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ARGENTINA

1. History of the organic sector in Argentina

Argentina's organic agricultural production has a relatively short history. The sector’s origin can be found in 1985, the year in which Canecos (Centro de Estudios de Cultivos Orgánicos), was established, the first association in the country focussing on organic agriculture (GREENTREE S.A., 2000). In 1987, it is estimated that only five farmers were producing organically. These pioneers began producing in a sustainable way on their own initiative, without any guidance or support from the Government. It was at a time when there was no national legislation and organic certifiers were absent.

Anecdotal information indicates that an organic producer exported wheat in 1989, which was produced in an organic way, but not as such certified. When the (European) importer asked for the certification papers, the Argentine wheat exporter showed a notarial declaration stating that the product was produced organically. This story shows the state of play in the Argentine organic sector just over a decade ago.

During the nineties much changed, and the Argentine organic sector became more professional. At the second Trade Congress of the International Federation of Organic Agricultural Movements (IFOAM), held in Vienna in 1990, two Argentines who were present observed the widely expressed concern about the lack of global supply of a wide range of organic products. That observation gave a strong incentive to Argentine primary producers to switch away from their conventional agricultural production, and start producing organically to meet that global demand. Conversion from conventional to organic production is generally easy in Argentina, thanks to its physical conditions. The endowment of ample and natural fertile soil, the wide abundance of virgin land, and the low use of chemical inputs in conventional farming practices enable farmers to switch to organic production without major adjustments to their farming methods. The diverse climates throughout the country and a low pest pressure allow organic production virtually throughout the whole country.

With the growing number of farmers producing organically, there was a ‘natural need’ for national organic certification. Among the first organic certifiers were those who currently have by far the highest number of members, ARGENCERT and OIA. In the early 1990s, due to the absence of national legislation, international established rules (such as those formulated by IFOAM) were applied.

On behalf of their members, the certification bodies explained to Government officials the strong need for national legislation on organic production. The absence of such domestic rules would have frustrated the further expansion of the organic sector.

In 1992 a fundamental enhancement of the sector was realized, when the Government through the "Instituto Argentino para la Sanidad y Calidad Vegetal" (IASSCAV) (Argentine Institute for Plant Health and Quality) and the "Servicio Nacional de Sanidad Animal" (SENASA) (National Service for Animal Health) established guidelines for the "National System of Control for Organic Products". These national rules, based on existing guidelines by IFOAM and the European Community (EC), were in most cases equivalent and in some cases more demanding than IFOAM and EC rules.

In mid-1992, Argentina submitted a request to the European Commission to be included in the equivalence list of third countries provided for by Article 11 (1) of EC Council Regulation No 2092/91. Based on analysis of the production rules and inspection system by the EC, Argentina was placed on a provisional list of third countries at the end of 1992 (Commission Regulation (EEC) No 3713/92, 22 December 1992). This was a major achievement; in a relatively short time period, the Government formulated national organic guidelines, such that Argentina could be included in the (provisional) EC list of third countries.

After verification of the equivalence of the inspection system and production rules for organic farming, Argentina was officially included in the EC list of equivalent third countries, on 26 March 1996 (Commission Regulation (EC) No 522/96) (EC mission report).

The fact that Argentina was included in the EC list was not only thanks to the level of applied standards, although it is of course a basic pre-condition, it was also thanks to EC recognition of reliable national certifying bodies and their procedures and control mechanisms. Details on this system are provided in Section 3.

Once the third country status was obtained, organic exports to the EC, traditionally already one of the main export markets for Argentina, grew strongly, and now account for almost 80 percent of organic exports. The expansion of the organic sector accelerated, with annual growth rates of over 100 percent during the second half of the nineties.

2. Institutions active in the organic sector at the national and local levels

2.1 Farmer organizations

The oldest farmer organization is MAPO (Movimiento Argentino para la Producción Orgánica -Argentine Movement for Organic Production). MAPO has, together with SENASA, played an important role in the formulation and implementation of the National Programme for the Development of Organic Agriculture in Argentina. Moreover, its activities included: (i) the organization of the IFOAM '98 Conference in Argentina; (ii) promotion of Argentine organic products in world markets, together with Export-Ar; and (iii) organization of seminars and training courses related to organic production

In 1998, Cámara Argentina de Productores Orgánicos Certificados (CAPOC) was established. This umbrella organization has been constituted to promote organic activity, defend the interests of organic producers, represent producers during fairs and exhibitions, create awareness among consumers and collaborate with government authorities as technical partner.

CAPOC’s Web site (in Spanish and English) contains useful statistics on Argentine organic production and exports, as well as detailed information of their members (see www.organico.com.ar).

2.2 Government agencies

The competent authority for the inspection system of organic production in Argentina is the "Secretaría de Agricultura, Ganadería, Pesca y Alimentación" (Ministry of Agriculture, Animal Husbandry, Fisheries and Nutrition), through the "Servicio Nacional de Sanidad y Calidad Agroalimentaria" (SENASA) (National Agrifood Health and Quality Service). SENASA approves and supervises private inspection bodies.

