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A report by the Soil Association confirms that organic sales slumped in 2009 after more than a decade of consistent growth. Sales of organic food, drink and other products fell by 12.9 per cent last year, as the recession impacted on consumer spending. Organic eggs were particularly badly affected. Sales fell by as much as 19.1 per cent and producers were encouraged to switch to free range.

Soil Association policy director Peter Melchett says in the association's Organic Market Report 2010 that the current economic climate is the toughest the organic movement has faced in 20 years, although he insists that there are some reasons for optimism. "We have come through recessions before, and we shall do so again. As this report highlights, in early 2010 organic sales have started to pick up and seem likely to return to growth this year. The Soil Association thinks that there are firm signs of a revival in the organic market, and that there will be a modest growth, of around two to five per cent, during 2010. Many organic companies continue to show great creativity in maintaining a strong customer base. Sales of organic food are still more than three times what they were in 1999 and over 50 per cent higher than five years ago."

Organic eggs accounted for 4.5 per cent of all eggs sold by volume and eight per cent by value in 2009. Retail prices for organic eggs were relatively static throughout the year, and falling demand was apparent across all major retailers, says the Soil Association. "As demand fell the retailers reduced the shelf space available, a move that can often depress sales further."

The Soil Association says that organic egg production fell in response to falling demand. Contracted organic egg producers were encouraged to revert to free range production if they had the required infrastructure and were interested in doing so. "This helped the majority of those who chose to remain in organic egg production to maintain a relatively static egg price for much of the year, although average farm gate prices fell by four per cent in the final quarter."

The report says that organic egg producers did benefit from reductions in feed and energy costs, but says that overall 2009 was a tough year for most producers - if not for everyone. "Some independent producers selling directly to the consumer, or via wholefood and organic shops, reported seeing little of the reported 'slump' in organic sales. But for others the picture was quite different. One told the Soil Association that sales had dropped by nearly a third early in the year, and only recovered to 80 per cent of 2008 levels by the end of 2009."

The report said that one of the UK's largest egg packers had indicated that consumer demand may fall further in 2010, although it predicted that the decline in sales would slow down considerably.

Despite the fall in sales of organic eggs, other higher welfare producers fared better. Sales of barn eggs increased by 18.4 per cent and free range sales rose by 7.8 per cent. At the same time sales of value and standard cage eggs fell by 5.9 per cent and 2.3 per cent respectively.

"Customers appear to be deserting cage eggs for welfare reasons but some are also 'trading down' from organic to free range to economise," says the report.

The Soil Association report does point to one problem for organic eggs that a number of analysts have highlighted in the last year or two - the confusion between free range and organic production. In a survey conducted in December last year consumers were asked to indicate their most popular organic products. Some 53 per cent of respondents said they bought organic eggs - despite the fact that organic eggs account for just 4.5 per cent of all eggs sold. The Soil Association believes that consumers are confused about the different types of egg production.

"The high figure for those claiming to buy organic eggs may indicate continuing consumer confusion over which eggs they are buying," says the report. "This shows that it remains important to communicate exactly what 'organic' means to the consumer. In a number of areas of the survey respondents made confused responses, even though only 9.17 per cent felt that they needed a clearer understanding of what organic means."

The Soil Association refers in the report to the EU ban on conventional cage production, which is due to come into force in January 2012. "More retailers are cutting back their ranges in anticipation of this legal requirement.
This is likely to fuel even higher demand for free range eggs, and should increase the potential to expand organic egg production and sales in the future."

The Soil Association concedes that the recession has impacted on organic sales. According to figures produced by consumer specialists Kantar Worldpanel, the proportion of households buying some organic food fell slightly in 2009, from 88.9 to 88.3 per cent. On average consumers bought organic products 16 times during the year, compared to 18 times in 2008. When they did so they typically spent 2.9 per cent less on organic products per shopping trip.

"This insight from Kantar Worldpanel shows that organic consumers may be responding to the recession by tightening their belts - just like everyone else.

Organic shoppers have been economising by shopping less frequently and spending less when they shop. For some this has meant choosing cheaper cuts of organic meat, or canned and frozen alternatives that help avoid waste."

The report says, "For others it has meant no longer buying certain organic products for a time - particularly where there is a large price difference as in the case of fresh meat and fish. Free range meat and eggs have proved attractive for some shoppers 'trading down' from organic products, satisfying ethical concerns up to a point even if they do not match what the Sustainable Development Commission has called the 'gold standard' of organic farming in environmental and animal-welfare terms."

Peter Melchett says the organic movement needs to strengthen its collective effort to communicate all the benefits of organic food and farming to the public. He says it needs to rekindle the kind of consumer demand that would be impossible for policy makers and retailers to ignore.

One initiative that is seeking to do so is the OrganicUK campaign, which is being fronted by Sustain and has the backing of organisations like Noble Foods, Humphrey Feeds, Rookery Farm Eggs and John Retson Services. Organisers are looking to spend £1.5 million over the next three years to promote organic.

They hope to generate a 15 per cent increase in the value of sales during those the three years.