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Canada's Organic Sector: Trends, Challenges and Opportunities

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Canadian <strong>Organic</strong> Science Conference<br />

Winnipeg, Manitoba<br />

February 22, 2012<br />

Vitins Consulting


$59 billion US<br />

37 million ha of ag l<strong>and</strong> is organic<br />

0.9% of all ag l<strong>and</strong> is organic<br />

1.6 million producers; more than ¾ in<br />

developing countries<br />

Strong markets still growing; new<br />

markets emerging in BRIC<br />

70 countries have organic<br />

regulations/st<strong>and</strong>ards of some type<br />

Source: IFOAM/FIBL


source: FiBL / IFOAM 2010


‣Most important markets are regulated, with unique m<strong>and</strong>atory<br />

st<strong>and</strong>ards <strong>and</strong> requirements (US, EU, Japan)<br />

‣Other markets have recently introduced draft / new regulations:<br />

(South Korea, Taiwan, Australia, Brazil, China, Israel, etc)<br />

‣As markets become more regulated, countries are looking towards<br />

equivalencies, harmonization.<br />

‣Canada has a strategic edge with access to 95% of world market<br />

through equivalencies with US & EU, but some restrictions apply…<br />

‣Canada’s market is heavily supplied by imports (75%)<br />

‣Need to differentiate & br<strong>and</strong> Canadian products from competitors<br />

‣Focus on growing our domestic market <strong>and</strong> sector through<br />

consumer education, training, mentorship, value chain, value-add


• Approximately 3,700 farms, 695,463 hectares plus<br />

210,000 ha for wild harvest <strong>and</strong> pasture.<br />

• Certified organic farms account for 1.7% of the<br />

total number of farms in Canada.<br />

• More than 1,100 certified organic processors <strong>and</strong><br />

h<strong>and</strong>lers of ingredients <strong>and</strong> consumer-ready<br />

products.<br />

Source: Canadian <strong>Organic</strong> Growers


1200<br />

1000<br />

800<br />

Farms/primary producers 2009<br />

600<br />

Farms/primary producers 2010<br />

Processors (includes food<br />

manufacturers & seed cleaners)<br />

400<br />

H<strong>and</strong>lers (includes packers, brokers<br />

& retail)<br />

200<br />

0<br />

BC AB SK MB ON QC NB NS PEI NFL YK NT<br />

SOURCE: Canadian <strong>Organic</strong> Growers


Certified <strong>Organic</strong> Farms in Canada 1992-2009<br />

4500<br />

4000<br />

3500<br />

3000<br />

2500<br />

2000<br />

1500<br />

1000<br />

500<br />

0<br />

92 93 94 95 95 97 98 99 00 01 02 03 04 05 06 07 08 09<br />

SOURCE: Canadian <strong>Organic</strong> Growers


• Retail sales of organic food: estimated $2 billion in 2008<br />

(doubling sales in two years)<br />

• 2.5% of total food retail sales<br />

• Private label accounts for 21%<br />

• COTA estimated the market was worth $2.6 billion in<br />

2010<br />

• Dem<strong>and</strong> is increasing but supply is tight<br />

Source: AAFC Retail Study 2008; COTA


Packaged & Prepared (15%)<br />

Meat, Fish, Poultry (1%)<br />

Beverages (18%)<br />

Dairy & Eggs (13%)<br />

Bread & Grains (12%)<br />

Fruit & Vegetables (41%)<br />

Source: AAFC Retail Study 2008


•Soya drinks<br />

•Milk<br />

•Yoghurt<br />

$47.3M<br />

$37.2M<br />

$35.4M<br />

•Cereals<br />

$32M<br />

•Coffee<br />

•Soup<br />

•Eggs<br />

•Breads<br />

•Baby Food<br />

•Juices & Drinks<br />

$27.2M<br />

$19.5M<br />

$15.7M<br />

$13.1M<br />

$11.4M<br />

$9.8M<br />

Source: Statistics Canada Import Data Source: AAFC Retail Study, 2008


Conventional Retail: $925.8 million (45%)<br />

Direct to Consumer: $400 million (20%)<br />

Other Retail: $712 million (35%)<br />

(specialty markets, natural health food stores,<br />

foodservice)<br />

Source: AAFC Retail Study


• GE Alfalfa has been approved in the US, <strong>and</strong> is awaiting varietal<br />

registration here: the first perennial GE, <strong>and</strong> critical organic rotation<br />

• The Government has just concluded “Low Level Presence” threshold<br />

consultations with industry.<br />

• What does “coexistence” look like? Is it a bad word?


