Manitoba Regional Office

Manitoba Organic Report

2002

Agriculture & Agri-Food Canada
Market and Industry Services Branch
Manitoba Regional Office

Completed by:
Dan Wuerch, Senior Marketing & Trade Officer
Hector Ubina, Marketing & Trade Officer
Kurt Diachun, Development Officer

Forward

To work effectively in export market development, a person needs to have good market intelligence and knowledge of the industry being supported. Through our study of the organic sector, we felt that opportunities existed for Manitoba organic producers and processors abroad. Trade officers believe the first steps toward exporting should only be taken after a strong domestic industry is in place. Therefore, we needed to accurately piece together all the components of the organic sector in Manitoba.

How did we do this? We collected information from our survey. We collected information and statistics from the Organic Producers Association of Manitoba. Finally, we collected information from conversations with dozens of stakeholders like retailers, distributors and processors. We are confident that we have reliable, tangible facts on production and sales volume, number of producers, desires, and capabilities.

This report would not be possible without the help of organic stakeholders throughout the industry. Specifically, Agriculture and Agri-Food Canada (AAFC) thanks the directors of the Organic Producers Association of Manitoba (OPAM) and its membership for their input and survey responses. We also thank Wally Haim of Pro-Cert for providing access to his members for our survey.

AAFC thanks Manitoba Agriculture and Food organic specialist, John Hollinger for his written and verbal feedback. The same thanks goes to Donna Youngdahl, organic manager at the Canadian Wheat Board. Finally, AAFC thanks organic retailers, distributors and processors in the province who took time out of their busy schedule to talk with us and provide valuable input on past, present and future activities of Manitoba's industry.

Table of Contents

Executive Summary

1.0 WORLD ORGANIC SCENE

1.1 Major Markets
1.2 United States
1.3 European Union
1.4 Japan

2.0 CANADIAN ORGANIC SCENE

2.1 Consumer trends
2.2 Distribution Channels
2.3 Certified Bodies by Region
2.3.1 British Columbia
2.3.2 Alberta
2.3.3 Saskatchewan
2.3.4 Ontario
2.3.5 Quebec
2.3.6 Atlantic Canada 11
2.4 Government Support
2.5 Table 1 - Country Summary

3.0 MANITOBA ORGANIC SECTOR

3.1 Trends
3.2 Manitoba Stakeholder Facts
3.3 Production - What, Where and How Much
3.4 Selling and Marketing Manitoba Organic Products
3.4.1 Sales
3.4.2 Marketing Channels
3.4.3 Grain Marketing

4.0 REVIEWING MANITOBA'S POSITION

4.1 Strengths
4.2 Weaknesses
4.3 Opportunities
4.4 Threats
4.5 CLOSING COMMENTS

Appendix A - Manitoba Organic Retailers
Appendix B - Maps
Appendix C - Technical Assistance and Web Sites
Appendix D - Producer Direct Sale
Appendix E - Commodity Matrix

Executive Summary

The organic sector in Manitoba is experiencing phenomenal growth in acreage and membership. The Organic Producers Association of Manitoba (OPAM) has seen its certified memberships increase by 70 per cent and its transitional memberships jump by 213 per cent to 134 and 100 members respectively since 1998. OPAM certified nearly 38,000 acres in Manitoba and Saskatchewan in 2001. When combined with transitional acreage, OPAM members have in excess of 50,000 acres ear marked for organic production.

We estimated ½ to 1 per cent of total retail sales in Manitoba were organic or natural food based. This translates into a local food industry worth somewhere between $10 and $20 million in 2000. Where as, producer cash receipts for organic products in Manitoba are estimated at $2 to $3 million per year.

In 2001, 13,000 acres or the majority of OPAM's certified acreage was in forages, hay, pasture or green manure. That is followed by wheat at 6700 acres and summer fallow at 3100 acres. The largest organic acreage can be found in the southwestern municipalities of Turtle Mountain, Cornwalis, Oakland, Wallace, Woodworth and Edward. The majority of Manitoba's certified livestock production is in cattle. In 2001, there were 805 certified and 406 transitional head of cattle. We see a bright future for organic cattle production due to the abundance of certified forage acreage in the province.

Agriculture & Agri-Food Canada's organic survey was mailed to more than 300 producers, processors, and stakeholders in the province. We received an excellent response of more than 100 returned surveys. The results clearly show that organic farming is generating a very low income for the majority of producers in the province. Financial gain is not the most important reason to engage in organic farming. The environment, and personal beliefs are ranked one and two as the main reasons for going organic.

The survey confirmed a desire to sell more products locally and domestically. Interviews with local organic retailers suggest they want the same thing, more local products on the shelf. The survey respondents felt lack of time, marketing knowledge and knowing who to contact were acting as barriers to successful marketing of products.

The survey told us that stakeholders see government taking the lead role in education and extension in the organic sector. They also want government to provide program funding, regulatory frameworks and to secure foreign market access through trade agreements.

Finally, we strongly believe Manitoba stakeholders need to plan together on how to develop local markets. This document provides a good base of information on which to build a strategic marketing plan for the province. The sector needs to identify champions (products, people & companies) and collaborate on resources for marketing initiatives with private and public stakeholders.

1.0 WORLD ORGANIC SCENE

A growing trend in the world is the consumption of organic food products over conventional food products which may contain added hormones, pesticides, insecticides, fertilizers, artificial ingredients, preservatives or irradiation. Not so long ago, organic food was seen as the food of choice by hippies and by the health conscious individual. Now, women are fueling sales as organic becomes a mainstream product in our culture. The new customers can be best described as baby boomers with a new found control over what they eat, or twenty-somethings with environmental sustainability in mind, and individuals concerned about the safety of the food supplied.

Organic agriculture is done in virtually every country in the world and in 1999 about 15.8 million hectares (39 million acres) were organically grown, according to the European Commission⁽¹⁾. Of this amount Australia had 7.5 million hectares (18.5 million acres) of land occupied with organic production, the European Union had 3.8 million hectares (9.4 million acres), Latin America had 3.3 million hectares (8.15 million acres), and the United States had 1.1 million hectares (2.7 million acres). However, these numbers can be misleading because most of Australia's area is pastoral land used for low intensity livestock grazing and are no where near the organic productivity levels in the other countries, for example Denmark⁽²⁾.

1.1 Major Markets

The major markets for organic food products are in the United States, the European Union (Germany, France, Italy, Belgium and the United Kingdom), and Japan. This report attempts to outline the highlights of selling into these markets, its opportunities and barriers to market development.

1.2 United States

The annual market for natural and organic products in the U.S. is estimated to be anywhere from $16.3 billion to $29.7 billion US⁽³⁾. In 1999, total sales volume of organic foods was estimated to be about $9 billion US. Organic foods make up less than 1% of total retail food sales, but it is the fastest growing sector in the food industry. Since 1992, organic food sales have increased by more than 20 per cent annually with 15 to 18 per cent annual growth predicted in the next decade.

Both tropical and processed organic products are important U.S. imports. Organic commodity exports total value is estimated between $200 and $300 million U.S. The majority of these exports go to Great Britain, Germany, France, the Netherlands, Japan and Taiwan. In 2000, the U.S. exported about $60 million US worth of products to Japan and nearly $8 million US of goods to Taiwan.⁽⁴⁾ The most heavily exported product groups included soy, fresh and dried fruits, nuts and rice as well as additives for food.

Regulations

On December 20, 2000, the U.S. introduced its national standards for the production, handling and processing of agricultural products which are organically grown. The standards require all parties to be certified by the United States Department of Agriculture (USDA) if involved with organic products. The standards will be fully in place by the middle of 2002 replacing the individual state regulations and certifying methods previously regulating the industry. The American organic standard clearly defines how the product is to be labeled. A product, which is labeled organic, is believed to have more than 95 percent organic ingredients. A product labeled "Made with Organic Ingredients" has between 70 and 95 percent organic ingredients. The American organic standards prohibit the usage of genetically engineered procedures, ionizing radiation and sewage sludge for fertilization of crops or pastures. These organic standards are seen as a competitive advantage for American growers because they address the concerns of international buyers who would favor buying from a country with a national standard implemented⁽⁵⁾.

