Surging secondary market spurs on organicsIndustry Best Practice
Half a decade ago, the organics industry in Australia was a niche market filled by a few passionate disciples and some early adopters who saw a profit potential. Fast forward to today and growing consumer demand for both fresh and processed product has seen buyers seeking not only record levels of first class fruit but also paying eye-opening prices for organic second-grade fruit.
It’s 1997, and Synergy Farms at Yarrawalla in northern Victoria has a problem: their conventional apple orchard has a bad case of black spot. Nothing is working, and the only advice the consultant can give is that they purchase a fortune in chemicals in a bid to save the crop. A friend says otherwise. They’ve heard of a Chinese remedy that involves spraying lime onto the trees to change the pH of the leaves. Synergy owners Sue Bennett and Brian Smith are willing to give it a shot.
The lime is applied once a year, and black spot has not been a problem since. Synergy’s path to full conversion takes another three years, but by 2000 Sue and Brian have converted their entire 10-hectare orchard to organic.
Since then, Sue says the orchard has taken “time, energy, and money”. Organics is far from the easy path; from the expense of pheromone ties for codling moth to the labour-intensive thinning that leaves enough shade to prevent sunburn and removes excess fruit that would prevent all the fruit produced growing to a saleable size. Organics brings plenty of challenges. So was it worth it?
“We would never go back,” she said. “It’s not even a consideration. We wouldn’t be interested in applying conventional chemicals and wouldn’t see any value returning to conventional. Part of our consideration in starting the orchard was to help us feel proud of the food we produce.”
A key part of the value proposition for organic orchards lies in the expanding secondary market. In the past, secondary apples would go to cattle feed, but in 2018 Synergy farms sent over 50 per cent of its fruit to processing.
According to a 2019 Market Report from Australian Organics, the industry is now worth $2.6 billion, with much of this due to a 13 per cent rise in exports in 2018. But with export access to China for first class apples not yet a reality, how can exports be rising so fast?
The answer comes back to second class apples in the form of processed and value-add snacks. Apples are a key ingredient for current high demand products like fruit pouches for kids’ lunchboxes, soups, juice, and baby food. These products have export access into China where first class apples do not.
Simorne Banicevic, Business Development Manager at South Australian-based Australian Organic Ingredients, is primarily focused on second class apples to the point where the company’s eventual goal is to source apples grown specifically for the secondary market.
“Up until two years ago everyone was using imported product for processing, but our own organic growers produce plenty,” she said. “The market for first-class organics is not as big, and a good crop can deflate the price much faster than the conventional market, so it makes sense to grow specifically for the export opportunity.”
Announcing a decision to pack all its conventional fruit with Goulburn Valley-based Plunkett Orchards, NSW grower and exporter N&A Group announced recently it would be concentrating on expanding its Batlow organic operation. In Victoria, M Edwards & Sons has been a major organic packer for 20 years, while Lenswood Co Op packs organics for South Australia growers.
In 1997, across the Bass Strait from Synergy Farms, Andrew Smith also made the decision to convert his orchard to organic and pursue secondary and value-add markets. Not only has R&R Smith pushed boundaries in the sector and won plenty of awards, including APAL’s Innovative Marketing award at the Industry Forum in June, but Willie Smith’s Organic Cider is a household name across Australia.
Grant Newbon, Sales and Packhouse Manager for R&R Smith, has been in the position for nearly three years and has worked in the industry for 37, ever since he was thirteen. For him, the numbers in organics add up.
“Sizes that don’t meet Woolworths’ spec used to get sold for 25 cents a kilo or $100 a bin for juicing. Now we get substantially more than that,” he said.
In Grant’s short time in organics, R&R Smith has grown considerably to supplying over ten wholesalers.
“We’re always trying to find new outlets for our fruit, and we feel we can do the best job in the country,” he said.
Where do I start with organics?
The first step on the path to organics is certification. Australia has a number of certification bodies, the largest two of which are the National Association for Sustainable Agriculture Australia (NASAA) and Australian Certificated Organic (ACO). The length of the conversion process depends on the conditions of your property and your chemical history, but on average it will be a 36-month process up to 24 months of which can be retrospective depending on your level of documentation.
The process differs slightly between bodies, but the general three-step process consists of:
- Reading through standards and speaking with a certification body about your orchard.
- Working with your chosen certification body to form a day-to-day organic management plan, including collating records on spray programs, soil applications, water records, fertigation, and your harvest record.
- Applying for an official audit which will grant certification if successful.
APAL Director Scott Price manages R&R Smith’s recently-acquired Rookwood orchard and is currently in his second year of conversion, with one more remaining, but can already attract an ‘in-conversion’ premium.
“There’s a bit of pain in the conversion process,” Scott said. “But I’m comfortable going down the organics road.”
“Before the start of the conversion process, you need to do some general housekeeping, like getting rid of all your chemicals. Give them to your neighbour.”
Scott is adamant that the decision to go organic is one you seize with both hands.