• All signs point to declining<br />

producer numbers in 2010,<br />

• Just as the market is<br />

heating up <strong>and</strong> global<br />

commodity prices are near<br />

record-high<br />

• How can we find long-term st<strong>and</strong>ards funding?<br />

• How can we avoid the old cyclical agriculture up-<strong>and</strong>-down?<br />

• How can we ensure producers stick with certification for the long<br />

term?<br />

• How can we support new entrants, provide knowledge transfer,<br />

<strong>and</strong> encourage conversion?


•Almost 50% of Canadians<br />

believe it is more important<br />

a food be labelled natural<br />

than organic (CBC Jan.<br />

2010)<br />

•60% of Canadian<br />

consumers believe it's<br />

important a new product be<br />

made from "all-natural<br />

ingredients," while 45 %<br />

have "greater trust" in<br />

natural products than those<br />

labelled organic<br />

(Br<strong>and</strong>Spark International)


• Under the OPR, we cannot use “Certified <strong>Organic</strong>” on our labels<br />

• But: because most provinces do not yet regulate organic within the<br />

province, there is organic (certified) <strong>and</strong> organic (not certified)<br />

product confusing <strong>and</strong> competing for the same consumer<br />

• How do we address the<br />

double st<strong>and</strong>ard?<br />

• Do we maintain two-tier<br />

organic within the province<br />

or do we try to streamline<br />

the rules across the<br />

country?


Recently conducted SWOTS:<br />

• <strong>Organic</strong> Value Chain Roundtable strategic<br />

planning<br />

• Br<strong>and</strong>ing <strong>and</strong> Marketing Campaign<br />

Research<br />

• COTA’s Long-Term International Strategy<br />

• Provincial


Strengths<br />

◦ New st<strong>and</strong>ards, certification, accreditation systems<br />

◦ Increased organic sector capacity<br />

◦ Canada Br<strong>and</strong> <strong>and</strong> buyer image of Canada<br />

◦ Diversity: consensus st<strong>and</strong>ards, cooperation, cross-pollination<br />

◦ Dedicated industry organizations<br />

◦ Research<br />

<br />

Weaknesses<br />

◦ <strong>Challenges</strong> facing new <strong>and</strong> existing producers, processors, distributors<br />

◦ Limited data <strong>and</strong> analysis of full value chain<br />

◦ Risk management along the supply chain, public relations<br />

◦ Diversity: horizontal sector across all commodities <strong>and</strong> scales<br />

◦ Confusion<br />

◦ Lack of Funding


<strong>Opportunities</strong><br />

◦ Significant growth in consumer dem<strong>and</strong>, import displacement<br />

◦ Strategic equivalencies <strong>and</strong> trade recognition, exports<br />

◦ Growing consumer awareness of food issues<br />

◦ Potential to increase domestic supply<br />

◦ Potential to connect with other agriculture organizations<br />

◦ Research<br />

<br />

Threats<br />

◦ Low market power <strong>and</strong> downward price pressure across industry<br />

◦ GE impacts on organic integrity <strong>and</strong> market<br />

◦ difficulties in “connecting the dots” — with each other, other agriculture<br />

organizations, with consumers<br />

◦ Attrition<br />

◦ Negative publicity


Tagline/Slogan<br />

It’s in our good nature<br />

nature<br />

C’est dans notre bonne<br />

Br<strong>and</strong> Essence<br />

Br<strong>and</strong> Vision<br />

Br<strong>and</strong> Mission<br />

Positioning Statement<br />

Value Proposition<br />

Br<strong>and</strong> Pillars<br />

Our better nature<br />

High quality Canadian organic products in every home<br />

To grow <strong>and</strong> promote a vibrant Canadian <strong>Organic</strong><br />

<strong>Sector</strong><br />

The Canadian <strong>Organic</strong> <strong>Sector</strong> provides organic products<br />

of the highest st<strong>and</strong>ards – it’s in our nature to care for<br />

the health <strong>and</strong> vitality of all communities<br />

Canada <strong>Organic</strong>, the closest thing to nature. It starts<br />

with a healthy attitude, pure air, water, <strong>and</strong> l<strong>and</strong>.<br />