Opportunities

Today, between 3000 and 4000 new natural and organic products are introduced every year into the marketplace. There are now 12,000 organic farmers in the U.S. and that number is growing. Fortunately, there has yet to be any brand preference by consumers. This is good news for companies wanting to bring new products to market. With no dominant branded products, some of the large retailers and distributers have decided to create their own organic or natural private-label brand. These private-label brands are relatively new, with room to expand the current items offered in terms of variety and quantity supplied. The dairy section of the organic food store has seen the fastest growth in recent times. It now averages 50 per cent annually, and has endless opportunities available to processors.

Product

Ready to eat packaged groceries account for almost half of all natural food product retail sales. The majority of organic food consumers begin their organic buying experience by purchasing one of the following: produce, dairy, or baby food. Top U.S. produced organic items include tomatoes, lettuce, carrots, apples, grapes, broccoli, strawberries, squash, mushrooms, and peaches.

Price

The prices charged for organic foods are higher than what is charged for similar conventional foods. This has encouraged many producers to convert to organic farming. It may also provide a financially viable alternative for small farming operators in Canada and the United .States.

Distribution Channels

In 1999, the sales of health and natural foods were equally divided between mass market retailers (supermarkets) and natural food stores. Mass market retailers are constantly taking away market share from natural food stores because of the growing demand for natural and organic products from the mainstream. Mass market retailers have the advantage of being in many more locations and accessing a larger number of consumers.

Organic or natural food retailers are dominated by two chains in the United States, Whole Foods, which is the largest retail chain with 121 stores throughout 22 states and Wild Oats with nearly 100 locations. In 1999, about two-thirds of the products sold in natural food stores were bought via wholesalers and distributers. The two largest distributers are Tree of Life Inc. and United Natural Foods Inc. (UNF). UNF is the largest and has more than 6500 retailers in its supply chain. The remaining one third of the purchases were shipped directly from manufacturers to retailers. However, this trend is rising as retailers attempt to reduce costs and compete with conventional products sold by mass market retailers.

Many of the large natural retail chains have centralized warehouses where products are collected and then shipped out nationwide to their stores. Inconsistent supply continues to be a problem, but is improving due to strong growth and interest in the sector. The Pacific region has 25 per cent of all organic or natural food stores in the United States. The Pacific region has a large group of consumers who are more conscious about health and food trends. More recently, major growth is coming from the central and northeast regions of the United States which are experiencing 10 to 20 per cent growth annually⁽⁶⁾.

Promotion

Advertising is a relatively new phenomenon in organic and most forms of advertising for small or large companies are in the point-of-sale (POS) format. Packaging is key to the success of a natural or organic product. It must be environmentally friendly, easy to carry and to consume. Magazines distributed throughout the store are also another common promotional method. Other forms of advertising such as newspaper and radio ads are mainly used by large manufacturers and are beginning to appear more frequently. With so many products available to consumers, it is vital to develop a lasting image of the product through an effective marketing scheme.

1.3 European Union

Organic farming has developed very quickly across Europe. The 15 countries that make up the EU are said to have a total of 130,000 organic farms, managing more than 3.8 million hectares of land. One of the main reasons for this movement is the support funding received from EU agri-environment programs.

In many countries such as Denmark, Sweden, Netherlands, and parts of Germany, government has gone even further and developed action plans. Measures have been introduced by EU Farm Commissioner, Franz Fischler, to permit organic farming on set-aside land. Also, he wants to increase organic food's current share of overall food output from 3 per cent to 10 per cent. The only European countries to achieve this goal of organic production were Austria at 10 per cent and Liechtenstein at slightly greater than 17 per cent⁽⁷⁾.

Regulations

As of January 1, 2005, the EU will only allow imported organic products from countries with a credible accreditation and certification standard. This means that all organic products entering Europe must meet the internationally recognized standard, i.e., An ISO 65-certified product. These new regulations are seen as a way of protecting both consumers and producers. In December 1999, the EU-Commission introduced a logo for organic products under EU-regulations. The first products to display this label were sold in Germany⁽⁸⁾.

The EU has rules in place that will help amalgamate national laws for a single market, and for the creation of a EU-logo. However, member states are permitted to apply their own standards and use their own national labels. Italy produces the largest organic food crop in Europe. It accounts for about 40 per cent of EU's total production. Italy has applied its own standards, as have many other countries, on top of the EU rules. All of these extra regulations have created confusion among European customers who are unsure of the organic standards outside of their own country⁽⁹⁾.

Opportunities

The market for organic products in Europe is small, but growing rapidly. In 2005, organic products are predicted to have between 5 and 10 per cent of the market share. Market estimates for retail sales in 2000 was $14 billion US in the original 12 European Union countries. Germany leads all other countries with annual retail sales of about $4 billion US. Germany is followed closely by France, Italy, Belgium and the United Kingdom. In Denmark, organic sales make up the largest portion of total food sales volume. Denmark and Sweden have the two fastest growing organic markets in Europe.

Product

Having a product with a recognizable European logo is important in getting a large market share. Products without this logo are often considered non organic.

Price

A premium price is obtained for organic products when compared to similar conventional products. However, amounts vary widely depending on the product and the country.

Distribution Channels

Organic foods sold in European supermarkets have a higher growth rate and market share than products sold in specialized shops. Significant market growth will continue mainly because of supermarkets. Also, expansion of current marketing channels and finding new marketing channels such as box systems and canteens will help growth as well⁽¹⁰⁾.

Promotion

The marketing channels used in Europe are different from country to country. In Germany, direct marketing and marketing within specialized shops is used most frequently. Supermarkets are the main market channels in Great Britain, Denmark and Sweden. Furthermore, government action plans include provisions for the marketing of organic products, an advising service and giving consumer information.

1.4 Japan

In 2000, the organic food market in Japan was estimated to be between $3.7 billion and $4.5 billion US with nearly $100 million in imports from the United States⁽¹¹⁾. In 1995, sales were only $1.5 billion US. Significant annual growth of 15 per cent is anticipated in this market over the next three to four years. Some of the more culturally important imported organic products are soybeans, fresh fruits and vegetables. Japans' imports originate primarily from Australia, New Zealand, United States and Canada.

Regulations

On April 1, 2001, the Japanese Ministry of Agriculture, Forestry and Fisheries (MAAF) implemented strict new regulations on the organic food industry. The rules are meant to help consumers sort out which products are or are not organic. These regulations are known as the Japanese Agricultural Standards (JAS) and define what standards both domestic and foreign manufacturers must comply with if they want their products to be considered organic. The largest organic association and certified inspection organization in Japan is the Japan Organic and Natural Foods Association⁽¹²⁾.

Opportunities

Small domestic producers account for about 95 per cent of total organic sales. The new organic regulations have eliminated many domestic producers who previously sold themselves as organic farmers. This has created an opportunity for foreign suppliers to move into the market. Opportunities exist in almost all categories, with basic commodities and processed foods with fruits or vegetables constituting the largest share of organic sales at 63 per cent.

Competition is greatest in these areas, especially for Canadian manufacturers who must compete against major U.S. food and beverage exporters. France, Germany and numerous Scandinavian countries are tough competitors as well because their organic markets are considered the most advanced in the world. It should also be noted that Japanese consumers perceive Canada as having a clean and natural environment, which is beneficial to Canadian exported products.

Product

Japanese consumers demand high quality organic food products, especially from imported sources. This is further reinforced by the JAS. So far, no product brand recognition exists because most companies supply only a small handful of organic products.

Price

Prices vary depending upon the organic product. All organic products have a premium price when compared to similar conventional products. A recent survey found 75 per cent of consumers will purchase what they perceive to be organic food as long as the organic price doesn't exceed conventional price by 20 per cent or more. Consumers consider the safety of organic foods as the most important purchase consideration, followed by price. Many domestic producers have had to increase prices in order to pay for the cost of the new standards. The new prices have created opportunities for foreign competition to supply local needs.

Distribution Channels

The food distribution system in Japan has various levels of distributors and wholesalers that have developed relations with manufacturers, retailers, importers and other wholesalers. Japanese customers want a quality product at a reasonable price. This has forced large retailers into reducing costs to the end customer by eliminating or reducing middlemen, increased marketing of private brand labels, and by importing products straight from the producer. The Japanese retail market, like other parts of the world, is dominated by large retailers and co-operatives, many of whom are becoming involved with organic food. Most imported organic foods are sold through supermarkets. Jusco is the largest importer of organic foods and takes up 20% of the market. The lack of a consistent supply is one of the factors that has hampered the growth of the organic sector. The three largest metropolitan areas of Tokyo, Nagoya and Kansai equal almost half of the country's population, making them regions that cannot be ignored.

