Covid has stimulated demand for organic products around the world. RusAg expects that the global organic market will grow by 12% to USD 140 billion in 2021. In Russia, this market may reach the RUB 12 billion mark by the end of the year.
‘Given the existing demand, the Russian organic market has a potential to grow. By the end of the year it may be worth RUB 12 billion,’ said Andrei Dalnov, Head of the RusAg Centre for Industry Expertise, speaking at Golden Autumn – 2021, a Russian agricultural exhibition.
Experts associate growing global demand for organic products with a general trend towards a healthier lifestyle. Organics are extremely popular in the United States, which consumes approximately 50% of organics produced globally; followed by the EU (35%) and China (about 10%). In terms of size of the domestic market, worth mentioning are the UK and Switzerland.
‘Where organic markets are well developed, the share of organics in the total food market does not normally go above 5-6%. Switzerland, Denmark and Austria, where it is about 10%, are notable exceptions. Denmark and Switzerland lead the way in terms of per capita consumption. In each of these countries, annual per capita expenses stand at about USD 400,’ added Mr Dalnov.
He went on to say that the Russian organic market had a great import substitution and export potential. The Russian organic production model is most successful in those agribusiness segments which are deeply integrated into global trade and have established contacts with the markets with high demand for organic products. Organic food exports, just EUR 20 million today, could grow dozens of times by 2025 if the right approach is adopted.
‘Whether or not a particular segment is able to go organic depends largely on the percentage of competitive farms and small-sized organizations that are flexible enough to modify their production processes. In this regard, there are good opportunities for grains, oilseeds and leguminous crops, widely produced by these farms and widely exported,’ explained Mr Dalnov.
Specifically, there is demand for Russian organic wheat, green peas, soybeans and buckwheat. Also relevant is the effect of a low base, as only 0.3% of Russia’s arable land is used for growing organics, against around 10% in the EU.
In the animal breeding sector, the most promising segment for organics is dairy farming. It is one of those agribusiness segments in Russia where farms are most competitive and mobile enough to meet growing demand. Increasing organic milk production will naturally drive the need for organic green feeds.
Domestic organic market growth will be buoyed by increasing buyer confidence in organic certification and by the consumer’s ability to distinguish organic products from other, non-certified, items with the help of such labels as ‘farmer’, ‘eco’ or ‘bio’. According to Growing For Knowledge, an international market research company, some of the products, such as dried fruit, honey, crispbread, pastila (a Russian fruit-based confectionery) that Russian healthy lifestyle buffs tend to classify as healthy, could well be certified and branded as organic.