Netherlands Becoming World’s Trading Hub for Organic Products

Tomatoes

February 26, 2018//-The Netherlands has increasingly become a trading hub for organic products. Dutch exports of organic products are valued $1.5 billion of which 80 percent are destined for Germany, according to the February Global Agricultural Information Network (GRAIN) report.

This number includes organic products produced in the Netherlands such as potatoes, vegetables, eggs, cheese and meat and also imported organic products, it added.

The report compiled by the U.S. Department of Agriculture (USDA) staff noted: ” In 2016 Dutch imports from the United States totaled $1.2 million, dominated by carrots and blueberries. The Netherlands is the seventh largest organic market in the EU with an estimated value of $1.9 billion in 2017″.

The average consumer spends over $110 on organic products annually. The current market share for organics is 3.3 percent and is expected to double in 2025, it revealed.

Production

In the Netherlands almost 60 thousand hectares are used for organic farming, representing between three and four percent of total agricultural land. This number is low compared to the average use in the EU which is six percent, the report said.

“Livestock, arable and produce farmers all need more farmland to produce organically. Half of the total organic acreage is used for permanent grassland. The other half is mainly used for producing organic vegetables, grains and potatoes”.

It is expected that the acreage of organic farmland in the Netherlands will go up due to growing demand for organic products. The Dutch Organic Industry Association (Bionext) expects more dairy, arable, poultry and pig farmers to convert to organic production in the future.

Better margins are the real drive for the vast majority of today’s farmers. Only a few switch for ideological reasons. Industry experts are saying that five years after conversion, profit margins will grow between 25 and 50 percent.

The Dutch government offers subsidies for organic farmers who need to invest like purchasing new equipment, it noted.

Trade

“There are no total trade statistics available for the Netherlands because organic products are products differentiated through certification only.

There is no specific HS code for organic products. However since 2011, the U.S. Bureau of the Census has collected data on certified organic products imported into the United States and for 37 products exported by the United States”.

In 2017, U.S. exports to the Netherlands of organic products which are covered by HS codes totaled over $1.5 billion making it the third largest export market in the EU after the U.K. and France. U.S. exports are up by 32 percent compared to 2016, driven by growing demand for carrots, lettuce, broccoli and peppers.

Additional codes for organic exports from the United States may be released in the future. In the meantime, it is difficult to calculate trade in other organic products such as packaged products, grains, dried fruit and nuts. Store checks however show that you can find U.S. organic sweet potatoes and dried fruits at most Dutch retail outlets.

Policy and Regulations

The production and import regulations and standards for organics are harmonized in the EU. The United States and the European Union (EU) have an equivalence arrangement on organics. This means that as long as the terms of the arrangement are met, organic operations certified to the USDA organic or EU organic standards may be labeled and sold as organic in both countries.

Since 2012, this partnership streamlines trade between the two largest organic producers in the world, and provides organic farmers and businesses access to a nearly $80 billion growing combined market.

Consumer Market

The Netherlands is the seventh largest organic market in the EU. Germany and France together represent nearly half of the EU organic market. The Dutch organic market grew in 2016 to 1.4 billion euro ($1.75 billion).

Its market share grew from 2.9 to 3.3 percent in 2016 and the highest market shares can be found in eggs followed by dairy and fresh produce. For the past five years, organic sales grew annually by ten percent while the total food market grew by only three percent.

The market share for organics is expected to grow to seven percent in 2025, similar to current market shares in Sweden and Denmark. The following segments demonstrated the highest growth rates and have good potential for the future: dry goods, bread and pastry, eggs, meat, soup, baby food and snack food.

Within the EU, the highest sales per person of organic food stuffs, more than €150 per person, were reached in Denmark, Sweden, Austria and Luxembourg while the lowest sales, less than €10 per person are found in Members States in predominantly Eastern Europe. The per capita consumption of organic product in the Netherlands is valued at €90, somewhat above the EU average number.

Distribution

Over half of the organic sales in the Netherlands are generated by regular food retailers. For 2016, their sales were valued at €735 million ($919 million).

Organic specialty stores are the second most important distributor of organic products in the Netherlands with sales valued at €336 million ($420 million).

The foodservice industry ($288 million) and other distribution channels are responsible for the remaining. On-farm sales & farmers markets ($44 million) and on-line sales ($25) are the largest within the latter category.

Regular supermarkets play an important role in offering organic products to the average Dutch consumer. Supermarkets offer a variety of organic products ranging from fresh produce and fresh meat to dry goods and wines. Organic products are placed next conventional products within the product category.

Store checks show that organic products on average are 50 percent more expensive than conventional products. For some products (almonds, onions, cereal bars and pork) the price difference is even more than double while in other cases prices for organic products (spaghetti, hazelnuts and tomato sauce) were lower than their conventional variant.

Recommendations

Farmers should also be aware that converting to organic production takes two years. Farmers also need to invest in new agricultural equipment and storage facilities and find new clients for their products. It simply requires a different way of doing things, the report recommended.

African Eye Report

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