The present SENASA was created in December 1996 when the former IASCAV and SENASA (see Chapter 1) were merged. It has a staff of 3 600 and is present in a central office in the capital, in local offices throughout the country and also at border points where imports and exports take place. SENASA’s work, besides the above-mentioned inspection of domestic organic production, is focussed on plant health protection, exotic diseases and pests, control of foods, veterinary medicines and agricultural chemicals (EC, 2000).

2.3 Other organizations and companies

SENASA approved twelve inspection bodies of which three are approved for inspection and certification activities of products for export to the EC: ARGENCERT S.R.L. (Instituto Argentino para la Certificación y Promoción de Productos Alimentarios Orgánicos), OIA (Organización Internacional Agropecuaria) and LETIS S.A.

The first two inspect 80 percent of the total volume of domestic organic produce, while Letis is significantly smaller. It obtained its equivalent status recently (October 2000). All certifiers are private companies, without any support from the government. They have inspection activities in organic farming throughout Argentina and a few certifiers also have activities in other South American countries. A complete list with all Argentine certification companies and their contact details can be found in Annex II.

3. National standards and regulations

In 1992 SENASA published national legislation on organic production, which set out the minimum requirements for organic farming in Argentina (Decree No. 423, 3 June 1992). The initial legislation contains 13 Articles, and describes what ‘organic’ stands for, requirements for organic imports, elaboration and packing requirements and describes the control system. Attached to the legislation are three annexes, which list the products which are allowed as fertilizers, products for plague control and procedures for food processing (full text can be found at http://senasa.mecon.ar/calidad.htm).

During the following years, adjustments to this initial legislation have been made, as international standards have also developed. It should be noted that Argentina was among the first countries in the world with legislation on organic animal production. The Argentine rules are in general equivalent to the EC Regulation (Regulation (EEC) No 2092/91), although more restricted in some areas, for example on the requirements for organic bee keeping.

Apart from the national legislation, each inspection body publishes its own private production standards on organic production, which do not have a legal status. In assessing the inspection bodies, SENASA checks whether these private standards meet the minimum requirements of the legislation (EC, 2000).

For organic materials, which are exported in bulk, the containers are accompanied by identification documents that can be inspected by the SENASA officers in the ports. The products have to be labelled as "Producto de agricultura orgánica", and have to display the label of the inspection body and its registration number, as well as a batch number identifying its origin, as defined in Article 9 of Decree 423/92 (SENASA, 1992).

4. Organic production

4.1 Introduction

The organic sector in Argentina has had a very high growth rate during the last few years. Total surface under organic production was estimated at only 5 000 ha in 1992, while in 1997 the total area devoted to certified organic production had increased to over 231 000 ha (FAS, 1998). It continued to grow in 1998 (to 291 000 ha), while in 1999 the total area under organic production ‘exploded’ to over 1 020 000 ha, an increase of almost 250 percent in one year (see Graph 1) (SENASA, 2000). Preliminary data for the year 2000 obtained from certifiers confirm a continuation of the fast growth: total area under organic production is estimated at 2 900 000 ha. for end 2000 (Argentina Orgánica, 2001).

Graph 1: Total area under organic production (in ha)


Sources: SENASA, 2000 and Argentina Orgánica, 2001.

It should be noted that the major part of total area under organic production is dedicated to pastures for cattle production (99 percent of the total). These pastures are mostly found in the southern part of the country, where agriculture has been extensive for over decades, and therefore no conversion period is needed. Although certified organic, not all fields are under production (Mercado Rural, 2000). The remaining part (about 24 000 ha) is for organic plant production, including wheat, sugar, and fruits and vegetables (see Graph 2) (SENASA, 2000).

Graph 2: Area under organic plant production


Source: SENASA, 2000.

Total value of Argentine organic production is estimated at US$20 million (1999), of which 85 percent is exported and the remaining 15 percent sold in the domestic market (FAS, 2000a). In 1999, 1 422 organic producers were registered, although this included the 754 small farmers of organic sugar cane in the north east Province of Misiones, who produce together in a cooperative, and can therefore be seen as one organic enterprise.

4.2 Organic fruit and vegetables

Argentina is one of the world's largest producers of certified organic apples and pears, with respectively 380 and 234 ha planted in 1999 (i.e. for apples, 102 percent and for pears, 50 percent above the 1998 figure). Although no precise data on area planted in 2000 is available at the time of writing (early 2001), it is expected that the total area planted to organic fruit will continue its aggressive growth (FAS, 2000b).

Total production of certified organic apples and pears reached approximately 7 400 metric tonnes in 1999 (up from 6 000 metric tonnes in 1998) (SENASA, 2000). It is expected to continue to grow at a similar pace, driven by rapidly growing demand the main export destinations, i.e. the EC and the United States. (FAS, 2000b). So far, exports to Japan have been limited (see section 5), but all producers, traders and exporters interviewed expressed a keen interest in what is seen as one of the main opportunities for a sharp increase of foreign demand. For more info see the chapter on Japan, elsewhere in this book. Details on production of organic fruits by product (1999) can be found in Table 1.

Table 1: Production of organic fruit and vegetables 1999 (in tonnes)

Fruits

Tonnes

Vegetables

Tonnes

Pears

3 990

Onions

2 124

Apples

3 377

Garlic

245

Oranges

583

Asparagus

149

Mandarins

99

Lettuce

93

Grapefruit

43

Beet

80

Lemon

24

Carrot

34

Grapes

12

Cucumber

33

Other

11

Other

627

TOTAL

8139

TOTAL

3 385

Source: SENASA, 2000.