Promotion

Manufacturers have only recently started informing consumers about organic food products through advertising and marketing initiatives. With the JAS in place it now forces producers to label and advertise products correctly.

2.0 CANADIAN ORGANIC SCENE

Currently, Canada's organic sector is enjoying $1 billion-a-year in retail sales and a 20 per cent annual growth rate. The retail market for organic food in Canada was worth an estimated $300 to $750 million Cdn in 1998. Significant opportunities to take this growth even further exist in several major markets such as the United States, Europe and Japan.

Approximately, 80 per cent of the products sold in Canada are imported. The organic market represents 1 per cent of total retail sales with an average annual growth rate of more than 15 per cent⁽¹³⁾. According to industry sources, farm cash receipts from the industry reached about $ 500 million in 1999, mostly from grains and oilseeds. This represents about 1.5% of agriculture's total farm cash receipts.

According to Statistics Canada's 1999 report, approximately 4.9 per cent of the fruit and vegetable farms in Canada consider themselves to be organic producers. As of 2000, organic production acreage was at 705,000 acres (285,425 hectares). Canada is among the top five world producers of organic grains and oilseeds. The estimated retail value is $1 billion Cdn, including processed and non processed products. Today in Canada, there are approximately 2,000 farmers, 150 processors or handlers and 46 certifying bodies.

Regulations

There are two national organizations in Canada. The Canadian Organic Growers (COG) and the Canadian Organic Advisory Board (COAB) which helped develop the National Standard for Organic Agriculture, CAN/CGSB-32.310. The Canadian General Standards Board (CGSB) began its development of a standard for COAB and Agriculture and Agri-Food Canada in December 1996. The CGSB managed the development of CAN/CGSB-32.310 through a Standards Committee of users, producers and general interest groups.

The National Standard for Organic Agriculture was approved and published in April 1999. These national standards outlined the production, processing and labeling requirements for organic agricultural products, and were developed in accordance with the Codex Alimentarius Commission.

The standard specifies the minimum criteria that must be met when food products, inputs and other products are used in organic production. It also outlines the principles of sound organic agriculture systems that entails producing high quality food using sustainable management practices, avoiding damage to the environment and ensuring the ethical treatment of livestock.

The scope of the standard covers such topics as; the period of conversion to organic agriculture, production plans and records, crops and livestock production, and production requirements for maple products, honey, greenhouse crops, mushrooms, sprouted plants, and wild and natural products. The standard also covers storage, processing and distribution of organic food products, and the Permitted Substances List.

2.1 Consumer trends

Only 18 per cent of Canadians regularly purchase organic foods, while 29 per cent have never purchased any at all⁽¹⁴⁾. This market is primarily driven by the Baby Boomers (35-55 age group) and the health conscious younger generation.

2.2 Distribution Channels

There is a correlation between higher education and the quantity of organic foods purchased. Forty-nine per cent of organic purchases are made in mass-market outlets while 48 per cent are made in specialty stores. The remaining 3 per cent of purchases are mostly made at farmers' markets or directly from the producer. Among mass-market outlets, Loblaws is putting in a major effort to develop its organic food section. Other major distributors have also begun stocking more organic foods on their shelves. Of the specialty stores, Whole Foods Market Inc. and Wild Oats Markets Inc. are the two largest specialty chains in the US. Wild Oats has stores in Canada and Whole Foods plans to expand into Canada in the next 12 months. See Table 2.5 at the end of section 2 for a quick summary review of each country's organic system.

2.3 Certified Bodies by Region

2.3.1 British Columbia

The Certified Organic Associations of British Columbia (COABC) works on a voluntary basis to maintain a credible set of organic production and processing standards. COABC represents the British Columbia organic industry in provincial, national and international forums. COABC ensures compliance with the standards by administrating the accreditation and auditing process in partnership with the British Columbia Ministry of Agriculture, Fisheries and Food (BCMAFF).

There are about 14 certifying bodies in British Columbia. For more information about COABC and their member associations contact their web site: http://www.certifiedorganic.bc.ca/ See Appendix C for more detailed information on organic web sites and technical assistance.

It is estimated that there are about 460 certified organic producers in British Columbia. Most of BC's organic production is in mixed vegetable or market garden products. Sales at the retail level are estimated around $250 million for the year 2000 with an annual growth rate of 20 per cent.

2.3.2 Alberta

An Alberta Agriculture, Food and Rural Development report (Alberta Organic Farming Operations 2000 Survey Result) showed that Alberta had about 350 organic producers. Approximately, 70 per cent of the producers were certified by Saskatchewan-based Pro-Cert. The report was based on responses from 278 organic producers. It showed the total owned and rented land in Alberta added up to 443,332 acres (179,486 ha.) of which 344,586 acres are dedicated to organic crops/pasture. About 59,433 acres are in transition and 31,283 acres are used for conventional crop or pasture. In addition, Alberta has 86,127 head of cattle in total, of which 26,063 head are organic and 6,529 head are in transition and the rest are conventional livestock.

The recently released study: "Organic and Natural Food Market Opportunities in the Pacific Northwest," estimates that in Alberta between 80 and 90 per cent of organic and natural food products are sold through natural or organic food stores. Organic sections are popping up in conventional grocery stores (21 retail stores, 5 distributors/brokers). Most Save-on-Foods have at least two bunkers of organic produce in their stores.

2.3.3 Saskatchewan

Saskatchewan is the largest organic producing province in Canada. It houses an estimated 40 per cent or 282,000 acres (114,170 ha) of Canada's certified organic field crop acreage. Saskatchewan focuses mainly on cereal, pulse, wild rice and forage crop production. It has about 636 organic crop and livestock producers. The sector consists primarily of small producers, processors or marketers who serve their own local or international customers.

Saskatchewan has around 11 certifying bodies and about 25 food processors, who are processing some type of organic food. A processor may use only organic ingredients or use organic ingredients for specific product lines and customer groups. The range of organic foods processed is considerable, from ingredients, such as flour and Canola oil, to the consumer ready or packaged products like bread, cereal mixtures and oatmeal. The Saskatchewan Food Processors Association estimates that total organic processing industry employment is around 285 people.

2.3.4 Ontario

Currently, Ontario has more than 600 certified organic farms using about 30,000 ha (75,000 acres) for production. In recent years, these numbers have risen about 20 per cent annually. Ontario has five certification bodies operating in the province. A farmer wishing to be certified applies to a certification body and requests an independent inspection of the farm to validate that it has met the standard. Farmers, processors and traders are each required to maintain the organic integrity of the product and to maintain a document trail for auditing purposes. Products from certified organic farms are labeled and promoted as certified organic produce. Food products labeled as organic must contain at least 95 per cent organic ingredients.

2.3.5 Quebec

The Ministre de l'Agriculture, des Pêcheries et de l'Alimentation du Québec (Minister of Agriculture, Fisheries and Food) estimates that there are 700 organic or transitional producers in the province. Quebec's largest crops are in forages, pasture, cereals, maple, beef, dairy and vegetables. In 1994, La Table filiere Biologique du Quebec, the main representative of the organic industry in Quebec, was established. It helps to build the sector by grouping stakeholders and government together. Annual organic sales are estimated to be $100 million and growing at a rate of 20 to 25 per cent per year.

In Québec, the organic sector is provincially regulated and any product claiming organic status must be compliant on two issues:

1) All product must be inspected by a recognized certification body, accredited by the Quebec Accreditation Board. There are only five accredited certification bodies in Quebec. Information is presented at http://www.caqbio.org/anglais/cpipressrelease.htm

2) All labels must identify the certification body responsible for inspection. Refer to the following web site for more information, http://www.caqbio.org/anglais/organicreference.htm

2.3.6 Atlantic Canada

Estimates put PEI production at 2000 acres and 30-35 certified growers. The primary cash crops produced are vegetables, potatoes and cereal and protein crops. Currently, three certifying bodies are active in PEI: Organic Crop Improvement Association (OCIA), Maritime Certified Organic Growers and privately owned Organic Crop Producers and Processors/Pro-Cert Canada Inc. (OCPP-Procert or OCPRO).

In response to the growing demand for organic products, the Department of Agriculture and Forestry partnered with industry to diversify production and identify new or expanded markets. New support for the organic industry was announced in last year's provincial Throne Speech. Representatives from the organic industry and the department have developed two new programs over the past year. The Organic On-Farm Research Program provides up to $5000 toward projects that evaluate and demonstrate practical farming techniques. A total of 19 projects were approved last year at a cost of $83,000.

