Organic Market Report discussion: From regenerative to Brexit, Amazon to the cost of living crisis

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Regenerative agriculture, Amazon and the post-Brexit trading environment were all topics that came up for discussion in a lively Q&A session that followed the launch earlier this week of the 2022 Soil Association Organic Market report

Hosted by the Soil Association’s trade relations manager, Lee Holdstock, the session brought together three panelists – Martin Sawyer, CEO, Soil Association Certification, Clare McDermott, Soil Association business development manager and Mark Haynes, Soil Association strategic retail advisor – to take questions on a range of topics raised by attendees of the Report launch event. 

Regenerative – it’s part of the new language 

Regenerative agriculture is a term that is increasingly heard in debates about sustainable food and farming. But how well defined a concept is it, and what about concerns that it might begin to displace organic? The panelists were asked what they knew about consumer preferences in this area, and whether these might already be influencing purchasing decisions. 

Martin Sawyer said regenerative was “clearly part of the new language that is emerging”. He said definitions of regenerative were not always clear (or the same), creating room for confusion, adding that the Soil Association wanted to help “have a better informed discussion around the whole agroecology and regenerative space and give it some shape”. 

Sawyer noted the emergence of a regenerative movement, most notably in the US, where schemes such as ROC (Regenerative Organic Certified) have emerged and are positioned as ‘organic-plus’. He acknowledged the value of approaches that incorporate specific farm outcomes in their metrics. The Soil Association acknowledged that “it (regenerative) is a language that is appropriate”, but was keen to see “clear definitions” developed and agreed, to avoid the risk of greenwashing. 

Clare McDermott said that regenerative was definitely something consumers were beginning to talk about. Suggesting that it presented both a challenge and an opportunity for organic, she said: “Consumers are looking for shortcuts. And this is possibly something we’ve not made enough of in the past, in terms of guidance about how to make sustainable food choices. The only legally certified system – in terms of agroecology and regenerative approaches – is organic”. 

McDermott suggested that in future the organic symbol could promoted more actively as a shortcut: “Organic is regenerative. And I think it’s really important for us to show that organic delivers regenerative outcomes”. 

Is organic becoming more niche?

The 2022 Organic Market Report shows that organic sales growth in the supermarket channel has slowed, while online and specialist home delivery retailers haver performed strongly. Did this mean that organic was becoming niche? 

Clare McDermott said that shifting retail channel preferences were in fact a sign of organic’s broader appeal. She said that while online growth was impressive, it was “coming from a smaller base”. She added: “The fact that online is over performing currently – and offering that extra depth of range – doesn’t take away from the fact that supermarkets are still 65% of the market. Of course that also includes their own online activities, which are significant as well.

Mark Haynes said that a “shifting demographic purchasing online” was also in play. “I suspect some of the core organic, older generation have been moving to online. The depth of range, making availability and choice a priority, is definitely helping online.”

Amazon and organic – an ethical quandary? 

The revelation in this year’s Organic Market report that Amazon is now the largest retailer of organic in Britain prompted audience questions about the appropriateness of Amazon as an organic partner. 

Clare McDermott said: “As we’ve shown, Amazon is one of the largest retailers of organic. It’s a platform, a marketplace, where many who are on this call sell through and for whom it constitutes a significant proportion of sales. It’s also where people shop.” She added that by working with Amazon on its Climate Friendly Pledge (a scheme designed to guide shoppers to more sustainable products via third-party certification schemes including EU Organic, Soil Association, Fairtrade Foundation and Carbon Trust), there was an opportunity help Amazon gain a deeper understanding of sustainability criteria. 

Martin Sawyer said that the Soil Association had a good track record of engaging organisations in dialogue on wider sustainability and ethics issues. He added that there were numerous examples from around the world of how organisations have been positively influenced in these areas as a result of campaigners, investors and consumers nudging  them in a environmentally and socially better directions.

Cost of living crisis – what impact for organic? 

With household incomes being squeezed as Britain’s cost of living crisis worsens, how might this impact organic? Could this be 2008 revisited? 

Clare McDermott acknowledged that the situation would be “tough for many people, across all the demographics”. But she said there were significant differences between 2008 and now: “For one thing, we’ve had 10 years of continuous sustainable growth – sustainable being the key word. We are in a different place. Organic is no longer seen as something that is faddish. This growth has been built on the underlying, long-term strategic health and sustainability macrotrends”. 

Supermarkets, she said, would be much less likely to engage in the wide-scale delisting of organic products that occurred in 2008. She acknowledged that it was not going to be an easy ride, and said the sector should “double down on the message that we’ve been working on – that nature has the answer, and organic is nature”. 

Mark Haynes suggested that increasing costs of conventional farming inputs, and potential restrictions on their use, could soon start to feed through to prices in grocery aisles, closing the price gap between organic and conventional. 

International trade – Brexit fallout, ‘supply chain disconnect’ 

What do the prospects for UK organic exports look like one year on from Britain’s formal departure from the EU? 

Martin Sawyer noted that the very recent removal of the Annex IV facility (effectively imposing a re-export ban on UK organic businesses) had had an “immediate impact on businesses”. He estimated that around 30% of UK organic exports had operated under the Annex IV arrangement. “We don’t know yet how this will settle out and if businesses will find alternative solutions and routes to market. And we see similar problem coming down the track in the way that products move into the UK from Europe – moving from third countries through Europe – and we think that will have a similar scale impact.”

Sawyer added: “I think what we have to hope is that over the six to 12 months companies find the channels – the routes and supply model – to allow product flow”. But he accepted that this might not be possible and that “some negativity” in terms of impacts was to be expected. 

Earlier, Sawyer spoke about the “huge opportunity” for UK organic businesses to engage with, and identify, new export markets in the “global export space”. 

But he also warned about the impacts of a “supply chain disconnect”. While the growth in the UK organic market for consumer facing product was “really fantastic”, organic farmland remained stuck at around 3% of land usage. Given organic farming’s benefits across climate, health, sustainability and nature metrics, there was a strong case for prioritising better supply chain connectivity and “long term partnerships between the brands, retailers and farming community in the UK”. 

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