organic

mt

export_3_4

Export Study - Chapter 3.4 The Netherlands - Organic Trade Association
Organic Trade Association
   twitter   facebook   linked In   rss
Loading
transparent

Export Study - Chapter 3.4 The Netherlands

 
3.4 The Netherlands

3.4.1Development of organic agriculture

The Netherlands is traditionally a major agricultural producer and plays a leading role for a wide range of conventional produce, processed food and flowers for the European market. It is also known for its extremely intensive cultivation methods with an unparalleled density of greenhouse cultivation. The Netherlands is also a major gateway for the import of agricultural commodities with a sophisticated network of importers, packers and re-exporters. The scale of organic production, however, is small, currently accounting for only somewhat more than 1% of the total agricultural land (figure 13). The Netherlands nevertheless plays a major role in manufacturing, packing and importing and exporting organic products. Distributors operating on a European scale are most likely to be found in the Netherlands.

Figure 13: Number of Organic Farms and Acreage under

Organic Cultivation in the Netherlands

The overall development of organic agriculture in the Netherlands during the last years has been fairly slow. In acknowledgment of this fact, the Dutch Ministry for Agriculture in 1996 launched a plan (Plan van Aanpak Biologische Landbouw) to stimulate organic agriculture. It included the allocation of $27 million in subsidies and tax benefits for conversation, marketing and related purposes, one of which is a national educational campaign on organics. In spring 2000 an extension of this plan with an additional allocation of $8 million was announced, with major emphasis on demand stimulation, creation of reliable supply chains and the broadening of the available organic assortment.

While the impact of the first stage of the program was not as evident as that of a similar program in France, it certainly has helped to further the conversion to organic agriculture. Nevertheless, with 57,000 acres under organic cultivation, the Netherlands is not among the major producers of organic produce in Europe. 50% of the total organic land is devoted to livestock, of which 50% are dairy farms, approximately 30% beef, 11% eggs and the rest various others, among them some 2,500 acres of vegetables. The main crops are potatoes, wheat, seed onions, seed potatoes, lucerne, corn, onions, sugar beet, and marrowfat peas. The total organic acreage as depicted in figure 9 represents 1.2% of the total agricultural land in the Netherlands.

The association for organic farmers in the Netherlands is "De Federatie van Biologische Boeren" (Association of organic farmers), and a specific organization for the promotion of biodynamic agriculture is the "BD-Vereniging (Biodynamic Association).

3.4.2 Infrastructure of the Organic Market

3.4.2.1 Processing, Distribution, and Wholesaling

The Netherlands are a well-known gateway not only for conventional but also for organic commodities, with special ties to the Scandinavian countries, especially Denmark and Sweden, as well as Germany and The United Kingdom. This function is enhanced by the fact that a substantial part of the Dutch, Swedish and Danish population speak English as a second language (the same is true for the German-speaking countries, although to a somewhat lesser degree), thereby largely eliminating the language barrier.

As in almost all European countries, organic food manufacturing and processing started with small and even artisan companies, and it is still dominated by this type of manufacturing. By the end of 1999, 716 manufacturers and processors were certified by SKAL, the official certification body. [33] Some of the better known are de Rit, Natudis (Naturproducts), Bonvita, and Mulder. In recent years, several of the mainstream food manufacturers have begun to establish organic lines, among them Numico B.V. with its Nutricia baby food label, which is also sold in Germany, Remia, an oil and fat manufacturer, Renco BV, which is active in the sugar and sweetener business or Campina Melkunie in the dairy sector. Table 12 below gives an overview over the companies involved.