Under the Organic Certification Assistance Program, the department provides financial assistance toward certification expenses. The program is available to organic producers or to those making a transition to organic production. The department has also dedicated one full time staff member to work with the industry.

The Department of Agriculture and Forestry will be providing $50,000 in support toward the Organic Agriculture Centre at the Nova Scotia Agricultural College. The department also made a financial commitment to the Atlantic Canada Organic Regional Network. It is dedicated to the development of organic agriculture in the region.

New Brunswick has two main groups involved in organic certification of crops and livestock. They are the Organic Crop Improvement Association (OCIA) NB Chapter and the Maritime Certified Organic Growers Ltd. (MCOG). In 2000, OCIA NB listed 27 growers as members, 20 of those as certified members. The MCOG is a regional body providing certification to growers in three Maritime provinces. The primary cash crops are grains, pasture or legume crops, soybeans, fruits and nuts.

Most of New Brunswick's organic products are marketed directly to local consumers as fresh product in a standard industry format such as pints, bunches, etc. Primary processing is performed on a few farms and value added processing is almost nonexistent.

2.4 Government Support

In 2001, Agriculture and Agri-Food Canada announced $854,700 in federal funding for a national centre for education and research in organic agriculture. The Organic Agriculture Centre of Canada, is located at the Nova Scotia Agricultural College (NSAC) in Truro, Nova Scotia. It will help quench a growing thirst for organic knowledge and give Canada's producers an advantage over international competition.

The government ear marked another $27,000 to help organic stakeholders develop a strategy for the domestic market, and for international markets. The strategy will be coordinated by a team of partners, including the NSAC. These two initiatives are in addition to the $600,000 in federal funding for the organic sector announced by the Minister in June 2001, and the $1.3 million in support for regional organic projects. Total accumulative federal funding for organic agriculture now stands at more than $2.8 million.

2.5 Table 1 - Country Summary

3.0 MANITOBA ORGANIC SECTOR

3.1 Trends

Organic farmers have always had a presence in Manitoba, but it wasn't until 1988 that the situation changed dramatically. In July of that year, a group of individuals from the Virden area formed the Organic Producers Association of Manitoba Co-op Inc.(OPAM). The original OPAM board of directors had representatives from across the industry: organic farmers, transitional farmers, a flour miller, and Manitoba Agriculture and Food.

The organic industry grew quickly in the late 80's and in the early 90's. OPAM did likewise, (see Figure 1) and it soon became the voice of the organic community in Manitoba. The reasons for this rapid growth were many and varied as listed below:

• Increased consumer demand for organic products
• OPAM's visibility and public relations efforts
• Society's environmental consciousness was hitting a peak
• Grain prices were low and farm input prices were high
• Organic commodities were earning substantial premiums
• Organic crops performed very well in the drought years of 1988 and 1989

In the beginning, OPAM was focused on certification and on providing production information to its members, who over the years have included growers of grain, fruits, vegetables, livestock, and a range of special crops from ginseng to wild rice. OPAM is not a marketing agency, although it does provide marketing information to both sellers and buyers. The group currently has one full-time and one part-time employee. However, the board's directors are still volunteers, just as they were in 1988. OPAM's business office has remained in Virden, Manitoba.

OPAM functions primarily as a certifying agency. It hires independent organic inspectors to assess farms and processing plants for their organic authenticity. As of December 2001, OPAM started the process of applying to the Standards Council of Canada for ISO65 accreditation. The ISO 65 accreditation will enable certified OPAM products to be marketed virtually anywhere in the world.

The long-term viability of the organic sector in Manitoba will be greatly influenced by the size and type of products exported to the USA, Europe and Japan. Hopefully, a stronger domestic market can be established at home. This would mean that local producers or processors and retailers are supplying a wide range of home-grown organic products, like chicken, honey, wheat and tomatoes. In helping to feed Manitoban's organically, we're able to keep more people on the farm and allow farmers to make a modest profit in the process. Manitoba is well-positioned in terms of climate to grow a wide range of crops and take advantage of global opportunities in the organic industry. Today, most organic products are earning a premium over conventionally based products. However, efforts must be made to continue this trend so that the organic sector can continue to grow and prosper.

3.2 Manitoba Stakeholder Facts

Currently, there are several groups representing organic producers, processors and consumers in Manitoba. The main groups and their functions are listed below:

• The Organic Producers Association of Manitoba (OPAM) represents the largest number of producers and industry stakeholders in the province. OPAM certifies farms and processing facilities, but also serves as a production and marketing information resource. By the end of 2001, producer memberships had swelled to nearly 240 organic or transitional operations in total (see Figure 2). OPAM's regulations comply with the "National Standard of Canada for Organic Agriculture" as established in 1999 by the Canadian General Standards Board.
• The Organic Food Council of Manitoba (OFCM) operates as a chapter of a national organic organization called the Canadian Organic Growers (COG). This group focuses on education and consumer awareness of the organic process. OFCM is neither a certifying body nor a marketing agency.
• The Organic Crop Improvement Association (OCIA), Pro-Cert, Farm Verified Organic (FVO), and the Organic Verification Organization of North America (OVONA) and others not mentioned, has a combined membership base which is less than 10 per cent of Manitoba's organic stakeholders. Currently, Canada has more than 45 certifying agencies operating in the country.
• The Canadian Organic Livestock Association (COLA) was formed in 1997, and has members from Manitoba, Saskatchewan and Alberta. The association currently markets organic beef into the U.S. and the EU on behalf of its 55 members, and there are about 77 producers on the membership waiting list.

Organic producers make up less than 2 per cent of the total number of farms in Manitoba and represent over 50,000 acres of transitional and organic crop or forage land. Current rules discourage the return of certified organic acres to their conventional state, and this has resulted in a dramatic increase in organic acres in the last number of years. Industry growth is forecasted to increase at an annual rate of 10 to 20 per cent over the next few years.

The organic sector and production of products are not mutually exclusive of supply management boards or from single desk selling by the Canadian Wheat Board. These legislated boards require producer participation once some or any production level is achieved. Appendix E contains a commodity matrix chart that shows just how commodities are produced and marketed under current controls. The most important aspect of this for the organic producer and seller are what and how much is exempt from the rules. Line six of the marketing matrix spells out just what amount is exempted and line eleven outlines the penalties for a noncompliance.

3.3 Production - What, Where and How Much

According to OPAM's statistics, certified production acres grew around 85 per cent in the last four years (see Table 2). About 92 per cent of OPAM's producer membership is based in Manitoba, and 8 per cent is based in Saskatchewan. This discrepancy is factored in when discussing total provincial acreage in the report.

Manitoba's total organic acreage and transitional acreage at the end of 2001 were approximately 29,000 and 16,000 acres respectively. Appendix B contains maps showing the distribution of organic and transitional acreage by crop in Manitoba. In general, most organic acreage is located in the western municipalities of Turtle Mountain, Edward, Wallace, Wood Worth, Oakland and Cornwallis. The interlake municipalities of Fisher and Bifrost show strong organic acreage growth as well.

Table 2

Source:OPAM

Manitoba's organic acreage is dominated by hay, alfalfa, clover, green manure and pasture land. We simply like to call this combined acreage as "forages." In 2001, OPAM recorded more than eighteen thousand acres of certified forage land. Of this, 73 per cent, or thirteen thousand acres were based in Manitoba. Forages have grown more than 167 per cent since 1998 (see Figure 3).

Traditionally, the second largest organic crop has been wheat. In 2001, OPAM registered 7899 acres of organic wheat and of that total, 6714 acres were based in Manitoba. The most popular type of organic wheat tends to be Canadian Western Red Spring. In 2001, the top three varieties were AC Barrie, AC Cadillac and AC Domain respectively. Wheat acreage has increased by 126 per cent since 1998. In 2001, most of the wheat acreage was concentrated in the municipalities of Turtle Mountain, Daly and Wallace.

Summer fallow was the third largest "crop" in 2001. Manitoba producers dedicated about 3150 acres of crop land to summer fallow. Summer fallow acreage has trended downward over the last four years and is 8 per cent lower than 1998 levels.