Caring Credible Committed<br />

Br<strong>and</strong> Equities Integrity Sustainable Healthy Canadian<br />

Passionate<br />

Source: OVCRT 2011


Recommendation: evolve the initial tagline<br />

“It’s in our good nature” to a simpler <strong>and</strong><br />

action oriented option:<br />

Option A: Canada <strong>Organic</strong>, For the Better<br />

Option B: Canada <strong>Organic</strong>, Eat Real<br />

Source: OVCRT 2011


A Voice for <strong>Organic</strong><br />

“As a teacher <strong>and</strong> a mom, I’ve joined the<br />

movement toward organic food. Since it’s<br />

produced without persistent toxic pesticides, it’s<br />

healthier for my kids. They like it because it<br />

tastes better. I like it because it’s good for the<br />

environment. Go organic <strong>and</strong> join a movement<br />

that’s growing every day.”<br />

Carole Thomas<br />

Teacher<br />

Source: OVCRT 2011


GrowingCanadianGoodness.ca<br />

Growing <strong>Organic</strong> food means more than just<br />

farming without persistent toxic pesticides. It’s<br />

about farmers meeting stringent, governmentregulated<br />

st<strong>and</strong>ards. Choosing agricultural<br />

practices that keep our soil healthy, our water<br />

clean <strong>and</strong> our animals happy. And most<br />

importantly, providing better-tasting, nutrientrich<br />

food.<br />

<strong>Organic</strong> farmers aren’t just growing food.<br />

They’re growing Canadian goodness.<br />

Source: OVCRT 2011


Think Before You Eat<br />

Why you should eat organic food:<br />

•It’s great tasting <strong>and</strong> nutrient rich<br />

•It’s produced without persistent toxic pesticides<br />

•It’s healthy for soil, plants <strong>and</strong> animals<br />

•It helps the environment by keeping our water<br />

clean <strong>and</strong> reducing our carbon footprint<br />

Next time you’re planning a meal, choose organic<br />

food.<br />

Think Canada <strong>Organic</strong>.<br />

Source: OVCRT 2011


Think Before You Eat<br />

Planning a meal? Think before you eat.<br />

Say yes to:<br />

•Healthy soil, plants <strong>and</strong> animals<br />

•Nutritious, real food<br />

•Environmental excellence<br />

•A healthier future<br />

Think Canada <strong>Organic</strong>.<br />

Source: OVCRT 2011


It’s a good sign.<br />

It’s a small symbol, but it carries a big<br />

message. It verifies the food bearing this<br />

label is produced under rigorous organic<br />

st<strong>and</strong>ards regulated by the government. It<br />

also represents good health, nutritious food<br />

<strong>and</strong> environmentally-beneficial practices. It’s<br />

not just a sticker.<br />

It’s a sign of goodness.<br />

Source: OVCRT 2011


Thank goodness, it’s organic<br />

Say yes to:<br />

•Healthy soil, plants <strong>and</strong> animals<br />

•Nutritious, real food<br />

•Environmental excellence<br />

•A healthier future<br />

100% Canadian Goodness<br />

Source: OVCRT 2011


Thank goodness, it’s organic<br />

Enjoy delicious <strong>and</strong> healthy foods, switch to<br />

Canada <strong>Organic</strong> food<br />

It’s produced under stringent, governmentregulated<br />

st<strong>and</strong>ards<br />

It offers great taste <strong>and</strong> vital nutrients in every<br />

bite<br />

It’s good for the environment because it keeps our<br />

water clean <strong>and</strong> reduces our carbon footprint<br />

Switch to organic food <strong>and</strong> experience goodness.<br />

Source: OVCRT 2011


Caring about our future today<br />

As organic farmers, we're not only helping Canadian<br />

families, we're also caring for their future. We proudly<br />

produce organic food because:<br />

•It's great tasting, rich in nutrients <strong>and</strong> healthy for our<br />

families<br />

•It's produced under rigorous, government-regulated<br />

organic st<strong>and</strong>ards, which do not allow the use of<br />

persistent toxic pesticides<br />

•It's good for the environment because it keeps our<br />

water clean <strong>and</strong> our soil healthy <strong>and</strong> reduces our<br />

carbon footprint<br />

Choose Canada <strong>Organic</strong>.<br />

Source: OVCRT 2011


<strong>Organic</strong><br />

Passionate<br />

Global<br />

Healthy<br />

Community<br />

People<br />

Sustainable<br />

Fresh<br />

Responsible<br />

Professional<br />

47


Thank you<br />

Gunta Vitins<br />

Vitins Consulting<br />

Email: gunta.vitins@gmail.com<br />

Tel: 778-772-5996<br />

Vitins Consulting<br />

48

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