THE green fields on Steve Skopilianos' organic farm are a bright splash against the gloomy sky. In the three years since he obtained organic certification for his third-generation family farm at Keilor, in Melbourne's north-west, sales of his organic salads have reached about $5 million a year.
And he has started selling strawberries, snow peas and pumpkins under his Ladybird Organics label. But such optimism comes at a testing time for the niche industry, which some insiders say has hit a new low.
Four Victorian organic businesses have closed in the past year amid the dire economic climate, including one in Melbourne last Friday. Other businesses have been forced to move online to cut overheads.
Concerns have also been raised over the fire sale of Macro Wholefoods to Woolworths. The deal was approved by the Australian Competition and Consumer Commission this month after it noted the organic retail chain was otherwise unlikely to survive "due to its declining financial position".
"It's a bit like survival of the fittest," says Andrew Monk, chairman of Biological Farmers of Australia. "There is a lot of hot air that the industry is cooking with gas across every sector — that's not the case. The demand is there, but it is nothing like what some claim."
Gentle Harvest wholesalers, whose customers included IGA and FoodWorks, was the latest organic business to close its doors, last Friday. General manager Michael Goldsworthy says the industry has sunk to one of its lowest points. "I don't think it's that strong at all and I can't see it getting better soon. Because of the economic climate, a lot of people are worried about spending.
"We serviced about 50 organic retailers in Melbourne and I don't know any who are doing well enough to say they are growing. I think there is still an attitude among consumers that organics are overrated or even a rort."
Remarkable growth in the estimated $600 million industry — which enjoyed an 80 per cent surge in farm-gate sales between 2004 and 2007 — has been dented by the global economic downturn. Sales among premium processed products have dropped, while staples such as food and vegetables have remained strong.
"Some people who see organics as discretionary have possibly pulled back," Dr Monk says. "But at the same time you've got some of the horticultural wholesalers saying they are posting their best months ever. We're expecting the industry to continue to grow, but maybe not at quite as cracking a rate as it did in the last four years."
The closing of Macro Wholefood's eight food and grocery stores in Melbourne and Sydney will temporarily dampen output, he says. Under the deal, reportedly worth $20 million, Woolworths will rebrand the stores under its new Thomas Dux gourmet banner.
As recently as last year, Macro bosses boasted of plans for up to 40 stores nationally. Last week, the doors closed at its four Melbourne stores.
Its deal with Woolworths has also sparked concerns among some organic farmers. Kevin Collins, of Yellingbo Berries, east of Melbourne, supplied blueberries to Macro and Melbourne-based Harvest Organic, which closed in February.
"I don't think too many growers would want to deal with Woolworths directly, because for the non-organic growers the treatment is pretty fierce," he says. "Most of us prefer to get our product into the organic wholesale industry and bypass the large supermarkets."
Other groups say the sale marks an important step in the shift of organics from a niche to a mainstream industry.
David Dall, senior research manager at the Rural Industries Research and Development Corporation, says: "The industry is moving from something 'trendy' to something that is becoming increasingly important to people for a range of issues — such as the food miles required to deliver the food and the long-term sustainability of production."
Organic industry growth is expected to slow to about 8 per cent this year, from an average annual rate of almost 14 per cent over the five years to 2008-09, according to research group IBISWorld. Organic revenue makes up less than 1 per cent of Australia's total supermarket industry, but costs 70 per cent more than conventional items for an average shopping basket.
Woolworths plans to "ramp up" its organic range, perhaps through the introduction of Macro-label goods such as cereals and nuts, says spokesman Benedict Brook.
Melbourne's first Thomas Dux stores should open within the next two months, he says.
Email a friend
Favourites
Del.icio.us
Facebook
Digg
StumbleUpon
MySpace
Reddit
Newsvine
LinkedIn
Kwoff
Twitter