Organic Products in International Trade

Organic food is increasingly becoming an active topic in international trade due to the increase in people’s living standards worldwide, improved transportation, and urbanization. In developing countries, we see that people consume more organic food now as a result of higher income, and this increases the national demand of meat products, which leads to a large inflow of live-stock feed to developing countries. However, in developed countries, organic food is not necessarily associated with high income populations, but rather with people with diversified diets who wish to eat naturally developed food.

Worldwide markets for organic foods are expanding, with annual growth rates of 15 to 30 percent in Europe, the United States, and Japan over the past 5 years.  Organic food consumption is expected to continue to grow in the next 5 years, with the major share in retail markets. In Europe, the highest organic market shares are in Austria, Denmark, and Sweden. This is mainly because these countries have a large presence in the food processing industry and have high demands for organic ingredients. These countries also benefit from organic food campaigns as people nowadays strive to know what they consume in their daily life. Government subsidy programs are also reasons why these countries have large shares in organic food products. Denmark especially has aggressively supported organic food market development and research. Compared to the European market, it is more difficult to project the growth of organic food products in Asian Pacific markets, simply because of the complicated market constitutions and less formal national standards. However, we do see the momentum in organic food markets, as the number of eco-labeled products is increasing in Asian-Pacific markets.

The issues of country of product origin are the most important problems in the international trade of organic food products. These problems complicate importing and exporting organic food products because the organic food buyers often prefer local organic food and are concerned with the process of the food traveling from farms to tables. Organic fruits and vegetables are the most popular products because they are perceived as fresher than conventionally grown foods. The export and import of these types of organic products suffers from long distance transports because the advantage of freshness decreases. In Japan, for example, organic imported soybeans sell for 14% less than domestically produced conventional soybeans. Problems also arise with people’s views toward the country of origin. Different countries have different labeling requirements for organic products. If the country of origin is not acceptable to the consumers, the products may not be marketable.

As organic markets are expanding worldwide, we should really think of setting the same organic product standards among different countries. In this way, people will have fewer concerns about the imported organic products and the trade of organic products will expand worldwide.