Health scares helps Europe's organic food industry, but will it last?

PAUL GEITNER / AP 19mar01

BRUSSELS, Belgium -- The patrician gentleman in the navy blazer and ascot looks a little out of place in the newly opened Bio Square organic market, with its exposed brick and wooden beams, skylights and New Age background music.

``I'm not a freak about organic products,'' Michel Van der Kindere insists, a little defensively. But in regular stores ``there are things we are a little hesitant to buy.''

Like many Europeans confronted with one food scare after another -- mad cows, foot and mouth disease in sheep and pigs, dioxin-poisoned chickens and eggs -- Van der Kindere is shopping greener these days.

The result is a boom in organic farming, which shuns chemical fertilizers and insecticides and requires livestock be raised humanely, with chemical-free feed and no hormones or antibiotics.

Organic farms across Europe, while still relatively few, are spreading fast. Traditional health food stores are reporting runs on their stock and even big supermarkets are getting in on the act.

Whether back-to-nature breaks out of its tie-dyed niche for good depends on whether consumers will still stomach the higher prices of organically grown foods once the latest hysteria fades.

Regular beef sales in Italy, down 35 percent in January and February after the first mad cows were found there, are already starting to recover, food analysts note.

``The fear is slowly disappearing,'' says Dario Furnagalli of Deutsche Bank in Milan.

Yet others bet alarmist headlines and gruesome photos of burning farm animals will have a more lasting effect on the European psyche.

German Agriculture Minister Renate Kuenast, a Green Party member who was swept into office in the mad cow scare, wants to boost organic production levels in Germany to 20 percent over the next 10 years, from 2.5 percent today.

She has support from fellow Green Pecoraro Scanio, Italy's agriculture minister, as well as colleagues from Denmark and Sweden.

Also on board is Franz Fischler, the European Union farm commissioner, whose native Austria boosted organic production to almost 10 percent of agricultural output with the aid of government subsidies in the 1990s. But he warns that any reform of EU farm policy will be tough.

In Britain, ground-zero for both the mad-cow and foot-and-mouth disease outbreaks, the number of organic farmers has more than tripled since 1997, to 2,865 last year.

``Organic farming is one of the few bright spots in the depressed picture of U.K. agriculture,'' the House of Commons Agriculture Committee concluded in a report in January.

``It is clear that there is a huge opportunity for U.K. producers to expand still further into organic farming to meet a ready market.''

German wholesalers report demand this year is up between 40 percent and 60 percent, says Thomas Dosch, chairman of the Bioland association of 3,500 organic farmers in Germany. ``No one knows whether the boom will really last. But I think you can take advantage of today's heightened awareness to really expand the base.''

Part of the difference today is the major food retailers.

French food giant Groupe Carrefour, owner of Belgium's biggest supermarket chain, has logged stronger sales of organic products and is looking for more suppliers.

``Certainly the objective is to increase those products,'' says Genevieve Bruenseels, a company spokeswoman. ``For the moment, the choice is not very large.''

Delhaize, Belgium's No. 2 grocery chain, has gone one step further with its own green-and-orange ``bio'' label of organic foods.

What started in the 1980s with breads and fresh produce has exploded to encompass 300 items, from traditional ``health food'' items like whole grains and beans to french fries, frozen pizza, even wine.

Those products fill much of the shelf space at Bio Square, which has been doing healthy business since opening last week in the leafy Brussels district of Uccle.

Delhaize provided its ``bio'' label products along with logistics and marketing know-how to a local franchisee, who added hundreds more items from other suppliers to fill a corner shop.

The supermarket giant plans to open more organic shops around Belgium and possibly export the concept, including to the United States, where it owns the Food Lion, Kash n' Karry and Save 'n Pack chains.

``People are more and more concerned with what they're eating,'' says Xavier Ury, director of purchases development at Delhaize Belgium. ``Now is the moment.''

Delhaize is not alone.

``More and more of the supermarkets are focusing on organic and bringing out organic ranges,'' says Stephanie Wall, accounts director for Information Resources U.K., a consumer research firm in London.

Backers hope problems with spotty supply, especially of fresh produce and meat, will fade as the market expands.

That would leave price as the biggest hurdle.

A four-pack of ``bio'' yogurt with fruit at Delhaize costs $1.60 -- twice as much the store's regular line.

Ury argues, however, that the average price difference of 20-30 percent is not much more than the usual markup between store brands and national brands.

Gilbert Hallet, who was picking up some hot dogs from the nearly empty meat case before moving on to the dairy case, said he's willing to shell out.

``If it's quality, it's OK,'' he says. ``I'm trying to live better.''

• Organic-Resources site funded by the European Union and the German SOeL foundation: www.organic-europe.net