The main organic vegetable is onions, with a total production of over 2 100 tonnes (or 63 percent of total vegetable output). Other organic vegetables include garlic, asparagus and lettuce (see Table 1) (SENASA, 2000).

4.3 Type of producers

Organic farmers are found throughout the whole country and produce a wide variety of organic products. Farm size ranges from small scale with a few hectares (or sometimes less), to farms, which are extensive, with thousands of organic hectares, mostly pastures, in the southern part of the country. An example of a small-scale organic farmer can be given in the following anecdotal story. An organic certifier was informed by one of the members that he ‘had destroyed’ all the bugs which were attacking his crop. The certifier was shocked and asked what product he had used to combat the plague, and asked if that product was allowed. The farmer, producing on an area smaller than 0.5 ha, said: "Well, I pinched them all between my fingers".

Another type of organic farm includes some producers of organic grapes in San Juan, who have made huge investments in areas up to 300 ha. The investment not only includes the vineyards themselves and the packing and handling facilities, but moreover includes the construction of a four kilometre long canal, which brings the clean Andean melt water to the remote area. Without this water, no production is feasible the semi-arid virgin lands. The canal was constructed in a joint effort by four major producers, and fills the water basin of 1.3 million litres per day (Picture 1). Such investments could not be made by small farmers, especially bearing in mind the high interest rates for credit in Argentina.

Picture 1: Some organic farmers have made large investments,
like Emprendimientos Ecológicos S.A.in San Juan


Source: picture taken by author.

It should be noted that, independent of the size of production, there is generally a strong willingness to cooperate among organic farmers. No competition between farmers is felt. For example, in Misiones 754 small-scale organic sugar cane growers are working together in one cooperative. Also, in the Province of San Juan, 15 relatively small farmers of organic grapes joined forces and created a company in order to streamline exports and reduce overhead costs. These farmers, in turn, regularly exchange information with the bigger organic grape producers (see above). Generally they are aware that each has a particular advantage (one is more experienced in the organic production and its technical requirements, whereas others have better established export channels or broader investment facilities), and that joining forces benefits all.

4.4 Economic analysis of organic vs. conventional production

Not much information about the economic aspects of the conversion to organic production methods is available. One document (SAGyP, 1997) provides an economic analysis in which costs and income at farm level of organic production methods are compared with those of conventional agriculture. It includes an example of apple production in Río Negro, the main organic fruit-producing province.

In comparing organic with conventional apple production, no differences in yields were observed, although 25 percent of the organic apples did not meet the minimum quality requirements and had to be rejected, while this percentage in conventional production generally is 10 percent. Moreover, the size of organic apples was inferior, resulting in a lower price obtained.

Costs and benefits of calculations carried out in 1997, using 1995 and 1996 price data, are shown in Tables 2 and 3. The net incomes per year (column 4) are converted to current values (column 5). The total current value for organic apples is over US$52 000 whereas for conventional it is less than US$36 000. Therefore, based on this analysis and its underlying assumptions, organic apple production seems economically more attractive.

Table 2: Cost and benefits of organic apple production (in US$ per ha)

Year

Cost (a)

Income (b)

Difference(b-a)

Current value

Year 0

2 872

9 762

6 890

6 890

Year 1

2 872

9 762

6 890

5 719

Year 2

2 872

22 137

19 265

14 449

Year 3

2 872

22 137

19 265

13 100

Year 4

2 872

22 137

19 265

11 944

TOTAL




52 103

Source: SAGyP, 1997.


Table 3: Cost and benefits of conventional apple production (in US$ per ha.)

Year

Cost (a)

Income (b)

Difference(b-a)

Current value

Year 0

2 267

11 495

9 227

9 227

Year 1

2 267

11 495

9 227

7 658

Year 2

2 267

11 495

9 227

6 920

Year 3

2 267

11 495

9 227

6 274

Year 4

2 267

11 495

9 227

5 721

TOTAL




35 803

Source: SAGyP, 1997.

Additionally, the study gives the minimum required price difference between organic and conventional apples at which both production methods result in the same benefit. That price difference is calculated at 39 percent. Therefore, if the price difference between organic and conventional apples drops below 39 percent, conversion to organic apple production is economically not attractive.

4.5 Production constraints

Thanks to its abundance of appropriate land and natural resources, its favourable climate throughout most parts of the country, and a generally low pest pressure, organic production in Argentina is not particularly limited by natural constraints. However, there is a wide range of other factors, which prevent Argentine farmers from taking full advantage of these natural conditions.

First, access to credit, especially for small farmers, is virtually impossible since actual rates are ranging between 24 percent and 36 percent annually. These rates prevent major investment (in organic production as well as in other sectors).

Second, many producers complain about the limited availability of bio-pesticides. SENASA, the competent authority for accreditation of organic certifiers, publishes in the annex to national organic legislation a list with all the allowed products (see Section 3). However, foreign products are required to be tested during at least three years at the Argentine research institutes (INTA), before they can be included in the list. Although pest pressure is generally low, the lack of sufficient means to combat pests in an organic way decreases the yield and therefore the profit.

