Organics industry coming of age

The organic food and beverage sector has announced that Australian Organic is set to become its peak representative body. Matthew McDonald spoke to Quentin Kennedy, a director of that organisation, about where the industry is heading.

Things have changed for the organic food indutry. It has entered the mainstream.

According to the 2017 Australian Organic Market Report, a survey conducted by Australian Organic (AO), more than two out of three Australian households purchased organic products in the previous year.    

And it’s not just consumers who are attracted to organics. The survey showed that Australia has more certified organically managed agricultural land than any other country. In addition, the 27 million-plus hectares used for certified organic farming in this country account for about 7 per cent of our total farmland.

These figures have translated into more organisation. In February, the industry came together for the Love Organic Symposium, an event in Canberra which was attended not only by growers and manufacturers, but also Prime Minister Malcolm Turnbull, Minister for Agriculture and Water Resources David Littleproud, and others. Out of the symposium it was agreed that, for the first time in Australia, a peak organics body will be formed. Over the coming months a permanent structure of the organisation, to retain the name Australian Organic, will be finalised.

According to Quentin Kennedy (pictured below), a director of AO and managing director of organic cereal grain processor Kialla Pure Foods, most Australians (76 per cent) are already aware of this organisation and its “bud logo”.

Australian Organic logo CMYK

“Originally we began as Biological Farmers of Australia which was both a member-owned body and a certification body. But some years ago we split off the clinical certifier Australian Certified Organic (ACO) as a subsidiary,” he said. “Then we also changed our name and moved from a member-based co-op to a not for profit and renamed ourselves Australian Organic.”

He explained that AO has a license agreement with ACO to approve the use of the logo on all certified products. “We’re separating ACO and opening up use of the bud logo to anyone that has certified with other certification bodies. In return, they will pay a fee which will go towards industry development,” he said.

So AO will now stand alone as the peak industry body. Asked why this step has taken so long, Kennedy nominated diversity and the relative youth of the industry as two important factors.

“The term organic covers all sectors of food and beverage production and agriculture, so having a single voice previously had been a challenge for us. It’s not until an industry starts maturing and getting a critical mass behind certain opinions that you’re able to get consensus.”

Growth, regulation and export potential

The organic food and beverage sector is growing. According to Kennedy, manufacturers of all sizes are now interested in producing organic products. “The bigger corporate players are looking at it now, just from the point of view of differentiating their product,” he said.

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According to the 2017 Australian Organic Market Report, in 2016 Australian exports of organic products increased by 17 per cent (in terms of overall tonnage) as compared to the previous year. While this growth was to all continents, according to Kennedy, much of the future growth is likely to be to Asian markets.

The Government responded to this potential by commissioning professional services network Deloitte Australia to conduct an Organic Export Orders Review. According to the Department of Agriculture and Water Resources, the aim of the review is to improve access for Australian organic products into premium markets and increase the competitiveness of the sector. Submissions ended in late February and the results of the review are due for release in the second half of this year.

Kennedy pointed out that any subsequent regulation is likely to centre around establishing and proving that “organic” products destined for exports are, in fact, organic.

“It’s a regulatory impact statement so they’re assessing the impact of legislation. We want a level of legislation to stay because we need authenticity for our organic exporters,” he said.

In addition, Kennedy said one of the key aims should be to establish equivalence with the national standards of various other nations.

Pointing to personal experience, he said, “One big challenge is we have to be certified to, for example, US standards and Korean standards. Not only is there a lot of lost opportunity but also it adds spend to our systems. We’ve got to store grain in individual silos depending on the certification and we can lose opportunity if we haven’t got product that is certified for Korea.”

Kennedy said that there is still no domestic regulation around organics and said that, though it is not within the scope of the Deloitte review, the industry is hoping this situation will be addressed some time down the track.

“There’s no domestic regulation and it’s a big challenge for us,” he said. “Having domestic regulation around the term ‘organic’ would assist the industry and prevent the players who choose to short cut and not do the right thing.”

But overall he is positive about the industry. He welcomes the establishment of AO as the peak body for the Australian organics industry and is looking forward to the future, both from the point of view of his own business and that of the broader sector.

“The industry’s matured. It’s coming together and it’s a force to be reckoned with. We’ve moved on from being on the hippy fringe, so to speak, and we’re here to stay,” he said.