Surging demand for organic meats is causing global supply to tighten. A number of regions are reporting undersupply due to organic meat production not keep pace with demand.
The most affected region is North America where supply has been unable to meet demand since the USDA implemented the National Organic Program (NOP) in 2002. Organic meat products have been imported into the US from Latin America, Australasia and Canada since. Imports are increasing at a fast rate with the volume of non-American organic pork doubling in 2005 alone.
Western Europe is also experiencing acute supply shortages. Organic meat supply has not kept pace with demand with a number of countries reporting undersupply this year. The organic beef and pork segments are the most adversely affected with prices rising across Europe. Danish Crown, the largest producer of organic pork, has reported a 36% price rise compared to last year.
Facing high demand, British retailers have started offering fixed contracts to organic meat producers to secure supply. Sainsbury’s and Tesco are giving meat producers contracts that guarantee fixed prices over 5 years. Although the initiatives are gaining acceptance by organic farmers, imports will continue to play an important role because of low domestic production levels. Like the US, organic meats are imported from a number of countries into the UK.
Organic meat supply is also tightening in regions like Latin America and Oceania. Countries like Brazil and Australia have export-geared meat industries with organic meats playing an increasingly important role. Friboi, a leading Brazilian producer of organic beef, is expecting export sales to triple this year. High global demand is leading new organic meat producers to spring up in countries like Chile and Nicaragua.
With demand for organic foods continuing to strengthen across the globe, organic meat supply shortages are expected to continue in the foreseeable future. Production will continue to lag demand in most countries because of the conversion period for organic products.
Some exporters will find it difficult to meet supply gaps however because of the differences in organic standards between regions. For instance, USDA standards for organic meat products differ from those of the EU. Trade liberalisation maybe removing tariff barriers however standards are becoming the major impediment to free trade in the global organic food industry.
Posted: July 11th 2006
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