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EU and US Organic Policies Differ

The European Union and the United States dominate the global organic food market. Combined, the two regions accounted for 95 percent of world organic retail sales in 2003. Strong consumer demand drives both markets. But the EU and US differ in their approaches to encourage organic food production.

Organic acreage increasing

The amount of certified organic agricultural land is increasing in both the EU and US. From 1997 through 2003, certified organic land in the EU rose from 2.1 million hectares to 5.1 million hectares, about 4 percent of total agricultural area. US organic lands increased from 549,406 hectares in 1997 to 889,734 hectares in 2003—or 0.24 percent of all agricultural lands.

The EU organic market is more mature than its US counterpart, having had the fastest worldwide growth in the 1990s. While forecasts of annual growth for organic sales in the next few years in various EU member states range from 2 - 11 percent, the annual growth rate for the US is predicted to be 9-16 percent per year through 2010.

Consumers have been the driving market force in both regions. Studies show that European and American consumers buy organic food for food safety and health.

EU promotes organic

The biggest difference between the EU and US organic markets is government policy. The EU recognizes that organic agriculture provides environmental and social benefits to society and actively promotes the growth of the organic sector with a wide variety of policies designed to increase the amount of land farmed organically, such as green payments for converting to and continuing organic farming.

In 2001, EU organic farms receiving average payments of $204-$208 per hectare, compared with $99 per hectare paid to conventional farms. Many member states have established targets for the share of farmland under organic production in their organic farming action plans. In 1995, Denmark announced a target of 7 percent of farmland certified as organic by 2000 and nearly reached this goal with 6 percent. Germany has set a target of certifying 20 percent of farmland as organic by 2010.

In June 2004, the European Commission adopted an Action Plan for Organic Food and Farming, with 21 policy actions aimed at promoting ongoing developments in the organic sector.

US sees organic as market opportunity

In contrast, the US government treats the organic sector primarily as an expanding market opportunity for producers and regards organic food as a differentiated product available to consumers. In fiscal year 2005, the US Government made approximately $7 million available exclusively for organic programs, including a certification cost-share program and $4.7 million for a research grant program. This amount is supplemented by other programs including funding for organic research and technical assistance by Federal, State, and local agencies.

(SOURCES: USDA, Economic Research Service; Food and Agriculture Organization of the United Nations)