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ORGANIC AGRICULTURE
GROWS WORLDWIDE

More than 24 million hectares (1 hectare = 2.5 acres) of farmland are under organic management worldwide, according to a February 2004 report by the International Federation of Organic Agriculture Movements (IFOAM). The World of Organic Agriculture: Statistics and Emerging Trends 2004, attributes the growth in organic acreage primarily to an increased global demand for organic food and the expansion of markets for organic products. If current growth rates continue, organic agriculture may be seen less as a "niche" market and more as a primary option for farmers in both northern and southern countries.

Since the last IFOAM report in 2003, the amount of farmland under organic management has grown by two million hectares, or 9%. In addition, IFOAM identified 10.7 million hectares of land certified as "wild harvested plants," which include naturally grown herbs and timber. Currently three continents -- Australia (42%), Latin America (24.2%) and Europe (23%) -- represent roughly 90% of the organically certified acreage worldwide. Countries fueling the expansion include Australia with approximately 10 million hectares, followed by Argentina (close to three million hectares), and Italy with close to a million hectares. The study estimates that less than half of total worldwide organic acreage is on arable land, since most of the organic acreage in Australia and Argentina consists of grazing land supporting extensive livestock systems.

The growth in organic farming is the direct result of expanding global markets for organic products, which totaled approximately US$23 billion in 2002. Demand for organic products remains concentrated in affluent, industrialized continents, such as North America and Europe. North American markets experienced a growth rate of 12% in 2002, totaling US$11.75 billion, with the bulk of the revenue coming from the U.S. ($11 billion). Growth rates for European markets have slowed in recent years, yet still increased at a respectable 8% in 2002, totaling US$10.5 billion. These two regions represent nearly 93% of the total market share for organic products and are thus the primary destination of exported organic goods.

In addition to North America and Europe, the organic food market in Australia has grown rapidly and now represents close to US$200 million. Although initially farmers were attracted to organic farming in order to supply growing export markets, research indicates that farmers there now have difficulty meeting domestic demand, which is increasing at a rate of 20 - 30% annually. Despite Australia's status as a leading producer of organic food, domestic demand has caused the country to import organic products from abroad. Industry growth is projected to continue as farmers earn a reported 50 - 75% price premium for organic products.

The report identifies two principle reasons why demand for organic products has remained concentrated within industrialized nations. First, the price premium for organic foods requires a sizeable middle class with the purchasing power to consume higher quality products. Second, the study found that as education levels rise, demand for organic products increases, especially as consumers gain a greater awareness of food issues.

IFOAM reports that demand for organic products is unlikely to remain concentrated in industrialized nations indefinitely. As more and more developing countries are attracted to organic farming for export purposes, domestic and regional organic markets are also expected to grow. In Asia, for example, export opportunities remain the principle factor in the conversion of farms to organic production in the region's developing countries. However, expansion of domestic organic markets in China, Malaysia, Philippines, Singapore and Thailand has continued to fuel the region's growth. In China, demand for organics reportedly exceeds supply, with premiums for organic goods ranging from 10% to 400%. As southern economies become more developed, it appears that both the supply and demand for organic foods will continue to grow.



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