Australia is the last OECD country without a legal definition for “organic”, which is causing export challenges due to double certification requirements and Australian companies to miss out on opportunities in a lucrative and growing market. Infor senior director Industry & Solution Strategy, Marcel Koks, writes.
In February, the Senate’s Rural and Regional Affairs and Transport Legislation Committee released a report on the National Organic Standard Bill 2024, which aims to establish a unified framework for regulating the sale and importation of organic products in Australia.
The report, backed by some of Australia’s largest organic industry organisations, is monumental in driving change and better regulation for the organic industry. It has commissioned analysis showing that the right policy framework has potential to more than double the Australian organic industry’s value to $5.8 billion.
The lucrative, fast-growing organic market
With global consumer preferences evolving, the demand for organic produce is increasing – there’s growing awareness about the potential health benefits of organic products, with non-GMO offerings also rising in popularity. Agritech innovations are also driving growth.
As such, organic products are no longer confined to niche stores but have moved onto mainstream supermarket shelves. Recent projections show the global organic food market more than doubling in the next few years, from around US$230 billion in 2024 to nearly US$600 billion by 2033.
With organic products typically enjoying a price premium, the market offers potential for Australian producers to increase margins. Australia’s organic export market is already recognised as equivalent to the EU, UK and Japan but demand for Australian organic produce is hindered by a lack of transparency over standards. One exporter claims to have lost a million-dollar export contract to South Korea due to certification issues.
A need for unified standards
To capture a slice of this market and widen the portfolio of Australian organic products that comply with the regulations of overseas markets., Australia needs better certification and domestic regulation. Under current application of the term, products can claim to be organic with as little as two per cent certified ingredients. By contrast, it’s 95 per cent in the EU – one of Australia’s most important export markets where organic products have been regulated since 1991.
This creates confusion among producers as well as the potential for greenwashing. The Australian Competition & Consumer Commission (ACCC) points out that there is no obligation for businesses to meet voluntary standards to list their products as “organic”. Market research has found that consumers frequently buy products believing they are organic and lose trust when they later discover they are not.
The National Organic Standard bill’s primary goal is to align the standards for organic products across import, export and domestic markets. This is crucial for ensuring consistency in regulations and quality standards to enhance the credibility and competitiveness of Australian organic products both locally and internationally.
Today, the burden is often in the export process and when working with individual customers, this will shift more to the product development process. Developers can see the impact of formulation on compliance and cost so that a sensible trade off can be made.
Potential impacts on smaller operators
Requiring an operator certificate could impose additional financial costs, potentially discouraging small farmers from selling organic produce.
To balance the costs of greater regulation, suppliers should focus on the product categories with the highest potential in volume and margin. There are also consumer trends, such as “superfoods”, that can lead to quickly rising demand and prices. Currently, we’re seeing this with pistachio partly driven by the hype of “Dubai chocolate”.
These trends can be great opportunities but are hard to predict. With less predictable harvests due to climate issues, food companies are building more reliance in their supply chain with additional sourcing options. This is another opportunity.
When the EU introduced stricter organic regulations, farmers made the investment because of the higher margins for organic milk. In 2019, 3.5 per cent of EU milk was organic. This share is expected to grow to eight per cent by 2031 – it’s relatively small but growing rapidly.
Technology also made life a lot easier for the EU organic producers trying to keep up with changing regulations. Tools like digital record-keeping, automated documentation, and even blockchain helped simplify compliance and reduce administration time. Some farmers use AI to monitor crop quality or predict issues before they happen, which saves time and stress. On top of that, agritech solutions and data tools helped producers better manage yields and deal with weather unpredictability, especially important if they're exporting to strict international markets.
Establishing a legal definition and regulatory framework for organic products in Australia is essential to maintain local and international competitiveness, protect consumer trust and unlock export potential. Without alignment to global standards, particularly those of the EU, Australian producers face unnecessary barriers and inefficiencies that undermine growth.
The National Organic Standard Bill 2024 represents a critical opportunity to modernise Australia’s approach, providing clarity for consumers and consistency for industry. While implementation must be carefully managed to avoid disadvantaging smaller operators, the long-term benefits of a unified national standard are likely to outweigh the short-term adjustments required.
