion euros), France (7.9 billion euros) and China (7.6 billion euros). The global organic food market is projected to reach $324 billion by 2024.
The greatest demand for eco-products is in Switzerland - 288 euros per capita in 2017, Germany - 278 euros, Sweden - 237 euros. The largest share of the organic market falls on Denmark - 13.3% of the total food market.
Growth international market organic agriculture is associated with sustainable development agriculture and the understanding by most countries of the advantages of this type of agriculture. During the year, the amount of organic land increased by 20% to 69.7 million hectares. Australia leads in the area of organic farmland (35.6 million hectares). This is followed by Argentina (3.4 million ha) and China (3 million ha).
In total, there are 2.9 million producers of organic products in the world: 835,000 industries are concentrated in India, 210,352 in Uganda, and 210,000 in Mexico. In Russia, there are about 70 certified producers of organic products, 290 thousand hectares of farmland are certified as organic.
Europe accounts for more than 33% of the market. Europe is also following healthy lifestyle trends while paying attention to the availability of organic products. Germany leads the market, followed by the UK, France, Spain, Italy and Russia.
In Asia, most of the organic production is imported from North America and Europe. The main markets for organic products in the Asia-Pacific region are Australia, New Zealand, Japan, Singapore, Hong Kong and South Korea. The average annual market growth rate directly depends on income and consumer awareness.
Russian market of organic products
The volume of the Russian market of organic products, according to the National Organic Union of Russia (NOS), is 160 million euros and 80% of this volume is imported.
On the this moment There are 70 certified organic agricultural producers in Russia. By international standards 53 farms were certified, 17 farms in Russia. Of these, 20 farms belong to the field of crop production. About 0.12% of agricultural land (246 thousand hectares) is certified as organic according to international standards.
In organic agriculture in Russia, there is a formed market for the export of organic agricultural raw materials, in this market there is a steady growth in demand and it far exceeds supply. Russian market organic production is growing annually by about 10-15%. At the moment, Russia is actively involved in the creation of an interstate standard for all countries of the Eurasian Economic Union.
Not only the domestic production of organic products is developing, but also its export. At the same time, demand in foreign markets exceeds supply. Russian products all EU countries and the USA are ready to buy, there are orders and competition between foreign traders. Thus, the export potential of Russian organic products to the EU countries is estimated at $130 million, and the global market for organic products - $290 million.
In the next three years, the country will switch to organic farming technologies on a pre-contract basis for specific orders. For the development of organic agriculture, agricultural producers need knowledge, investment and stable demand.
A key factor for development domestic market is acceptance federal law about organic agriculture, which will establish uniform rules, clear the market of falsification, clarify the concept of "organic", protect labeling, and introduce a single logo. Establishing a direct exchange of information between producers and consumers, openness, transparency and the formation of understanding and trust in organic products will also play a big role.
