2.2.2 Limiting Factors to the Development of the Companies and the Organic Industries Growth
2.2.2.1 Constraints to Industry Growth
Constraints to growth in organic production in New Zealand identified by respondents included:
Small Company Respondents
- "Lack of publicity, understanding and support for organics from the mainstream population."
- "Lack of professional advisory services, lack of critical production inputs."
- "Production loss by growers over the conversion period."
- "Possibly a failure by Producer Boards etc, to acknowledge the clean, green and fresh market and therefore, a failure of the market philosophy."
- "Arrogance and ignorance of conventional farmers and their ability to ignore rapidly changing markets and strong market demand for organic products."
- "Being able to meet full organic standards."
Large-Medium Sized Companies
- "Economics - the organic markets are often small and the transaction cost for servicing them is high."
- "Lack of market demand for some products."
- "Limited supply because of the small number of current producers."
- "Lack of dedicated clearly identified retail outlets for the consumer."
- "Negative conventional grower attitudes and perceptions."
- "Concentration of organic industry around relatively few products/channels."
2.2.2.2 Constraints to Company Growth
The main limiting factors to the growth of small companies organic business, were limitations with the existing organic production technology and secondly certification issues. A lack of suppliers was not a significant issue as many in this group were producers. However, the lack of raw material was rated as a limiting factor to the expansion of some existing operations. The lack of markets was rated as being the most significant limiting factor by 20 per cent of these companies. Comments on these positions included:
- "The New Zealand BIOGRO standard is more difficult to meet than overseas ones."
- "We find organic regulations extremely restrictive and without logic at times, they make managing our operation hard. We have got close to abandoning our organic standards several times."
- "Finding export slaughter houses and processors prepared to kill on contract and be inspected by BIOGRO is our major limiting factor, i.e. the small initial size of the processing run and the clean down procedures required by BIOGRO make it an unattractive proposition for processors."
- "Funding, experimentation, marketing and production especially during conversion is extremely difficult. No advisory backup for organic farmers with only limited solutions and no room for errors in today's farming economy"
For medium size companies the lack of suppliers of raw materials was rated as the most significant limiting factor by 65 per cent of the respondents. Profitability was also rated highly as being a limiting factor to the growth in their business area, while certification was a significant priority for 50 per cent of the companies. Comments included;
Suppliers
- "The grower base is very small therefore, quality and continuity of product produced can be a problem."
- "Market opportunities are available, more suppliers are required."
- "Production is currently small scale and needs to develop up to a commercial scale."
- "Consistent and reliable supply of quality organically produced raw material is the number one priority."
- "Conventional growers are not prepared to shift from a killing regime to a holistic living regime."
Other constraints
- "The long term restrictive nature of BIOGRO certification is a major constraint. There is an urgent need for a recognised certification system for crops grown without pesticide."
- "Profitability for growers caused by production problems is a significant constraint."
- "Quarantine issues are the most significant issue with the threat of fumigation to organic integrity for fresh fruit and vegetables."
- "Lack of funding capital is preventing growers starting organic production due to the high cost of certification and the conversion phase before organic prices can be achieved."
Contact for Enquiries
Kay Brown
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0695
Fax: +64 4 4 894 0746
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