Oats was the fourth largest crop in 2001. Certified oat acreage has surpassed flax acreage every year since 1999. About 73 per cent or 2690 acres of OPAM's registered organic oat acreage is Manitoba grown. The most popular varieties last year were Triple Crown and CDC Boyer respectively. Of the big three organic crops, oat acreage has had the largest increase at 236 per cent since 1998. The largest oat acreage was found in the municipalities of Wallace, Wood Worth, Turtle Mountain, and Archie.

The fifth, sixth and seventh largest crops by acreage were flax, rye and barley at 1384, 472 and 355 acres respectively. Interestingly enough is the distribution of flax acreage in the province last year. Three very distant municipalities, Park, Turtle Mountain and Fisher, had the highest concentrations of flax crop land and can be viewed in Appendix B.

3.4 Selling and Marketing Manitoba Organic Products

People frequently use the words marketing and selling to mean the same thing. Many producers talk about "marketing" their grain or livestock, when in reality, it is more an act of "selling" or making a final transaction.

All the work completed prior to the sale is called marketing. Marketing is everything leading up to meeting the needs of the end customer. Marketing has four major elements: promotion, place (distribution), product and price. Each element contributes toward an overall marketing strategy as outlined in a marketing plan. A marketing plan is a lot like a road map, and it leads you to a specific group of customers or users. There can be considerable effort, time and resources that go into creating and implementing a marketing strategy and plan.

We believe it's important to know the difference between the terms if the market for organics is going to grow at home or abroad. In our survey, respondents identified two key success factors for growth (see Figure 4):

• #1. increase sales to Winnipeg & Manitoba consumers and 
• #2. increased sales to Canadian consumers

Other survey participants felt success is best achieved through more processing (18 responses) and by increasing foreign sales abroad (17 responses). In order to achieve these goals, Manitoba stakeholders need a marketing strategy in place and a strong commitment to making it happen.

3.4.1 Sales

Organic sales volume in the province can be measured in one of two ways. For the purposes of this study, one measurement is based on gross cash farm receipts and the other is based on purchases by consumers at the retail store level. Neither estimate is perfectly accurate. However, we are confident that the dollar volumes will give readers a sense of the size of the market in Manitoba.

In our survey⁽¹⁵⁾, around 75 per cent of our survey respondents told us that organic sales accounts for less than 25 per cent of total household income. Furthermore, more than 60 per cent of the respondents reported three year gross sales of less than $10,000 per year. The remainder of respondents reported varying amounts of income with only 1 per cent grossing more than $70,000 per year. Based on provincial certification memberships, we estimate about two hundred organic producers are in the province. If we multiply the number of producers by annual gross sales averages of $10,000 to $15,000 per year, we get a range of $2 to $3 million per year in farm cash receipts in the sector.

Retail sales volume in the province is significantly higher because of value-adding. According to Environics⁽¹⁶⁾, 18 per cent of the Canadian population are heavy users and 22 per cent are moderate users of organic products. Statistics Canada (CANSIM II, Table 080-002), had Manitoban's purchasing about $2 billion worth of grocery products in 2000. A report from the Alberta government indicated that organic sales accounted for roughly 1 per cent or less of total retail grocery sales in 1999⁽¹⁷⁾. We also believe Manitoba is not as fully developed as the Vancouver or Toronto market. Therefore, organic retail sales volume in Manitoba probably ranges from ½ to 1 per cent of total retail sales or between $10 and $20 million in 2000.

A conservative estimate of organic retail sales would be around $10 million in 2000. Then, the gap between farm receipts and retail sales volume is around $7 to $8 million per year. A major reason for this gap can be attributed to value-adding. Unfortunately, most of the value-added products sold in Manitoba come from outside the province, mainly from the USA. According to Dr. Helga Willer, 85 to 90 per cent of Canada's organic goods come from the USA⁽¹⁸⁾. About 80 per cent of United States exports to Canada are either processed or packaged goods. The remaining 20 per cent are fresh vegetable and fruits.

3.4.2 Marketing Channels

With more than 200 organic and aspiring organic producers in Manitoba, consumers should have a wide range of organic foods and beverages in organic section of grocery stores. This is simply not the case. The average urban organic consumer struggles to find consistent supplies of Manitoba meats, vegetables, fruits or dairy at retail. It is even more difficult, to find semiprocessed products like wheat flour, breads and baked goods. Locating packaged or ready to eat Manitoba products like butter, cereals, frozen entrees or snack goods is pretty much impossible.

The demand for organic products continues to grow in Manitoba as it does in all western societies. The majority of organic sales occur in Winnipeg because of the population base and the amount of disposable income available. The neighboring communities of Winnipeg support urban stores and market gardens. Remote and rural organic consumers may avoid urban retailers and buy directly from neighbors and friends who are into organic production.

The distribution of organic products depends on the type of product being produced. Figure 5 shows how most egg, dairy, vegetable and meat production is sold in the province. By nature, these products have short distribution channels because they are perishable and need to be refrigerated or consumed within a short period of time. We found a local meat distributor and some local vegetable producers who sell directly to Winnipeg retailers like Harry's Foods, Organza and Organic Planet.

Unfortunately, local suppliers struggle to meet the needs of local retailers. Retailers and their customers need consistency and variety of supply throughout the year. Most fresh produce, meat, dairy and eggs are imported from other provinces or countries. To date, fewer than 20 local producers sell directly to Winnipeg organic retailers. Depending on the season, retailers reported local supplies on the shelf ranged from zero to 15 per cent with an average well below 10 per cent. We believe most producers direct sell or consume their perishables (vegetables & fruits) and meat products on a seasonable basis.

Almost 35 per cent of the respondents in our survey sold end products to a broker or distributor. The second, third and fourth most popular distribution methods were selling to processors, selling at the farm and selling to direct to retailers as reported by 24, 20 and 10 per cent of the respondents respectively.

Producer satisfaction with current selling methods was quite high. Approximately, two-thirds of the respondents were somewhat or very satisfied with how products were sold. When asked for the ideal selling situation, the majority or 26 per cent of respondents wanted to sell directly to processors. Direct sales to brokers and retailers were tied in responses for being the second most desirable selling method.

3.4.3 Grain Marketing

Based on our survey and anecdotal information, we found the distribution channels for grains and oilseeds much more developed. In turn, the channel for grains and oilseeds is much longer than perishables. In Figure 6, the thick line shows what a typical distribution channel looks like for grains and oilseeds. It involves many more intermediaries like brokers, processors and distributors before reaching the end customer.

The thin dotted line in Figure 6 shows how less than 10 per cent of grains and oilseeds end up in the domestic processing and retail food system. The international or export system takes up to 90 per cent or more of what we produce. This is important to the development of the sector in Manitoba. It shows how much wealth we could capture in organic value added processing and strategic marketing of our local products. This has been successfully demonstrated by other businesses, groups or cooperatives in other provinces or in other sectors.

Marketing Organic Grains

There are four primary options for wheat and barley farmers to market their organic grain through the Canadian Wheat Board system.

• 1. Sell to a Canadian mill or company dealing in organics.
• 2. Sell through a broker, who arranges the sale to the end user or distributor.
• 3. Find your own market, make the sale directly to a buyer or processor of organic products (by doing Producer Direct Sale with the CWB.)
• 4. Sell the grain into the CWB pooling system as conventional grain.

Farmers also have the option of milling their own wheat and selling it locally. If a farmer mills his own grain with an on-farm mill, and sells the grain within Canada, they do not need to go through the Canadian Wheat Board. If a farmer chooses to export the wheat, however, he/she will need to do a Producer Direct Sale with the CWB and obtain an export licence. If a farmer sells wheat to a local mill or bakery/mill, he/she must do a Producer Direct Sale.

In deciding how to sell organic grain, there are some general advantages and disadvantages to the various options. Option one has the major advantage of simplicity and reliability. Larger companies are bonded and licenced by the Canadian Grain Commission (CGC), are reliable, often arrange transportation, do the exporting, and will handle any transactions with the Canadian Wheat Board (CWB). On the other hand, one may be able to find a higher paying customer by looking for export markets oneself, or by going through a broker. The major disadvantage to options two and three would be risk and complexity. Finding the buyer, negotiating a price, and arranging customs brokering, transportation, and taking the risk on payment is more involved. Some brokers may not be licenced grain dealers, which makes them a higher business risk.

Obviously the last option--selling on the conventional market--would be the least appealing, as the loss of the premium available for hard-earned organic status is given up. There may be cases, however, where a crop does not meet the quality specifications of organic buyers, where supply exceeds demand, or where the cash flow requirements make this an acceptable action.