Table 12: Manufacturers of Organic Foods in the Netherlands

Product Manufactured

Company

Chocolate*

Bonvita

Conserves

Balthussen, Bio-core

Dairy

Zuiver Zuivel, De Zwaluv, De Dageraad, FEZ

Honey, jams

De Rit, De Tray

Muesli

De Holm, Natudis (Naturproducts), Mulder, BD Graan

Processed foods, Nut pastes

Horizon

Processed foods

De Vuurdoop, Joannusmolen

Baby food

Numico B.V. (Nutricia)

Oils and fats

Remia

Sugar and sweetener

Renco

Dairy

Friesland Coberco

Dairy

Campina Melkunie B.V.

Preserved fruits an vegetables

HAK

*Light grey shadow indicates companies that manufacture or process mainly ore exclusively organic.

Source: Kortbech et al., Van der Grijp and den Hond [22,38]

In 1998, Campina Melkunie B.V., the Netherlands largest dairy company, took over two smaller organic dairy companies, and Friesland Coberco started its organic NatuurBest line. [40]

HAK, a company mainly involved in the preserved fruits and vegetables business, has started to experiment with organic produce. The company emphasizes product chain management. HAK is in the process of developing a project aimed at total traceability of its products via a specific product number printed on every jar or can of its products, very similar to the UPS or FEDEX tracking number system. By typing in the number on its web site, consumers may learn about the exact product origin, growing conditions etc., a system specifically in line with the strength of organic production and certification.

As the Netherlands is a gateway for conventional and organic agricultural products alike, many companies import, distribute and wholesale at the same time. A good example for this combination is Natudis, the dominating force in the distribution of dry organic foods. Its market share, as estimated by trade sources, is 80% of the distribution in this product group. Natudis also acts as an exclusive distributor for many imported brands. The company, which employs 130 people, stated an annual turnover of roughly. $50 million in 1999. In addition, Natudis owns Naturproducts, which organizes and sells several private organic labels, among them Ekoland, Akwarius, Fertilia and Molenaartje.

Other companies active in the distribution and wholesaling of dried organics are De Rit, De Nieuwe Brand, and Terrasana. Dutch Organic International Trade BV (Do-It BV, a specialized distributor of processed organic food like pasta, tomato products, nuts, and ethnic dishes, also operates in several European countries.

The biggest wholesalers of fresh produce are Odin (especially known for its green bag scheme, for which the companies claims to have 25,000 customers), BICK, van der Steen, and Kroon. Nautilus is one of the suppliers of Albert Heijn. Udder B.V. is active in the dairy sector, while Fan Zuidhorn supplies cheese.

A major distributor of organic fresh fruit and vegetables is Eoasta B.V., which handles domestic products and imports alike. Eosta supplies many European supermarket chains through a vast network of wholesalers and sub-distributors. It sources most of its products worldwide and exports or re-exports 70% of its turnover to neighboring European countries.

The conventional cooperative The Greenery, handling about 60% of all Dutch fresh fruit and vegetables, announced in November 1998 to aim at a 10% turnover share of organic products within the next five years. The reason stated for this decision was increasing demand by major European retailers. As the Greenery is expecting shortages in supply, it planned to actively source farmers willing to convert to organic farming. To date, however, it is not yet clear how the company is going to make good on the goal steed more than a year ago [40].

Euroherb Bio B.V., a joint venture between the Dutch market leader Piramide and Lebensbaum Kräuter GmbH of Germany, is the European market leader in organic herbs with an estimated market share of 80% of the European organic herb trade in 1997.

One of the most important players in the frozen foodstuffs field is Oerlemans Diepvries Centrale, reportedly Europe’s number one in frozen organic potatoes and vegetables.