“You go straight into organics,” he said. “If you’re going to bite the bullet, bite the whole bullet. The conversion years are hard if you’re doing the whole orchard, but if you only did a section the logistics would be a nightmare.”
Fellow Tasmanian organic grower Robin Dance, of RM&JL Dance, grows organic apples and blueberries and works for EE Muir & Sons Pty Ltd trading as Serve-Ag. He has seen the ups and downs of the industry, such as changing varieties and falling conventional returns. For Robin, it made sense to make the switch to organic.
“I kept up with the R&D over the last 10 years and found that with the new products coming online that, in terms of IPM and other things, what we were doing with conventional was already close to organic anyway,” he said. “And now the organic specs from the retailers are as high as conventional specs too.”
After 24 years as a conventional grower Robin now manages 6,500 trees over four hectares and produced 35 tonne/hectare (t/ha) in his first year of organic production with the aim to have above 80 per cent first grade pack out. Advances in organic products means there’s now a product for almost everything, and yield doesn’t have to suffer.
“When I started looking into organics, we had lime-sulphur and some mediocre kelp products,” Robin said. “Ten years later we have over 40 specific products available, including fertilizers, trace elements, biological insecticides, and even herbicides.
“There’s no commercial product that doesn’t have an organic counterpart, except chemical thinners. For grass and weeds some people use sheep, but I let wallabies in to eat the weeds, then get the dog to chase them out when they start nibbling on the trees.”
“The actual soil looks healthier. The worms have come back.”
What are the challenges of organics?
Organics presents its own problems, a key one being the inability to use efficient conventional chemical thinning products requiring thinning to be done by hand, leading to much higher labour costs overall.
“Starting in the third week of November, labour costs become huge,” said Scott. “The biggest challenges are those labour costs, diseases like black spot, and IPM problems like codling moth. Even with the newer products, you have limited solutions. There is a big extra cost to going organic.
“Constant spraying means our diesel usage has gone way up too,” Scott said. “We are using double the diesel.”
Without the benefit of soil balancing agents and protective fungicides, organic crops are especially vulnerable to soil and fungal disorders. Australia has a mixed bag of natural conditions on this front; drier conditions reduce the risk of fungal load, but soils tend to be poorer.
“Conventional problems like hail still exist as well,” said Scott. “It’s a very interesting challenge.”
Choose your site
Across the country, Newton Orchards at Manjimup, in south west Western Australia, first started to think about organics after Harvey Giblett returned from an APAL conference in Melbourne inspired by a speaker to have a go. Newton converted one of their orchards from 2008-2012 and managed it organically until 2017 when a scab outbreak forced them to return it to conventional use to protect neighbouring orchards.
WA presents its own challenges. While Tasmania has problems with black spot, Manjimup is prone to outbreaks of the aggressive kikuyu weed known for sucking nutrients from everything else. Growing organics also requires “a passion for IPM”, which involves some out of the box thinking.
“You have to be invested personally,” said Newton’s Marketing Manager Nicole Giblett.
“We grew some native species as a natural barrier. That was one of the tricky parts.
“It’s so site-specific. Get your soil nutrient analysis done before selecting your site. Don’t use old spud ground, or old anything ground. If possible, use virgin soil.”
While European certification can require the organic orchard to have been grown from young trees, Nicole recommended converting a conventional orchard once the trees are established if aggressive weed control would be a key site issue.
“It’s basically impossible to grow trees organically from scratch in an orchard with kikuyu, even up to the wire on the trellis. That was the biggest learning – if we’d known about the process we wouldn’t have started with a young orchard.”
Have a market in mind
Newton Orchards grew organic Royal Gala, which had a 95 per cent organic pack out and was “the best fruit we’ve ever grown”. They sold the first-class apples direct to retailers and a small number of wholesalers and couldn’t keep up with the voracious demand.
“We couldn’t have grown enough, we certainly didn’t come up against a cap in demand,” she said. “The marketing was great. We went in under Woolworths’s Macro brand, which was immediately successful.”
According to Nicole, less vegetative growth improved the colour and eating quality, and the first-class apples earned significantly more per kilo and enabled “really valuable marketing pre-planning”.
“We were so proud of our organic orchard, and it also helped tell ‘the story’ around our care in growing our conventional fruit. It builds trust for Australian food branding,” Nicole said.
For Robin Dance, the existing Tasmanian market was an opportunity waiting to be seized.
“One of the reasons I went organic is that I had a packing shed in mind, and a market,” he said. “I spoke with Andrew Smith before I went into conversion, so I didn’t go in blind and made sure I had a place to take my fruit. That’s my advice: make sure you have a supply chain in place. Go and talk to your local fruit packers and make sure they will take it, and that they have certified organic facilities.”
“Do your own research. Make sure there is a market and you’ve got the right varieties. You have to have what they want, at a high standard. I believe growers are becoming more knowledgeable with growing practices and some well-kept secrets, and this, alongside ongoing research, will lead to organics becoming a major supplier in food production.”
Australian Organics, the peak body for organics in Australia
Australian Certified Organic, an Australia-wide certification body
National Association for Sustainable Agriculture Australia, another large certification body.