Third, although the organic sector has increased strongly, it is still a relatively young and inexperienced sector. There is hardly any research on appropriate organic farming methods under local conditions and extension assistance is virtually absent. Therefore, many producers start producing organically on a ‘trial and error’ basis, and adjust their farming methods every season until they reach an acceptable and (more) stable level of output. Some producers expressed during interviews that the costs of low yields due to unforeseen problems in especially the first few years of production are the highest costs they face, much higher than other costs, such as certification and inspection. Small farmers will have difficulty bearing such costs.

Fourth, although conventional agriculture has been extensive in many parts of the country, other parts need a three-year conversion period before full organic status can be obtained. No government support exists during those years of conversion, a practice that is common for example in many European countries in order to provide incentives to farmers to convert.

4.6 Support to production

The Government of Argentina does not grant any subsidies or incentives to agricultural production, including organic production. There are no Government or private sector sponsored activities designed to educate and encourage consumers to purchase organic products. However, in September 1998, the Argentine Agricultural Secretariat (SAGPyA) launched the National Program for the Development of Organic Production (PRONAO). This programme, which does not exist anymore, aimed to promote organic products in the domestic market, increase the number of organic producers, capture new markets and educate consumers (FAS, 2000a).

5. Marketing organic fruit and vegetables

5.1 The Argentine organic market

Organic sales in the domestic market are estimated at US$3 million, or 15 percent of total domestic production of organic products. The Argentine organic market is underdeveloped and virtually only exists in the main urban area, i.e. greater Buenos Aires (13 million inhabitants), but annual growth rates have been high (25 percent). However, compared to the growth rates in total domestic organic production, domestic demand expansion has lagged behind. Most of the products sold are specially produced for the domestic organic market, rather than being residual after exports.

The two main products consumed at the domestic organic market are (1998 figures) cereals such as corn (891 metric tonnes) and bread wheat (425 metric tonnes). Other certified organic products include: beef, poultry, eggs, honey, olive oil, fruits and vegetables, dairy products, tea (mate), sugar and wine (see Graph 3). Preliminary data for the year 2000 estimate an organic certified traded volume of 5 600 tonnes (Argentina Orgánica, 2001). Among certified organic fruit, apples and pears are the most outstanding, while for vegetables, lettuce, beet and carrots are the leading products (see Table 4) (FAS, 2000a and SENASA, 2000).

Graph 3: Organic products for domestic market (percent based on volume)


Source: SENASA, 2000.


Table 4: Quantities of Certified fruits and vegetables for domestic market, 1999 (in tonnes)

Fruits

Tonnes

Vegetables

Tonnes

Pears

83

Lettuce

93

Apples

55

Beet

80

Oranges

18

Carrot

36

Mandarins

15

Radish

34

Grapes

5

White cabbage

28

Lemon

5

Spinach

25

Other (raspberries, cherries, etc.)

0.4

Other (courgette, cucumber, broccoli, potatoes, etc.)

306

TOTAL

181

TOTAL

602

Source: SENASA 2000.

5.1.1 Marketing chains

The Argentine retail sector is dominated by large supermarkets (hipermercados), such as Disco-Ahold, Jumbo, Carrefour and Coto). Jumbo introduced organic fruit and vegetables in its stores in 1992 (Negocios, 2000). In Buenos Aires and its suburbs, approximately 80 percent of all organic food products is sold in supermarkets. Some supermarket chains are developing private labels for a few organic products. Some chains are also working on marketing campaigns with the purpose of educating customers about the benefits and advantages of eating organic products (FAS, 2000a). Sales are said to increase significantly during such marketing campaigns, but fall back to pre-campaign levels immediately after the promotion is finished.

The remaining 20 percent of organic sales take place in speciality stores (where all types of natural, health and dietary products are marketed), as well as through direct farms sales and home delivery, which are on the rise.

5.1.2 Producer prices and price differential with conventional products

No detailed information on price differences between organic and conventional horticultural products could be obtained. One source states that price differences go up to 50 percent (Negocios, 2000).

In one of the supermarkets, JUMBO, which has a special corner on their fruits and vegetable section, indicated by: "productos ecológicos", the following price differences between organic and conventional vegetables were observed (Table 5).

Table 5: Prices of selected conventional and organic vegetables

Product

Price conventional
($/kg)

Price organic
($/kg)

Price premium (% price organic above price conventional)

Lettuce

1.49

2.19

47

Carrots

0.69

1.49

116

Courgette

1.39

1.80

29

Source: Author’s observations in hypermarket Jumbo (December, 2000; week 51).

The table shows that, although the obtained data is not necessarily representative for average price differences, the price for organic vegetables can be more than double the price for conventional vegetables, as was the case of carrots during the observations.

5.1.3 Type of consumers

The average Argentine consumer is price-oriented and thus not prepared to pay a higher price for a product, which he/she does not perceive as ‘better’. No formal market research has been carried out on the profile of consumers of organic products. However, a recent report describes them as: (i) belonging to the higher-income strata; (ii) knowledgeable of the qualities and benefits of organic foods; and (iii) concerned about their health (FAS, 2000a).

