Thriving French organic food market needs domestic supply boost - study

PARIS (Reuters) - Farmers need to boost organic food production in France to meet fast-growing demand or consumers will turn to imports at the expense of some environmental benefits, credit insurer Coface said on Tuesday.

Organic food sales are expected to reach 8 billion euros (£7.1 billion) in 2017, up 14 percent on last year, and the pace of growth should continue at 10-15 percent for the foreseeable future, it said.

Production, however, rose at a far slower pace than demand between 2014 and 2016, leading to organic food imports rising last year for the first time since 2009, accounting for 29 percent of the organic food consumed in France, Coface said in a study.

Products theoretically available in France accounted for 57 percent of organic food imports and 19 percent of total consumption.

France is the third-largest organic food market, with 7 percent of the global market in 2015, behind the United States (more than 40 percent) and Germany (11 percent) but just ahead of China, Canada and other EU countries, Coface said.

Strong demand allowed organic producers to be in better financial shape on average than other farmers, with data showing that a 10 percent increase in the share of organic produce in a sector’s output reduced insolvencies by 11 percent.

Coface said it was key that French organic farmers, which achieve average yields about 20 percent lower than in conventional farming, boost output through innovation and expansion to meet thriving consumer demand.

“While there should be a supply increase in 2017 and 2018 due to new conversions in past years, we need this to continue or France will be more reliant on imports,” Coface economist Bruno De Moura Fernandes told reporters.

A rise in imports would be clash with some of the organic sector’s founding principles, such as short supply chains, small carbon footprints and community roots, he noted.

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Reporting by Sybille de La Hamaide; Editing by David Goodman