The organic market is facing significant challenges in Germany

During a conference on German organic market, organized by the German Central Market and Price (ZMP), they have analyzed the prospects offered by this sector to organic farmers in Germany.

Operators participating in the markets for organic products face significant challenges for the near future, this mainly affects the farmers if they want to exploit the boom in the persistent demand for these products. Dr. Klaus Siegmund, Director of the ZMP, said that the market for organic products is faced with major restructuring processes, precisely because of this demand growth.

The department responsible for farming in ZMP said that for the current year growth rates of two digits are expected. The estimated retail boom in recent times by the recent entry of Lidl into this market will grow even more than the specialized trade. Strong demand, unexpectedly, led to a shortage of organic raw material, which causes are now also beginning to raise producer prices, although this increase is mitigated because of its link with the prices of conventional products.

However, farmers, after many years of losses of income in many areas of production, still are not getting to price levels to pay the conversion to organic production and also in some land have removed support for this type of crop, so it is estimated that organic production will not grow in the market allowing it. Consequently, this market will increasingly cater to imports rather than domestic production.

Experts estimate that in the medium term, these prices will remain under severe pressure due to the low-price strategy pursued by the big chains that recently, they are entering on a large scale in this market. Pioneer establishments over the past decades have been those that have been building this type of market, but they are characterized by a cost structure more unfavorable compared with the big chains which will have serious problems with the tendency to hold on to lower consumer prices.

This in turn means that in the short or medium term, these will save time to shop, so there is a danger that in future not only to lower prices for producer but also might suffer the quality of production processes and final products.

Therefore, the aim is to introduce more innovative marketing strategies, participants in the conference have come to the conclusion that the market will be characterized by diversity and there will be segmented, so that may coexist parallel different marketing concepts.

According to the results presented by the investigation of consumer markets in 2005, they saw a major boost in demand for organic products. Most consumer markets analyzed by the ZMP grew double-digit rates, with higher rates of growth of trade in the big chains and supermarkets. This positive trend has continued this year, with growth rates even higher. However, it is observed that the strategic business objectives in the sense that the commodity is being used for ecological building a certain image and to emphasize with respect to competitors.

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