Another source quotes an Argentine consultant, who states that the demand for organic products is relatively independent of the level of income of consumers (Mercado Rural, 2000). She adds that most organic consumers are found in the groups of under 35 years and above 60 years. Families with children under six years tend to be more concerned about possible allergic consequences of food consumption.

5.1.4 Prospects for development of domestic organic market

Currently, the domestic organic market is still underdeveloped. Factors that negatively influence its development include: (i) lack of knowledge by consumers on what ‘organic’ stands for; (ii) absence of a national organic label; (iii) the confusion between the wording "producto orgánico" (the official name) and "producto ecológico" (the term used by the supermarkets); and (iv) only a selected group of consumers has physical and economical access to the organic products.

However, Argentina is the Latin American country with the highest average GDP per capita (US$7 733 in 1999) (EIU, 2001). Moreover, promotional activities in supermarkets increase awareness among consumers. The combination of these factors provide remarkable opportunities for further development of the domestic organic market, especially in urban areas.

5.2 Exports

Although the domestic organic market has increased over the last years, by far the main destination of Argentine organic products is abroad. Of all organic products produced domestically, an average of 85 percent is exported, with a total estimated value of US$17 million. For plant (versus animal) products the percentage exported is even higher at 90 percent.

The organic volume exported in 1999 is estimated at 25 800 tonnes, while preliminary data for the year 2000 estimated total organic exports at 35 000 tonnes (Argentina Orgánica, 2001). The main destination of organic horticultural exports is, by far, the EC, accounting for about 80 percent of organic horticultural products exports. The United States is, with 19 percent, the other main market to which these products are exported (Graph 4).

Graph 4: Organic horticultural exports by destination (1999)


Source: SENASA, 2000.

5.2.1 Marketing channels

Some big producers export their produce themselves. They havecontacts with the foreign purchaser, sometimes through their own office abroad, in for example Miami or the United Kingdom. Smaller producers tend to co-operate and combine efforts to export by themselves or through brokers.

During field visits and interviews it was mentioned by various persons that generally the organic producers do not know how to export, whereas the organic exporters (with an established network of potential clients) often lack sufficient quantity to export. Joining forces enables both to benefit from the comparative advantages of all partners.

5.2.2 Products and destination

As stated above, the leading export destination of organic horticultural exports is the E. The EC accounts for 75 percent of all organic fruits export, while for organic vegetables this percentage is even higher (92 percent) (see Table 6).

Table 6: Exports of Argentine certified organic fruit and vegetables by destination,1999 (metric tonnes)

Products

USA

EC

Other

Total

Fruit

1 849

5 953

156

7 958

Vegetables

209

2 382

11

2 602

Total Fruit & Vegetables

2 058

8 335

167

10 560

Source: SENASA, 2000.

The leading fruits exported are apples and pears, followed at some distance by oranges. Other fruits exported include mandarins, grapefruit, plums, grapes and cherries. During interviews with exporters, the export of strawberries and raspberries, among others, were identified as fruits with strong export growth rates (Annex I).

The main organic vegetable exported is onions, which account for 82 percent of organic vegetable exports (based on volume). Other organic vegetable exports include garlic, asparagus and pumpkin, among others (Annex I).

Most products are exported to the Netherlands, a significant entry point into the European hinterland, followed by the United Kingdom. The third country to which Argentine organic horticultural products are exported is the United States. Exports to ‘other’ countries include Norway and Japan, although quantities so far have been small (Annex I). Many producers, traders and exporters see the Japanese market as the most attractive market for future export growth.

5.3 Price difference with conventional products for export markets

No precise data could be obtained. One organic exporter mentioned that average FOB price margins between organic and conventional products range from 10 to 50 percent, although he added that over the last years it has become more difficult to get the 50 percent. Various exporters indicated the likelihood of an ongoing erosion of price premiums.

5.4 Constraints to exports

At first glance, constraints to exports seem minimal. Argentina’s 'third country' status is a clear sign of recognition abroad of the national legislation and its control mechanism. The expertise and reliability of some of Argentine’s certifying agencies enable smooth exports to the EC. Moreover, Argentina’s physical location in the southern hemisphere enables the export of fresh perishable products during the northern winter, when domestic supply is absent.

The largest possible constraints include the fact that the EC accounts currently for 80 percent of Argentine exports of organic fruits and vegetables, which makes the sector highly dependent of growth in that market. Moreover, the Argentine peso is pegged to the US dollar, and a deterioration of the exchange rate between the US dollar and the Euro, could favour competing organic exporting countries in the southern hemisphere, such as Australia or South Africa.

5.5 Support to export

Argentine exporters of conventional agricultural products receive an export rebate between 5 and 8 percent (depending on the product) of the FOB export value.

In December 2000, the Government approved a law, which provides an additional 3 percent export rebate for organic exports (therefore total rebate for organic exports range between 8 and 11 percent). It is the first time in Argentina that organic exports are clearly differentiated from conventional exports.

6. Conclusions: prospects for increase in production and exports

The Argentine organic sector has grown significantly from a few pioneering farmers ten years ago to a US$20 million industry today, of which about 85 percent is exported, mainly to the EC. The total certified organic area increased dramatically from 5 000 ha in 1992 to over one million ha in 1999. Early figures for 2000 estimate that total surface has increased to 2 900 000 ha, although this number includes pastures in the south which are not in production. The variety of products is also remarkable, including many different fruits and vegetables.

