ECONOMY

High prices weigh on local organic market

The penetration rate of organic products in the Greek market remains relatively low, according to an industry survey conducted by Infobank Hellastat (IBHS), which underscores the sector’s turn toward exports for survival.

The drop in consumers’ disposable incomes resulting from the prolonged recession, along with delays in the start of new subsidy programs have slowed down the high rate of growth observed in previous years.

Now the price factor has led to a decrease in domestic consumption as organic products, which in certain categories are as much as 50 percent more expensive than conventional ones, are losing ground to cheaper options despite their benefits for the environment and consumers’ health.

In an effort to reverse that slide, retailers increased their offers on the shelves in a bid to make the sector’s products more attractive while substituting local goods for imports. However this move did not have the desired effect, and in 2013 the sale of several organic products stopped. Furthermore a number of supermarkets now place organic products on the same shelves as conventional ones, and have done away with special “organic” corners.

On the other hand, there is good news from the exports front, as a significant portion of Greek organic produce is now being channeled abroad, where demand is higher.

At the end of 2013 there were 23,544 entrepreneurs active in the organic sector in Greece, down 6 percent from 2012, which is attributed to the reduction in producer numbers. There were some 22,000 producers, 1,555 manufacturers and three importing companies in 2013. The total surface area of organic cultivations amounted to 3,836 square kilometers in 2013, a significant reduction of 17 percent from 2012, amounting to just 11 percent of arable land.

Standardization and distribution networks are still not seen to be sufficiently developed, and there is a limited supply of Greek organic products in several areas of the country. This even applies to domains with a considerable Greek produce such as olive oil, wine and oranges, which is put down to the lack of information provided to the public. These drawbacks have resulted in the domestic market’s needs for organic products being covered by imports.

The turnover of the companies surveyed by Infobank Hellastat (IBHS) for 2013 showed an increase of 6.7 percent to 89.39 million euros. However, total earnings before interest, tax, depreciation and amortization (EBITDA) declined by 14.7 percent to 6.19 million euros, while pretax losses were reduced to 770,000 euros against 1.22 million euros in 2012.