If the grain is feed quality, it can be sold domestically as organic feed grain without going through the CWB system. When making an export sale of organic feed, one must still go through the Producer Direct Sale.

Marketing Wheat Board Grains

The Canadian Wheat Board is legislated to market all wheat and barley in Western Canada that is destined for domestic human consumption or export. All four marketing options outlined above can be used to market organic wheat and barley, and with all four options (except domestic feed sales) the transactions go through the CWB pool accounts.

When delivering organic grain to a Canadian company that is established as a handler of CWB grains, the farmer will be issued the CWB initial payment by the company on behalf of the CWB. The company will also pay the farmer an organic premium that is negotiated between the farmer and the company. In this case, the company handles all necessary transactions with the CWB. This transaction will automatically enter the farmer into the pool, and she or he will then receive adjustment, interim, and final payments for the conventional value throughout the rest of the year.

When selling through a broker or when finding a market, before making the sale, the producer must do a Producer Direct Sale (PDS) transaction with the CWB. When a farmer does a PDS, the CWB pays the farmer the CWB initial price, and the producer pays the CWB the conventional spot market price for that day for that market--i.e., the price the CWB would get in that market for conventional grain. The transaction enters the producer into the pool, and then the producer will ultimately be paid the pool price--the CWB initial payment plus interim, adjustment, and final payments--for that grade and protein of grain, the same as all other pool participants.

For transactions with both grain companies and individual producers, the CWB bases the sales price on the market for conventional grain at the time of sale. The grain company and the individual producers negotiate the organic premium separately, and the CWB is not involved. The conventional grain market prices fluctuate throughout the year. An effective marketer will generally follow the conventional market prices and the organic market prices in order to maximize sales profits. PDS prices will vary depending on the time of sale and the market into which the grain is being sold.

The PDS process has been in place since the late 1980's. In the spring of 2001, the organic PDS transaction was simplified, and now can be done easily with the CWB over the phone and by fax.

Currently the CWB does not do any direct selling of organic grain. At this point, then, it is not an option for farmers to deliver organic grain to the CWB and receive from the CWB an organic premium.

For more information on issues related to the PDS, please contact the CWB organic marketing manager at 1-800-ASK-4-CWB (see the full address in Appendix D).

How does a producer sell to Canadian organic companies? How are producers paid?

Several Canadian organic grain companies and mills have handling agreements with the CWB. When a deliver is made to one of these companies, typically they negotiate separately a price with an organic premium over the CWB initial price. They do the transaction with the CWB. A producer will be paid the CWB initial payment plus receive an organic premium from the company, which was negotiated separately. Thereafter, a producer will also receive adjustment, interim and final payments from the CWB.

These accredited exporters/handling companies merchandising CWB grains enter into contracts for the purchase of specified tonnage of specified grades of grains from the CWB. They pay the conventional cash market price for the grain to the CWB.

It will be necessary to compare net returns when deciding on whether to deliver organic grain to an organic company, or find your own export market and market independently using the PDS. Net returns should be based on account elevation charges, transportation costs, the spread reduction or gain of the PDS, and customs brokerage. When delivering to an organic grain company, a producer will usually be quoted an organic premium above the CWB initial price. Call more than one company for price quotes and call the CWB to find out what the PDS price is. If an organic company is quoting a price based on the CWB initial payment, a producer can estimate the overall return from the CWB portion by using the PRO estimate of the final pooled price.

Marketing your own grain: The Producer Direct Sale

If a producer finds their own export buyer/processor, they need to do a PDS with the CWB and apply for an export licence for the grain. Again, the PDS may be done directly with the CWB or done through an elevator agent. Producers are responsible for arranging customs brokering and transportation. For instructions on how to do a PDS and apply for an export licence, see Appendix D.

With wheat and barley, when a producer does a PDS, their net return will be the conventional CWB pool price plus the value of the organic premium over conventional.

If the PRO is above the conventional spot market price (i.e., the PDS price), a producer will receive a net payment from the pool. If the PRO is lower than the conventional spot market price, a producer pays the difference between these two prices into the pool.

Example 1

The organic price is $370/mt. The Pool Return Outlook (PRO) is $200. The conventional spot market price is $210. Your return is PRO + (organic price - conv. Spot price) = $200 + (370-210) = $360.

In this example the spread between the conventional spot price and the organic price is $370 - $210, so the organic premium is $160. The PDS spread paid to the CWB is $10. Since prices rise and fall, it is important to track the organic premium in order to more effectively negotiate a price. When conventional prices go up, a producer may be able to negotiate a proportionally higher organic price.

Example 2

The organic price is $350/mt. The PRO is $210. The conventional spot market price is $205. Since the PRO is higher than the spot price, a producer would receive a $5 payment from the pool. However, the spread between the conventional spot price and the organic price is only $350 - $205 = $145. In this case the net return from the sale would be PRO + (organic price - conv. Spot price) = $210 + ($350 - 205) = $355.

When we compare two examples, we find that the first example had a net PDS payment to the pool, while the second example showed the producer receiving a payment from the pool. In general, if one is selling in a period of high prices when the spot price is higher than the pool price, in a PDS transaction money will go to the pool. Conversely, when prices are lower, producers will receive the pool price for the grain.

In terms of overall profit, the producer made more money in example one, where the organic premium was higher. A producer maximizes their return when the spread between the conventional cash market price and the organic price is the greatest.

Note: the CWB charges and administration fee of $1.50/tonne for individuals doing the PDS, and another $0.50/mt for the CWB credit program (see Appendix D for more detail on how to do the PDS). While the examples above describe net prices, the full pool price is not paid out until the end of the year. Thus, there is an up-front differential payment by the farmer to the CWB, that is recovered later unless the credit program is used. This up front differential is the difference between the CWB initial price and the conventional spot price, as previously discussed. After the PDS transaction is completed between the CWB and the farmer, the farmer is in the pool and will receive adjustment, interim and final payments.

Companies buying organic grain and handling CWB grains are not charged administration fees by the CWB. If they charge you administration fees, the charges are for their own activities.

Selling Through A Broker

Many brokers of organic grains do not have a handling agreement with the CWB, and therefore do not issue the initial payment on behalf of the CWB. To sell through a broker, a producer must do a PDS. After this, if the grain is being exported, the export permit can be sent to the producer's broker/agent. There are two ways to do the PDS. One can either call the CWB directly to do the PDS, or call an elevator company to arrange the PDS. Generally administration fees are higher when going through an elevator company.

Producers should note that the PDS transaction is not a complicated process. If a broker is charging for the service of arranging the CWB transaction, this may be an unnecessary charge.

Check to see if the broker is licenced with the Canadian Grain Commission (CGC). If a broker is not licenced, there is no course of action in case of nonpayment. A licenced grain dealer will have security posted with the CGC, and in the event that the intermediary does not pay for grain, a producer can go through a claim process with the CGC as mediator.

The minimum requirement for a dealer to become licensed through the CGC is to have a bond or a bank line of credit for $150,000, or more depending upon the volume of business done. Smaller dealers could be operating without licences because they do not qualify for this credit. Without the security or bond, these brokers may pose a business risk for you. In the first years of organic trading, a number of producers experienced the misfortune of nonpayment, with no recourse. As the industry has matured, these incidents have become less frequent.

CWB Pricing Options

The CWB now offers producers the option to market their grain by using CWB Pricing Options. Two programs available to producers are the Fixed Price Contract (FPC) and Basis Price Contract (BPC) program. To use these options, one must sign up before the beginning of the crop year, between March and July 31. Under the BPC program, producers lock in a basis (spread between the CWB Fixed Price and the relevant futures price) then lock in a futures price later at their discretion.

A third option available to producers is the Early Payment Option (EPO). Under this program, a producer receives 90% of their locked in PRO value upon delivery. Producers remain in the pool and will receive additional payments over the 90% price level.

One can use any of these three options in conjunction with doing either a PDS or delivering to a local organic grain company. There is a deduction for risk and administration under all three. Again, a producer's organic premium is entirely separate from this transaction; all three options only deal with the CWB facet of your sale. Under the FPC/BPC, a producer will be paid out the entire CWB payment either two weeks after delivery, or two weeks after you settle the price if already delivered.