3.4.2.2 The Retail Market

The total amount of retail sales in the Netherlands differs considerably according to various sources. The Leatherhead report estimates total organic retail sales for 1997 at Dutch Guilders 527 million, at the time $260 million, approximately in line with the number given in the report "The European Organic Food Market" by the Produce Study Group [27], assuming total sales at $230 million. Kortbech et al. [22] approximate sales in 1997 substantially higher at $350 million, while a study of the Dutch consulting firm Aurelia! Advies assumes the size of the organic market as amounting to only half of this volume, with total retail sales at $175 million. [9]

Between 1990 and 1996, when other European countries like Austria, Denmark, or Germany experienced growth rates of the organic markets in the double-digits, the Dutch retail market only grew by 2-3% annually. The main explanations for the slow growth are very high prices, partially due to an inefficient distribution system, and small sales volumes, as well as the low amount Dutch customers spend on food in comparison with their European neighbors. Since 1997, sales have taken off with an estimated yearly growth rate of 10-15%, although latest numbers published in BioFood magazine [39] state the growth rate for the first three month in the year 2000 with only 4.2%.

In line with the moderate to slow growth is the per capita consumption of organic food, which is between $11.30 and $22.58 annually, depending on which retail sales volume is assumed. Most probably per capita consumption is around $15. This is somewhat surprising, as the Dutch population in general is known as highly environmentally aware and well educated.

Another important reason for the phenomenon is certainly the very late appearance of supermarkets in the organic picture. Albert Heijn, the biggest supermarket chain in the Netherlands, which is owned by the large international food holding Royal Ahold, introduced its "AH biologisch" organic label as late as 1998. Reportedly, this action came in response to considerable public pressure by a variety of green lobbying groups. Until then, Albert Heijn had carried only a few organic products on an occasional basis. When the company launched its organic label, it did so with a considerable nation-wide advertising effort on television and in its monthly customer magazine (2.1 million copies published).

Other multiples involved in organics include the smaller chains Nieuwe Weme, Coop, Dekamarkt (60 shops) and Konmar (25 shops), the pioneer in organic foods in the Netherlands. Konmar has a company policy of offering an organic or environmentally friendly alternative in every product category. As the larger organic and natural food suppliers did not want to jeopardize their existing relationship with their traditional customers, the health food shops, Konmar reportedly experienced supply problems. Therefore, the company decided to launch its own organic brands. Ecogrande for processed foodstuff and Natuurzuivel for dairy products [9].

Two of the larger multiples, Edah (300 shops) and Dirk van der Brock have only a very limited organic product range and appear reluctant to change this.

Traditionally, most sales on the retail level take place in small natural food shops. Their current market share of retail sales is estimated to be around 57% (1999), a substantial drop from the well over 70% share they used to hold. Therefore, in the past an elaborate net of wholesalers was necessary to link the relatively large number of small producers and suppliers with the large number of small retail shops. As the supermarkets have gained ground within the last years, distribution and wholesaling has also become more large scale.

Figure 14: Shares of Organic Food Sales by Retail Outlet Type in the Netherlands 1998-1999

As there is considerable variation on the estimation of total retail sales, figure 14 needs to be taken with a grain of salt. What is clear is that with the entry of Albert Heijn the market share of the multiples is soaring, with a market share increase of approximately 10% in the year 1998. It is not clear at this point if this shift in preferred retail outlets cuts into sales turnover of health food shops or if the multiples merely absorb the overwhelming part of the growth in organic sales.

Most of the 380 health food and specialist organic shops are run independently, with only one franchising scheme in place, Natuurwinkel/De Groene Winkel/ Gimtel. Together they account for about 70 stores.

In 1999, there were approximately 20 major organic farmers markets and the number is still, if slowly, increasing.

3.4.3 Breakdown of Products Sold

There are no statistics available pertaining to the breakdown of organic products sold.

Bread, baked goods, cereals and pulses

Very little information is available on numbers and players in this product segment. There are three associations of conventional industrial bakeries, which are run almost like a franchising system, but with some leeway for the individual managers. These are Bakkersland, Bake Five, and Quality Bakers with more than 2,500 shops altogether. All three chains include individual members that offer organic bread and baked organic goods. They buy organic raw materials in larger quantities and therefore the individual members are able to compete better. In a recent interview with two managers of bakery shops belonging to Bake Five and Quality Baker, the potential for growth was estimated as high as 3-5% of the total gross turnover [39]. While this estimate is certainly on the high side, there is general agreement among trade sources that demand for grains is certainly rising, as the chains cited above as well as bakeries linked to supermarkets and the supermarkets themselves launch more organic bread and baked good lines.