This section analyzes the Argentine organic horticultural sector, using SWOT-analysis: Strengths, Weakness, Opportunities and Threats. It provides the sector’s strengths and successes, but also lists limiting factors. For the medium-term outlook (about five years), it identifies the main opportunities for organic horticultural exports as well as a further development of the domestic organic market for fruits and vegetables. Finally, it discusses some threats, which might negatively influence continuation of fast growth of the sector.

6.1 Strengths

Thanks to its climate, the natural soil fertility and other physical conditions combined with a low pest pressure, organic production is feasible virtually throughout the whole country, without major difficulties or strong adjustments to conventional production methods.

These natural conditions are not fully responsible for the success of the Argentine organic sector. The fast and pragmatic way in which the Government of Argentina formulated the national legislation on organic production, at a time when the sector was still at an early stage of development (1992), paved the way for international recognition of those rules and provided a strong incentive to farmers for converting away from conventional agricultural practices.

Strong rules, however, are not a guarantee for success, as long as there is no appropriate control of compliance with those rules. Therefore, the recognition of national reliable certifying bodies and their procedures and control mechanisms by the EC facilitated a strong development of the organic export sector.

Moreover, Argentina’s location in the Southern Hemisphere enables the country to export organic fresh products at times when production in the northern markets is absent. This is especially the case for perishable products, including fruits (e.g. grapes) and vegetables.

Finally, the strong historical links with Europe, the fastest growing market of organic consumption and Argentina’s name and fame as an agricultural exporter, combined with good sea and air links, underpinned the development of its organic export sector.

6.2 Weaknesses

There exist a series of weaknesses, which limit the farmers ability to take full advantage of the above-mentioned strengths. First, access to credit, especially for small farmers, is virtually impossible with actual rates ranging between 24 percent and 36 percent per annum, limiting investment possibilities.

Second, many producers complain about the limited availability of bio-pesticides. Although pest pressure is generally low, the lack of methods to combat pests in an organic way decreases the yield and therefore the profit.

Third, the organic sector is still relatively young and inexperienced while extension services are absent often resulting in lower than expected yields, especially during the first years of organic production.

Fourth, although conventional agriculture has been extensive in many parts of the country, coming close to organic, other parts need a three-year conversion period before a fully organic status can be obtained. No government support exists during those years of conversion, a practice that is common in, for example, many European countries in order to provide incentives to farmers to convert.

Fifth, constraints are found in commercialization of the product, since quantities are generally so small that economies of scale during handling, processing and shipping are virtually absent.

Sixth, many producers expressed their frustration about the lack of contracts with the importers abroad. Generally, insecurity exists until the last moment before harvest. This is especially the case for perishable products, including grapes and certain vegetables.

Finally, the absence of a national logo for organic products limits the marketing possibilities at the domestic market level. Additionally, some confusion might exist among consumers, since the official denomination of organic products in the Argentine legislation is "producto orgánico", whereas most supermarkets use "producto ecológico" to sell the products.

6.3 Opportunities

During the study of the Argentine organic horticultural sector, through interviews and review of documents, the following opportunities have been identified. Organic exports, currently the destination of 85 percent of domestic organic production, is poised to continue being the strongest growing sector. Thanks to the natural conditions of Argentina, its equivalent legislation, its competent control mechanisms and good air and sea links, the generally high quality requirements for imports into developed country markets are met without major problems.

Moreover, Argentina’s reputation as a major exporter of conventional agricultural products provides a strong promotional tool for their exports of organic products, especially through their presence at international trade fairs and exhibitions. Additionally, the local market for organic products, currently still underdeveloped, provides opportunities for further growth. Although virtually only existing in Greater Buenos Aires where a third of the Argentine population lives, increasing consumer awareness of organic products combined with the highest per capita GDP of Latin America provides for a strong growth potential.

6.4 Threats

Although the Argentine organic sector has many strengths and opportunities for ongoing growth as discussed above, some aspects that might negatively influence further development of its production and export of organic horticultural products should be taken into account. One obvious factor is competition from other countries with similar advantages (e.g. climate and opposite seasons), such as Chile, Brazil, South Africa. If these countries obtain the same EC third country status as Argentina, competition for EC market share will increase.

Another factor is the ongoing improvement of storage methods of perishable products, which allow competing producers of organic fruits and vegetables in the northern Hemisphere (e.g. Spain and Italy) to widen the availability of organic products throughout the year. This might strongly affect export opportunities from Argentina (and other Southern exporters).

Third, there is a certain distrust among groups of organic consumers in importing countries about the reliability of certification mechanisms abroad, which might limit export possibilities from countries oversees. Moreover, importers and traders in some European countries express their preference for domestic or European products for which transport distances are shortest.

Finally, the EC accounts currently for 80 percent of Argentine exports of organic fruits and vegetables, which makes the sector highly dependent of growth in that market. An economic slowdown in the EC or a deterioration of the exchange rate between the Argentine peso (which is pegged to the US dollar) and the Euro, could have wide impacts on the Argentine organic export sector.

