Purpose of this project
The Western Australia Department of Primary Industries and Regional Development has commissioned Policy Partners to review the indicators of maturity and quality of the Organic Industry in WA compared with benchmarks in other States.
WA contributes 26 per cent of the total value of Australian agricultural production, but only contributes around 10 per cent to total Australian production of organic livestock, vegetable, fruit and grains. It also contributes around 14 per cent of eggs, 3 per cent of dairy, 10 per cent of sheep, and 5 per cent of beef.
Consequently, organic production could be viewed as significantly underdeveloped in WA, when compared with the rest of Australia.
Furthermore, Australian exports of organic products is growing at around 18 per cent annually. Consequently, WA may be missing out on significant growth potential for its agriculture industries.
Policy Partners will be engaging with industry to consider the opportunities, challenges and options for development of the WA organics industry.
Organic agriculture is a production system that sustains the health of soils, ecosystems and people. It relies on ecological processes, biodiversity and cycles adapted to local conditions, rather than the use of inputs with adverse effects. Organic agriculture combines tradition, innovation and science to benefit the shared environment and promote fair relationships and a good quality of life for all involved.
There are around 200 organic operators in Western Australia who have their production systems certified as organic. These producers are distributed across the State, but the vast majority of operators are located within the region bounded by Perth, Margaret River and Albany. They produce the full range of agricultural products, but using organic systems of production.
In 2018, it is estimated that there was around 3½ million hectares in WA fully certified organic. This represents about 10 per cent of total agricultural land. A further 1 million hectares was in the process of conversion to organic (Australian Organic Market Report 2019).
WA contributes around 10 per cent to total Australian production of organic livestock, vegetable, fruit and grains. It also contributes around 14 per cent of eggs, 3 per cent of dairy, 10 per cent of sheep, and only 5 per cent of beef (Australian Organic Market Report 2019). In comparison, WA contributes 26 per cent of the total value of Australian agricultural production (Australian Bureau of Statistics, Value of Agricultural Commodities Produced, Australia, 2018-19).
Organic products grown and manufactured in Australia are exported to 61 countries, with new markets opening up in South America, Oceania, Africa, the Middle East and Europe. Key export markets for Australian organic food are the United States, Europe, China (including Hong Kong) and the Republic of Korea. Exports of organic products have been growing strongly, with tonnages up 13 per cent in 2018 (Australian Organic Market Report 2019).
So organic production could be viewed as significantly underdeveloped in WA, when compared with the rest of Australia. And consequently, WA is missing out on significant growth potential for its agriculture industries.
Anecdotal feedback from organic producers in WA indicates that they face significant disadvantages in comparison with conventional producers in the State, but also in comparison with organic producers in other States.
- WA has a relatively small domestic market and locational disadvantages in respect of supplying the larger population centres on Australia’s eastern coast.
- The supply chain for many organic products is relatively undeveloped, particularly for many broadacre products. There are significant problems relating to lack of scale in the handling of grains, for example.
- The lack of scale also aggravates problems with poor continuity in supply of produce.
- There is a lack of agglomeration benefits, exacerbated by the vast area of the State and a relative focus on broadacre agriculture. In addition, support networks are very difficult to maintain.
- The costs of conversion to organic production are significant, and there is no premium in the price received during the long period of conversion. The premium received for organic products after conversion is often not sufficient to compensate for the higher production costs and the conversion period. Consequently, organic production is often adopted for philosophical or lifestyle reasons, rather than for commercial reasons.
- A GMO contamination court case (WA Supreme Court 2014, Marsh v Baxter) denied compensation for an organic grain producer whose certification was revoked when his crop was found to have been contaminated by GMO canola from a neighbouring farm. While the issues are complex, the regulatory and legal frameworks were seen by organic producers and potential converters as not being supportive, and significantly elevated the perceived risks of organic production.
Some of the challenges facing the WA organic sector could be characterised as similar to those facing conventional producers, but the issues are more intense due to the lack of scale, and there are also additional sector specific issues.
DPIRD has commissioned several substantive reports in the area of premium products and market opportunities. The organic sector is not covered explicitly in these reports, but is acknowledged as one being one premium market with significantly marketing opportunities. These good quality reports provide a useful base from which to consider the implications and challenges for the organic sector specifically.
This DPIRD project is seeking a consolidated understanding and quantification of the potential opportunities for growth of organic production and processing in WA based on specific competitive advantage and industry profile.
Ultimately, we view the question as being about how the WA Government can support the organic sector to succeed in harnessing the available market opportunities, and what strategies the industry can itself adopt to succeed.
Synthesis of evidence, analysis, expert opinion, and producer perspectives will underpin this project.
Our report will focus on the insights attained from stakeholders and a strategy for improved sector performance.
We expect to undertake stakeholder engagement during July and August, including regional workshops and video conferences, targeted interviews with key players, and surveys.