Most important grains are wheat, oats, barley and rye, mainly imported from Eastern Europe. Durum wheat is mainly imported from Italy.

As the Netherlands are a major primary processor of soy beans, the recent concerns pertaining to genetically modified soy beans imported to The Netherlands have boosted organic soy bean sales substantially. While the Dutch are known as potato eaters, demand for high quality rice, especially Basmati and Thai rice, is also growing considerably. Two of the players in the cereal business are Urtha and Do-It.

Fresh fruits and vegetables

The Netherlands is believed to be the biggest exporter of organic produce in Europe, supplying mainly imported but also home-produced produce primarily to Germany, Denmark, Sweden, and the UK. The domestic distribution is quite diverse through bag schemes, farmers markets, specialist organic shops, and to some extent through supermarkets, the fastest growing sector. When the Albert Heijn chain launched its organic campaign in 1998, it experienced supply shortages even in domestically produced vegetables such as carrots and onions.

Main players in the fresh produce and fruit business are Eosta International, which is presently also the biggest player, the fresh produce cooperative Nautilus and Ariza, with the large conventional cooperative The Greenery having launched its organic arm just last year, in 1999.

Dairy

Until 1997 Dutch dairy production was confined to small specialist dairies such as Zuiver Zuivel and De Zwaluw, both of which have been taken over by the main dairy group Campina Melkunie. A third specialist organic dairy is Friese Ecologische Zuivelfabriek, of which Friesland Coberco, the second largest player, bought a stake of 33%. With the involvement of the two large companies, sales of dairy products are expected to rise significantly within the next years. The Main products are milk, both fresh and UHT, butter, yogurt, and cheese, of which 25% is exported to European neighbors.

Other foods

The Netherlands has Europe’s highest per capita consumption of edible nuts, and therefore there is a strong demand for all sorts of edible organic nuts, especially peanuts, almonds, hazelnuts, and walnuts, as well as coconuts. This is partially due to the Dutch inclination for Indonesian and Chinese cuisine, where those items have an important place.

Despite its relatively low domestic demand, the Netherlands is on the leading edge of introducing organic convenience foods and frozen foodstuffs. For example, Europe’s number on in frozen organic potatoes and vegetables is Oerlemans Deepvries Centrale, a Dutch company. This is most probably a corollary of the fact that the Dutch importing, primary processing and re-exporting as a whole is highly developed and therefore it stands to reason that the technical expertise developed over a long period of time is applied in the organic industry, too.

The latest thing in organics is organic pet food. The Dutch company Yarrah Organic Certified Petfood has recently ventured into pioneering is this area, manufacturing and exporting a full line of organic pet food to several European countries and the United States.

Product areas under serviced.

As it is impossible to differentiate between imports for domestic consumption and re-exports from the Netherlands into other European countries, it is also difficult to thoroughly assess the underserviced product areas, as they will shift substantially with changes in the demand of the Netherlands’s European neighbors. Nevertheless, there are some overall tendencies recognizable in the Dutch domestic market:

  • Demand for grains will rise, due to the increasing involvement of bakery chains and supermarkets in organic bread and baked goods.
  • Demand for reliable, steady supply of large quantities of vegetables with low product variations will increase due to the involvement of the major cooperative The Greenery as well as supermarket chains.
  • Fruits, especially non-seasonal and tropical fruits, will be sought after, and also fruit purees and fruit ingredients for processing purposes. Organic berries are increasingly in demand.
  • The market for baby foods is just emerging
  • Organic fruit juices are becoming more and more popular
  • Demand for organic frozen foods and ingredients for frozen foods to supply primary processors continues to rise.
  • Rice, specifically Basmati and Thai rice, and rice as ingredient for baby foods is gaining popularity.
  • Food ingredients of all kinds will prove to be one of the main overall growth sectors.