The advantages of using a pricing option are that producers will know for certain what their CWB payments will be at the time of sale, it can set the price, and produce earlier cash flow. If a producer is interested in one of the payment options, they must sign up for the program between March and July for the upcoming crop year. The risk of using the option is that producers must deliver the grain contracted before the end of that crop year. Failure to deliver on the fixed price contract will result in liquidated damages. There is also the risk that had a producer stayed in the pool . . . it could have led to a higher price.

Price Discovery

For many marketers, knowing whether they are getting a fair price is challenging. An obvious but an important tool in price discovery is to check with other producers in a certification group to determine general price ranges. Lack of price information is a problem in the organic industry. The Organic Agriculture Centre of Canada (OACC) is working to develop a price survey of all organic commodities for summer 2002. The success of the project will depend upon the willingness of producers to participate in sharing their prices with the researchers on an ongoing basis. With producers' support, the OACC will be able to provide a range of prices for commodities in various locations throughout Canada. Published prices will give producers a tool to be able to ask for the highest possible, but market-related, organic premiums.

U.S. Customs

To export grain into the U.S., a number of forms must be completed to comply with the United States Department of Agriculture (USDA) requirements. There are a number of customs brokers that do this paperwork for farmers and exporters for a fee. It's a good idea to contact the brokers and complete the paperwork before shipping any grain. The CWB uses Norman G. Jensens for customs brokerage, and has negotiated a lower customs brokerage rate for farmers making PDS organic export sales. Contact the CWB organic marketing manager for more information.

International Marketing: Contacting Buyers

There are a number of resources to assist farmers in finding buyers. OPAM and the Saskatchewan Organic Directorate have buyer lists; so does the CWB. Attending international organic trade shows individually or in cooperation with other growers or provincial and federal trade specialists is an effective way to meet buyers in export markets. While doing this kind of market research can be costly, the higher returns available in these markets may pay off in the long run. The largest trade shows for organic products include the Natural Products Expo East and West, Anaheim and Baltimore; Organic Trade Association, All Things Organic and BioFach USA, Austin, TX; Biofach Germany; Biofach Japan; and England's Organex. For more information about these shows, contact the CWB or Agriculture and Agri-Food Canada's MISB office.

Selling Grain On The Conventional Market

Organic grain can be sold into the conventional market through local grain companies if necessary. If a producer anticipates that they may sell wheat or barley on the conventional market to the CWB, sign up for delivery contracts at the beginning of the year. For more information about CWB delivery contracts, see Appendix D.

Marketing Tips From Organic Growers

When marketing grain, research the options that have been discussed. Verify the reputation of the buyers by calling other producers and players in the organic industry. Ask about the buyer's payment record and integrity. It is best to meet face to face with the buyer, but if that is not possible, ask for references.

Any agreements should be formalized in writing. As soon as the negotiation is completed over the telephone, request or create written and signed documents covering all aspects of the terms of agreement, as follows⁽¹⁹⁾:

• The contract should specify product quality and quantity, price, timing and method of payment, details of shipping including who pays the freight and the shipping date, who pays for cleaning, testing and grading procedures that will be used to determine agreed-upon quality standards.
• If payment is withheld until the buyer resells the product, a written agreement should detail when and where the buyer takes possession and ensure it is the buyer's responsibility that the shipment meets the quality and contract specifications of the next buyer or end user. This will ensure that the producer is not held responsible if the end user is not satisfied with the quality and refuses to pay your buyer. Clearly define how much money the buyer can take off the payment if the grain delivered does not meet standards.
• Using an official sample from the Canadian Grain Commission allows for a clause in the purchase agreement or sale contract stating clearly that if a dispute occurs with dockage or grade, the CGC report will prevail. Samples to establish a grade should be taken during harvesting. After shipment representative samples should be taken from the truck at unload at the buyer's location.
• Keep the bill of lading from the trucker and ask the trucker to provide weights at a second scale along the way as well as a copy of the scale ticket when the shipment is unloaded.
• Ask the buyer for a statement of the grades and weights as soon as possible after delivery. (For CWB PDS sales, record these amounts and send in the Final Weights Report.)
• Send an invoice when the payment is due.
• If the buyer is late in paying, phone and be persistent. If a producer believes the buyer does not intend to pay, consult a lawyer. If a producer has used a Canadian Grain Commission (CGC) licenced buyer, they can file a claim with them. International buyers are not covered by the CGC, so the costs of recovering payments or settling disputes will be higher. The Export Development Corporation offers export credit or payment insurance for companies selling into international markets.

There are considerable opportunities in organics, with overall demand in the industry continuing to report a 20 per cent annual growth rate. Marketing options for organic grains, pulses, and oilseeds are increasing, and with careful research and planning farmer marketers can achieve significant premiums over conventional grain in the marketplace.

To do an Organic Producer Direct Sale, follow these steps:

Doing a PDS with the CWB is not a complicated process. If you are unsure, please call the Organic Marketing Manager, who will walk you through the process easily.

1. Get a PIN number

To qualify for the program, you must have a current crop year CWB permit book number and be a certified organic producer.

Call 1-800-ASK-4-CWB or 204-983-3635 and request a Personal Identification Number (PIN) application form. The form will be mailed or faxed to you. When the CWB receives your completed PIN application, you will be mailed your confidential PIN. (For your own security, you will be asked for your PIN when you complete your sales contract.)

2. Check the price

Contact the CWB Organic Marketing Manager Donna Youngdahl for a PDS price quote at 204-983-3635, or call 1-800-ASK-4-CWB. Initiate sale when overall organic value is acceptable. CWB PDS prices are calculated daily for the U.S., EU, and Japanese markets based on CWB trading information.

3. You can do the PDS sale over the phone

Contact the Organic Marketing Manager and provide the following information to execute the sale:

• proof of organic status by certification company
• grain and grade; verification of grade (elevator, end-user, or CGC)
• tonnes
• destination
• port of exit
• any outstanding cash advance payments owing?

You will be faxed a PDS Sales Confirmation Fax, which includes the contract number, tonnes, grain and grade, administration fee, shipment period, and amount owing, including on outstanding advances.

You will be faxed an Export Licence Application Form to complete and return; then a completed Export Licence will be faxed back to you. You will be mailed the sales contract which you must sign and mail back to the CWB.

Keep one copy of the Export licence for your records, and send two copies with the trucker. Customs will require the export licence at the border.

You have thirty days to ship the grain from the date of the sales contract. Once the grain is shipped, complete and fax in to the CWB the PDS Final Weight Report, confirming the final weight and date of the shipment.

Forward Sales

If you wish, you can make a sale for delivery in future months. You will be quoted a PDS price based on the forward cash market, and will be expected to ship during the shipment period specified in the contract.

4. Payments

For a direct sale, the administration fee is $1.50 per tonne, and the payment must be made immediately by wire transfer or cheque. For the credit sale, the overall administration fee is $2.00 per tonne. Payment may be made after shipment, up until the final CWB payment is issued. Interim and final payments can be allocated to any balances owing, and interest on any outstanding balance will be charged at the prime rate of interest from the end of contract shipment date.

Frequently Asked Questions about CWB Delivery Contracts

Do I need to sign a delivery contract to deliver organic grain?

No. Organic sales can be made at any time without delivery restrictions. When delivering to an organic company, the company will provide the CWB delivery contract at the time of delivery. When conducting a PDS with the CWB, the farmer will complete the Sales Contract only. This will automatically initiate a delivery contract for the producer.

What if I am unsure how much of my crop will be sold as organic, and how much will be sold as conventional?

Then sign a delivery contract at the beginning of the year for the entire amount you want to deliver that year. In this case, though, you must deliver at least 85 per cent of the entire amount of grain contracted (as conventional and/or organic) before the end of the crop year, or you will be assessed liquidated damages. All grain delivered, whether organic or conventional, will be applied to the delivery contract you signed up for.

If I sign up for a delivery contract but I am not sure how much will be sold as organic and how much as conventional, do the other obligations of delivery policy apply (for example delivery in accordance with CWB calls)?

The obligations of delivery policy apply to your conventional production. The delivery in accordance with CWB calls apply to the total tonnes contracted. The organic grain could be delivered at any time during the year and will be applied against the delivery contract.

Example.