6.5 Concluding remarks

The case study on the successes and weaknesses of the Argentine organic horticultural sector shows the importance of its national legislation on organic production as well as its control of compliance with those rules through a number of private certifiers, which are supervised by an independent accreditation body, SENASA. This structure enabled Argentina to obtain its EC third country status and allowed strong growth rates in organic production and exports.

Therefore, the Argentine case provides a good example for other countries, which are at a less advanced stage of development of their organic sector, regarding what road could be followed to develop such a sector and what basic requirements are needed to improve the probability of success.

Moreover, the case study shows that, under certain preconditions, potential exists for further development of the Argentine domestic organic market, especially in urban areas.

References

Argentina Orgánica (2001), CD-Rom, Ministerio de Relaciones Exteriores, Comercio y Culto et al, Buenos Aires, 2001

EC (2000), "Organic Farming in Argentina", Mission Report, DG (SANCO)/1044/2000-MR Final, European Commission

EIU (2001), Economist Intelligence Unit, Argentina Country Profile 2000, www.eiu.com, 2001

FAS (2000a), "Argentina - Organic Food Report", GAIN Report, USDA Foreign Agricultural Service, Buenos Aires, 2000

FAS (2000b), "Argentina - Organic products: Apples, Pears and Cherries", GAIN Report, USDA Foreign Agricultural Service, Buenos Aires, 2000

FAS (1998), "Update on Argentina’s Organic Sector", GAIN Report, USDA Foreign Agricultural Service, Buenos Aires, 1998

GREENTREE S.A. (2000), "El Reconocimiento a la calidad", Buenos Aires, 2000

La Nación (2000), "Los productos orgánicos escapan de la recesión", Negocios, Sunday 10 December, 2000

La revista de la Bolsa (2000a), "La Bio Agricultura", p. 4-7, Buenos Aires, 2000

La revista de la Bolsa (2000b), "La Bio Agricultura en la Argentina", p. 8, Buenos Aires, 2000

LATIN CONSULT (2000), "Cómo vender más alimentos orgánicos?", informe del taller, 13 Noviembre, 2000

Mercado Rural (2000), "Producción Orgánica: Ni tanto ni tan poco", Buenos Aires, October 2000

SAGyP (1997), "Producción orgánica en Argentina; Factores a tener en cuenta y análisis económico de su conveniencia ", Secretaría de Agricultura, Ganadería, Pesca y Alimentación et al, Diciembre 1997.

SENASA (2000), data based on certifiers information, available at www.organico.com.ar and http://senasa.mecon.ar/calidad.htm

Supercampo (2000), "Argentina pica en punta", Economía y Mercados, Productos Orgánicos, Buenos Aires, 2000

ANNEX I: Exports of Argentine Organic Horticultural products by destination, 1999 (in metric tonnes)


United States

European Community (total of next 8 columns)

Germany

Belgium

Spain

France

Italy

Netherlands

United Kingdom

Sweden

Norway

Japan

TOTAL

FRUITS














Pears

1 447

2 460

2

314

0

0

239

914

962

28

1

0

3 907

Apples

402

2 765

143

418

0

0

27

899

1,134

145

155

0

3 322

Oranges

0

565

20

0

0

294

11

117

123

0

0

0

565

Mandarins

0

84

0

0

0

14

0

14

56

0

0

0

84

Grapefruit

0

43

0

0

0

0

0

0

43

0

0

0

43

Lemon

0

19

2

0

0

0

0

2

15

0

0

0

19

Plums

0

8

0

0

0

0

0

4

4

0

0

0

8

Grapes

0

7

0

0

0

0

0

2

4

0

0

0

7

Cherries

0

1

0

0

0

0

1

0

0

0

0

0

1

TOTAL Fruits

1 849

5 953

168

732

0

308

279

1 953

2,341

173

156

0

7 958

VEGETABLES














Onions

55

2 068

188

28

13

0

53

424

1

0

0

0

2 123

Garlic

47

198

13

69

0

0

17

71

0

0

0

0

245

Asparagus

76

73

23

4

2

14

2

7

0

0

0

0

149

Pumpkin

0

31

0

0

0

0

31

0

0

0

0

0

31

Dry beans

20

0

0

0

0

0

0

0

0

0

0

0

20

Cucumber

0

11

11

0

0

0

0

0

0

0

0

0

11

Black beans

11

0

0

0

0

0

0

0

0

0

0

0

11

Azuki Beans

0

0

0

0

0

0

0

0

0

0

0

11

11

Melon

0

2

0

0

0

0

0

0

2

0

0

0

2

TOTAL Vegetables

209

2 382

235

100

15

14

103

502

1

0

0

11

2 602

TOTAL Fruits and vegetables

2 058

8 335

403

832

15

322

382

2 455

2,342

173

156

11

10 560

Source: SENASA. 2000 (based on information obtained from certifiers).


