Alberta Organics Strong, With Room to Grow

The Alberta demand for organic products in grocery stores is growing a whopping 44% per year, according to ACNielson. Although still a very small part of the total grocery package, the growth in organics presents significant opportunities for organic producers and processors.

“Alberta imports $2 of organic products for every $1 that is grown locally” reports Rosalie Cunningham, of Alberta Agriculture and Food, in a recently released study. “While Alberta organic operators will never be able to grow or produce certain organic products that are in demand (i.e., coffee, bananas), there could be opportunities [for] Alberta grown organic products.”

The Alberta study found that Albertans purchased $48 million of organic food in grocery stores in the year ending August 2006. Although only seven percent of Alberta’s organic producers currently sell into this market, these figures show potential for the future of Alberta’s organic producers.

Selling to grocery stores is a major challenge. Stores require a consistent supply of large volumes of high quality products. According to Rosalie, “It is highly unlikely that one producer will be able to supply such a market. It is also possible that one province will not be able to supply the market alone. In order to meet this demand, producers are going to have to work together and coordinate their efforts quickly.”

After grocery stores, consumers second most common source of organic product is directly from farmers. Currently, almost a quarter of Alberta’s organic producers sell directly to consumer, either at the farm gate or at farmers’ markets. These markets “have good growth potential,” according to Rosalie. For producers who are able to make the direct connection with consumers and especially for those near large urban centres, selling directly to consumers allows producers to capture more of the consumer dollar.

Smaller specialty natural and organic food stores are another common place for consumers to access organic products. “It is in this area that regionally focused producers can capitalize upon their uniqueness and find other opportunities,” claims Rosalie. These regional stores are more welcoming of unique local products. They often market a combination of organic, locally produced, and environmentally friendly products, which make Alberta’s organic products a natural fit. According to Rosalie, opportunities also exist for organic producers who “are willing to develop the relationship and meet the product and business needs of the natural health food store.”

Only 14% of Alberta’s organic producers add value to their products; however these products contribute a third of cash receipts for organic products. Clearly, processing offers higher economic returns.

Just over a quarter of Alberta’s organic producers sell to processors. It is primarily the processors who sell to retail groceries. In this area consumer demand greatly outstrips local production, yet only a small percentage of the organic products processed in Alberta are consumed in Alberta.

The ACNielson data shows that Canadians purchased more than $1 billion of organic product per year. The demand for organic products is increasing 20 to 30% per year, even though the demand for conventional products is only increasing 2-4% per year. This suggests that there is room to grow organics.

There are currently only 40 organic processors in Alberta, doing primarily primary processing. As Rosalie points out, “the transition period for a processor is not as long [as for a producer]. It is also possible for a processor to handle both organic and nonorganic product. With modification of some practices, ingredients, and increased record keeping, it is possible for an existing processing plant to become certified.”

Alberta is home to roughly 240 certified organic producers. Their main products are hay or feed, oat, wheat or durum, other grains, oilseeds, pulses and vegetables, as well as beef and poultry. There is good potential for increased organic production if producers are able to balance the needs of production with the needs of their consumers.

The great demand for organic product in Alberta is fueled by consumers who are concerned with their health, and who see organic products as safer and more nutritious. The number of people who buy organic products is increasing, as is the amount of organic product that they buy. In Canada, organic sales rose past $1 billion last year. According to the Alberta study, “To many consumers, organics represents a more healthful option. This established niche market is not going to go away.”

See the complete marketing report, "Farm to Fork: Organics in Alberta" or contact Rosalie Cunningham at 780-415-9013. For the Canadian marketing report see Docs/RetailSalesOrganic_Canada2006.pdf

 

Brenda Frick, Ph.D., P.Ag., is the Research and Extension Associate for Organic Agriculture Centre of Canada at the University of Saskatchewan. She welcomes your comments at 306-966-4975 or via email at organic@usask.ca.

 

Posted September 2007