3.4.4 Infrastructure of the Import Market

3.4.4.1 Channels of Entry and Imported Products

Despite the relatively low domestic consumption of organic food, the Netherlands is one of the main importers of organic food in Europe. Reportedly there are about 50 certified importers in the Netherlands, although SKAL, the sole certifying agency, does not differentiate between importers, processors, and distributors in its published numbers of certified entities. While the most common way organic products enter the country is through a specialized importer to a processor or packer and then to a distributor/wholesaler, is also worth mentioning that many Dutch primary processors have substantial experience in directly importing from a variety of countries. An example of this is Joannusmolen, which directly imports specialty flours and processes them into finished products. Hence, it is certainly worth while to approach processors directly to establish trade relations.

Table 13: Origin of Imports of Organic Products to the Netherlands in1997

Imports

Countries of origin

Cashew nuts

Brazil, El Salvador, Mozambique, Turkey

Cocoa

Belize, Bolivia, Brazil, Dominican Republic

Coconuts

Dominican Republic, Sri Lanka

Coffee

El Salvador, Guatemala, Mexico, Nicaragua

Dried Fruits

Burkina Faso, Guinea, Morocco, Sri Lanka, Togo, Tunisia, Turkey

Fruits, Processed

Israel, Latin America, Sri Lanka

Fresh Fruits

Algeria, Argentina, Bolivia, Brazil, Chile, Costa Rica, Dominican republic, Egypt, Guatemala, Honduras, Israel, Madagascar, Morocco, Puerto Rico, South Africa, Tunisia, Turkey, Zimbabwe

Grains, cereals

Egypt, India, Turkey, Latin America

Ground nuts

Argentina, China, Mexico, South Africa

Hazelnuts and walnuts

Turkey

Honey

France, Hungary, Mexico, New Zealand, Tanzania

Palm oil

Benin

Pine nuts

Pakistan

Pistachios

Iran

Raisins

Turkey

Rice

India, Myanmar, Pakistan, Sri Lanka, Thailand

Sesame seed

Central and South America, Mexico, El Salvador, Burkina Faso, Uganda, Paraguay, China, Malawi, Sri Lanka

Soy sauce

Argentina, Brazil, China, Paraguay

Spices and herbs

Argentina, Bolivia, Brazil, China, Dominican Republic, Egypt, Guatemala, India, Indonesia, Madagascar, Malawi, Tanzania, Mexico, Morocco, Peru, Comoros, Sri Lanka, Uganda, Zimbabwe

Tea

China, India, Sri Lanka, Tanzania, Viet Nam

Vegetables, fresh

Egypt, Ethiopia, Israel, Kenya, Morocco, Tunisia, Senegal

Source: Kortbech et al. [22]

Probably the best known organic importer and trader is Tradin Organic Agriculture BV, a company specializing in importing and trading more than 200 different organic products from more than 20 countries. The company partners with Tribune B.V., Europe’s biggest organic banana importer, with an import volume of 10,000 tons in 1999, and Winged Ox, a Chinese organic food company. Another importer is Greenfood International B.V., and Eosta, a major distributor, is also directly importing fruits and vegetables. Euroherb B.V. is the major importer of organic herbs and spices in Europe, and Simon Levelt B.V. is active in the organic coffee trade and processing.

Table 13 above shows imported products and countries of origin, with special emphasis on developing countries. Therefore, it does not include imports from the United States. The table does show, however, how diversified the sources of organic imports into the Netherlands already are. One of the more important newcomers is China, which currently demonstrates a concerted effort to beef up its organic exports, not only for green tea but also for herbs, spices, and different sorts of nuts. It is reportedly developing its grain and rice sources as well.