Annex II

Certifiers

Argencert S.R.L.
Director: Ing. Agr. Laura Montenegro.
Address: Bernardo de Irigoyen 760,
Piso 10 B
(1072) Buenos Aires
Tel: (54-11) 4334-03134342-1479
Fax: (54-11) 4331-7185
argencert@argencert.com.ar
argencert@interlink.com.ar
www.argencert.com.ar

O.I.A.S.A.
(Organización Internacional
Agropecuaria).
Director: Ing. Agr. Pedro Landa.
Address: Av. Santa Fe 830 PB
(1641) Acassuso, Buenos Aires
Tel/Fax: (54-11) 4793-4340
4798-9084/6514
oia@oia.com.ar
www.oia.com.ar

LETIS S.A.
Director: Ing. Agr. Mónica S. De
Incola
Address: Entre Ríos 138/142
(2000) Rosario, Prov. De Santa Fe
Tel: 0341-4264244
biocertificacion@biocertificacion.com.ar

M.O.A. (Fundación Mokichi Okada)
Director: Ing. Viviana Mariani
Address: Federico Lacroze 2025
(1426) Buenos Aires
Tel/Fax: (01) 4771-5441/5512
4778-1380
moa@accessnet.com.ar

AMBIENTAL S.A.
Vicepresidente: Ing. Agr. Cristina
Comezaña
Dirección: Av. Córdoba 966 Piso 6 A
Buenos Aires, Argentina.
Tel/Fax: (01) 4322-2520/1312
ambient@pinos.com

A.P.P.R.I. - Asociación para el pastoreo racional intensivo
Director: Ing. Agr. Gustavo A.
Lundberg
Dirección: Marcelo T. De Alvear
1640 3º B (1060) Buenos Aires.
Tel/Fax: 4813-7720
appri2000@hotmail.com

FU.CO.FA - Fundación Argentina de lucha contra la Fiebre Aftosa
Directores: Dr Esteban Pantín y
Dr. Marcelo Barrero.
Dirección: San Martin 1360 (3100)
Paraná, Entre Ríos.
Tel/Fax: (0343) 4233565
fucofaer@infovia.com.ar

Food Safety - Seguridad Alimentaria
Director: Dr. Oscar Bruni,
Maria Susana Vidal.
Dirección: Ramón Falcón 2530 (1406)
Buenos Aires, Argentina.
Tel/Fax: (01) 4612-1257/
4612-4837
food@ciudad.com.ar,
foodsafety@lab-rapela.com.ar

Agros Argentina S.R.L.
Responsable Técnico: Ing. Agr.
Silvia Sunkowsky
Dirección: Av. Córdoba 1352
1º piso (1055)
Buenos Aires, Argentina
Tel/Fax: 4941-6741/4302-0850
agrosargentina@infovia.com.ar

VIHUELA S.R.L.
Responsable Técnico: Ing. Agr.
Marisa Repetí
Dirección: Perú 1236 (1141)
Buenos Aires
Tel/Fax: 4307-7667/4541-5947
vihuela2000@yahoo.com.ar

Convenio de Certificación Conjunta Argentina INTA-IRAM
Director: Lic. Guillermo
Malvicino
Dirección: Cerviño 3101,
1º piso (1425) Capital.
Tel/Fax: (01) 4802-9623
4381-9785/4804-3920
fundac@inta.gov.ar

Government and other agencies

SENASA - Servicio Nacional de Sanidad y Calidad Agro-alimentaria
Organic Productds co-ordinator:
Ing. Agr. Juan Carlos Ramírez
Ministry of Agriculture, Animal
Husbandry, Fisheries and
Nutrition
Av. Paseo Colón 367, 5th floor,
(1063) Buenos Aires, Argentina
Tel./Fax: (+) 4345-4110/12;
(+) 4331 - 6041/49
DICA@inea.com.ar

C.A.P.O.C - Cámara Argentina de Productores Orgánicos Certificados
Presidente: Ms. Laura Tami
Carlos A. López 3826, 1st floor,
Dept. 1
(1419) Capital Federal - Buenos
Aires, Argentina
Rel/Fax (5411) 4502 - 8778
info@organico.com.ar
www.organico.com.ar

Producers and traders

Organic Sur
Director: Ernesto Engels
Juncal 3066, 4th floor
(1425) Buenos Aires, Argentina
Tel: (5411) 4826 - 1315
Fax: (5411) 4821 - 5759
egengels@arnet.com.ar
Organic exporter

Emprendimientos Ecológicos S.A.
Director: Gustavo Ghiglione
Av. Laprida 5052
(B1603ABN) Villa Martelli
Pvcia de Buenos Aires, Argentina
Tel/Fax: (5411) 4709 - 2268

emprendimientos.ecologicos@provintersa.com.ar
Organic table grape producer in
San Juan

Organic Life
Ing. Aldo R. Marcaccio
Cnel. Apolinario Figueroa
1837/43
C1416DQC Buenos Aires,
Argentina
amarcaccio@organiclife.com.ar
www.organiclife.com.ar
Organic table grapes and other
fruits in San Juan

ARGENTBIO
Gabriel Miralles Brea
Pedro Morán 3212 1st floor 8
(1419) Buenos Aires, Argentina
Tel/Fax; (5411) 4503 -
9379/4780 - 3792
Adrian@argentbio.com.ar
Organic garlic producer in
Mendoza

CONEXPORT S.A.
Av. Libertador 25 este
5400 San Juan, Argentina
Tel/Fax: (54 - 264) 427 3062
conexport@interredes.com.ar


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