Scarcity continues to plague organic-ingredients sector

Skyrocketing demand, competing crops and poor weather are all contributing to the problem

International The good news: demand for organic produce is booming, continuing to turn in year-on-year growth rates of 20 per cent or more in many markets, including the world's biggest — the US. That demand shows no signs of abating as consumers seek healthier foods such as natural, fortified and organic foods.

The bad news: supply is struggling to keep up, including an increasing number of organic ingredients. This problem has been compounded by some organic farmers switching to potentially more lucrative biofuel crops such as corn, particularly in the US, and poor weather resulting in lower yields in some regions. Prices are being forced up as a result.

A contraction in supply couldn't come at a worse time. The US organic food market grew by 21 per cent in 2006 to reach sales of $16.7 billion (2005 sales were $13.8 billion), making it the fastest-growing segment of the food industry, and accounting for 2.7 per cent of total food produced, according to the Maryland-based Organic Trade Association. Eighteen per cent annual growth is forecast until 2010. Western and eastern European markets report similar growth, albeit from a smaller base, and developing economies such as Brazil, China and Vietnam are joining the fold.

HopsBut ingredients shortages are becoming increasingly common and were responsible for some of the 38 nonorganic ingredients being permitted by the US Department of Agriculture in organic foods. These include fish oils and fish gelatine, chia, blueberry juice, fructo-oligosaccharides, hops, rice starch and whey-protein concentrate. Dave Alexander, president of Maryland-based Global Organics, admitted that for the first time ever the global supply of organic sugar might not meet demand.

Similar shortages are becoming commonplace in Europe with many ingredients buyers attempting to guarantee supply by striking exclusive deals with organics suppliers, often committing to long-term contracts to avoid having to take their chances on the spot-price market, or having suppliers turn down their requests.

Do-It sales manager Jurrien Roossien recently told a seminar at Food Ingredients Europe in London that the organic conversion period of two years may need to be reconsidered to relieve the situation.

Simon Wright, who chaired the seminar and runs the UK-based The Organic Consultancy, noted other suggestions included developing organic production in new markets, and encouraging consumers to eat more seasonally. He warned a lack of ingredients could act as a barrier to producers moving into the sector.

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