3.4.4.2 US Products Imported

The Netherlands does not publish specific data on imports of organic goods. While SKAL, the only legal certifying body in the Netherlands, does forward its data to the Central Bureau vor de Statistiek (CBS, Central Bureau of Statistic), CBS does not publish data on organic products. [5,34]

3.4.5 Consumer Buying Patterns and Attitudes toward Organic Products

One major difference between the Netherlands and most other European organic markets where spending for organic products has increased much faster has been that occasional and selective buyers have not increased their organic purchases at the same rate as in comparable countries. In addition to this the "hard-core" of convinced organic buyers seems to be somewhat less pronounced than for example in Germany. In a study of the Landbauw-Economisch Institut (LEI) of the Netherlands consumers were categorized in five segments:

  • Heavy buyers of organic food (1%)
  • Selective purchasers of organic food (4%)
  • Occasional purchasers of organic food (34%)
  • Non-purchasers aware of organic quality represented by EKO-label (55%)
  • Non-purchasers of organic food unaware of organic quality as represented by the Eko-label.

The heavy buyers are dedicated to buying at farmers markets, at farm gates or in health food shops, while selective purchasers buy some organic products on a regular basis, but their purchasing decision is strongly influenced by convenience, availability, and price. Occasional purchasers who are well aware of the differences between organic and conventional agriculture tend to exclusively shop at supermarkets, therefore, their selection is restricted to what the preferred supermarkets have to offer. In terms of expectations, they expect organic products to meet the same quality criteria in terms of appearance, taste, and freshness as conventional food and their readiness to pay a premium price for organic is very limited.

Obviously, the latter two categories of buyers are the ones who are mainly targeted by the supermarkets, as this is the place where they buy the overwhelming portion of their foodstuff. Therefore, the entry of mainstream supermarket chains with their more cost-effective and large-scale distribution system proves to be crucial for a substantial growth of the organic market in the Netherlands.

3.4.6 Trends and Conclusions

In the last three to four years, the Netherlands has seen substantially increasing interest in organic foods. This is fueled by the entry of large supermarket chains into the market, the overall booming economy with very low unemployment and inflation rates, substantial government support resulting in nation-wide marketing and PR campaigns for the promotion of organic products and increased subsidiaries to convert to organic farming. The marketing and PR effort was to a large extent spearheaded by the Platform Biologica, an association of growers, processors, and distributors for the furthering and promotion of organic agriculture and the organic industry. These campaigns have undoubtedly had their impact in stimulating domestic growth.

With the entry of major market forces like the prominent produce and fruit distributor The Greenery, the largest supermarket chain Albert Heijn, and the two biggest players in the dairy market, Campina Melkunie B.V. and Friesland Coberco, the Dutch organic market is certainly poised for growth within the next years.

It is, however, important to recognize that the role of the Netherlands for the organic industry is in certain aspects similar to its role in the conventional food industry, although not as a producer. This role is that of an importer, packer, and processor and re-exporter of the packed or processed goods into middle, western and northern Europe. It was fostered by the Netherlands geographical location and its dominant European port, Rotterdam. With the fall of the iron curtain, Europe is in a process of reshaping itself. The future entry of countries like Poland, the Czech Republic, or Slowenia into the European Union, as well their appearance on the European organic market might shift the balance somewhat more eastwards. It remains to be seen if this shift will affect the Netherlands’ traditional role. As of today, it appears that Dutch companies are on the forefront of developing some of the Eastern European countries as a source for organic commodities such as grain and vegetables.

Another role, that of a pioneer of highly processed convenience food, will certainly remain with the Netherlands, and therefore the country is certainly a prime target for US food ingredient suppliers. The upsurge in domestic production should boost this part of the organic industry considerably, which until now produced largely for re-export.

 
 
2014 Annual Fund

Research and Promotion 2012

TOPO


TOPO


TOPO
 
print