You have 50 tonnes of conventional grain and 50 tonnes of organic grain, and 100 tonnes contracted with the CWB. You have delivered the 50 tonnes of organic product. There is a 20 percent delivery call in effect. You can deliver 20 percent of the total contract, that is, 20 percent of 100 tonnes. In this case, then, you could deliver 20 tonnes of conventional grain on the call. If the percentage called is less than 40 tonnes, you can use the 40 tonne minimum provision on the first call of each series of delivery contracts for each class of grain. In this case, then you would deliver 40 tonnes of the conventional grain, and have 10 tonnes left to deliver.

What happens if I complete a delivery contract and later do a PDS sale?

The PDS sale would be applied against the original delivery contract; another delivery contract would not be initiated.

For more information about CWB organic programs and CWB payment options,contact:

Ms Donna Youngdahl,
CWB Organic Marketing Manager
Mailing Address:
Canadian Wheat Board
423 Main Street
P.O. Box 816, Station Main
Winnipeg, Manitoba, Canada
R3C 2P5
e-mail: Donna_Youngdahl@cwb.ca
Tel: 204-983-3635 Fax: 204-983-3841

4.0 REVIEWING MANITOBA'S POSITION

This report is meant to bring clarity to the situation in Manitoba and to unite stakeholders toward common goals. Manitoba's strategic direction is determined by four main factors: the sector's strengths, weaknesses, opportunities and threats. We can use this situational analysis to help stakeholders develop the sector in the short and long run.

4.1 Strengths

• Manitoba has a proven track record in production. Manitoba can produce a wide variety of organic crops, such as hay, wheat, lentils, buckwheat, peas, hemp, fruits, vegetables and herbs. It is also capable of raising organic livestock.
• Organic products are in demand locally as well as internationally. This market is experiencing annual 20 per cent growth across numerous product sectors. Manitoba is poised to supply current and future demand. In 2001, OPAM certified nearly 38,000 organic acres (29,000 in Manitoba), an increase of 85 per cent in four short years.
• OPAM is an industry leader in local and national certification. OPAM is an excellent resource for the organic producer and is well connected to organic stakeholders.
• Additional groups support the sector. Groups like the Organic Food Council of Manitoba, Pro-Cert, AVONA offer support and expertise to Manitoba's organic sector.
• Transitional memberships in OPAM have risen more than 200 per cent in the last four years. The assumption is that more acres in the future will be certified organic.
• There is an abundant amount of hay, pasture and forage land that is certified under OPAM. This is the largest (13,099 acres) crop category in the province.
• There have been increases in funding and resources from federal and provincial governments in the last twelve months.

4.2 Weaknesses

• Few, if any, locally made organic products are being sold on Manitoba's retail shelves. Processed goods and perishables are primarily imported from outside the country. The availability and the exposure of organic products to consumers is limited and small, so the potential for sales not realized exists and may be substantial.
• Manitoba's organic consumer base is quite small in comparison to Vancouver, Toronto and Montreal. Markets in the United States are even larger and more affluent than anything Canada has to offer.
• An organized distribution system from local producer to retailer is non existent. The sector needs the services of intermediaries who can successfully bring both parties together.
• Organic producers lack the marketing knowledge and regulations needed to sell to retailers. Many producers are not trained in pricing, packaging, transporting, negotiating, selling, and marketing of their products.
• Most organic farms are relatively small and cash strapped. Most of these operations are unable to meet the standards of independent organic retailers.
• Retail chain buying decisions are not made in Manitoba. The chain supermarkets like Safeway, Whole Foods, Wild Oats and IGA have centralized buying units in another province or country, making it difficult to gain access to the market.

4.3 Opportunities

• Few companies have successfully branded natural and organic products. Therefore, consumers have not developed loyalty or preferences toward specific products. Manitoba companies can use this to their advantage and develop loyalty to local brands.
• Canadian retailers have private label products in the organic section. Superstore's PC's Organic line is always interested in finding alternative local supplies when possible.
• US retail giants Wild Oats and Whole Foods, have or will expand into Canada. These companies are top marketers of organic products who look for local suppliers when possible
• There is strong demand for both natural and organic foods in the United States. Whole Foods, Wild Oats, Trader Joe's and Mother's Market and Kitchen are the most dominant players in the organic or natural product retail marketplace. However, there are thousands of independent US retailers and/or processors just hours away from southern Manitoba.
• European and Japanese markets are hungry for organic products. Some specific products are in short supply in these markets.
• Organic associations can act as a catalyst toward development. Independent bodies can help in attracting producers and processors able and willing to supply enough quantities to justify an organic slaughter house or food processing facility.
• Manitoba has the right mix for organic cattle production. Low capital costs coupled with abundant feed and pasture land make organic cattle production very attractive. Cattle producers may be in the best position to capture domestic and international market share versus organic poultry or hog producers.
• Increasing production should give local conventional processors the confidence to certify and dedicate some manufacturing to organic food lines.
• Conventional producers have good growth potential.

4.4 Threats

• Consumers have high standards for food and beverages. Consumers will expect the same high standards in food quality, consistency, and packaging, with a competitive price from local suppliers as they do with international manufacturers.
• The organic producers are an aging population. The sector urgently needs young producers who want to enter into organic production.
• Organic production in Manitoba is primarily in grains and oilseeds for export. Currently, this is the only economically viable option for many grain and oilseed farmers. This trend will not stop until domestic premiums or selling options catch up to their foreign counterparts.
• Total organic income is quite low in Manitoba. The majority of surveyed respondents grossed less than $10,000 per year. This diminishes the organic sector's economic importance and is perceived as an interesting hobby for enthusiasts.
• Capital investment in the sector is nonexistent or very limited. Existing processing facilities are not certifiable or are inadequate for value added processing facilities.
• The cost of ISO 65 certification could be a burden. ISO 65 is a necessary, but expensive initial and annual undertaking for OPAM and its stakeholders. Failing to achieve ISO 65 certification puts the growth of Manitoba's sector at risk.
• A decline in government support toward market access and certification infrastructures.

4.5 CLOSING COMMENTS

Worldwide, the organic sector continues to expand at an accelerated growth rate of 15 per cent or better annually. The reasons are varied, but it's mostly driven by the consumer's need for food safety and a belief in what is good for the environment. The most mature organic markets in the world are located in Europe. The United States and Japan are quickly becoming significant markets for organic foods and beverages. Currently, nations do not share the same uniform standards and regulations. Governments realize that this is preventing the free flow of goods and efforts are underway to make positive changes to the certification system in Canada and abroad.

The Canadian organic scene is in transition itself and evolving to meet the needs of tomorrow's customers. The implementation of ISO 65 certification will significantly impact the forty-six or so certifying bodies operating in the country. Streamlining the certification standard will improve access to foreign markets. However, the cost of achieving ISO 65 will be the elimination of many current certification bodies due to the inherently high costs involved. Saskatchewan has the largest certified organic acreage in the country and Alberta has the greatest number of organic cattle. The largest number of organic operations are contained in Quebec and Ontario. Federal funding in total has reached about $2.8 million. It is primarily targeted to developing certification infrastructure, market access and production extension learning for the industry.

Manitoba is experiencing the same solid growth as the rest of the country and the world. OPAM has seen its numbers in organic certification grow by nearly 100 per cent since 1998 and its transitional numbers grow even more. Green or forage acres have the greatest percentage of certified land in Manitoba and can support expansion of the organic cattle herd. OPAM is the main certification body in Manitoba and has been successful in representing Manitoba's organic community at the national level. This leadership and experience are important to the development domestically of the market. Other groups, such as OFCM/COG can assist OPAM by playing a different role, like consumer education, for local market development. Manitoba producers, processors and retailers need to work together to build a strong distribution channel at home. To define goals toward production, processing and marketing is important. Implementing and committing to the goals will be harder and much more important.

AAFC's survey and sector interviews told us that more attention and resources should go toward developing local skills in marketing and selling locally. Farmers see time constraints and not knowing how to market as the major barriers to selling organic goods. The majority of grains and oilseeds leave the province for international markets and use a more sophisticated distribution channel. Most perishables like vegetables, meats and dairy are sold directly to the end consumer at farmers' markets or at the farm. The majority of survey respondents were happy with their current method of selling organic goods. The survey told us that producers are not getting rich on organic farming. Most producers did not enter organic farming for financial reasons, but did so to help the environment. An immediate concern is the aging population of organic farmers and the low income experienced by the group as a whole.

Our department recognizes that this report can only go so far in building the industry in Manitoba. We hope it has the information onto which stakeholders can build a strategic platform. We strongly encourage local stakeholders to commit to a provincial marketing strategy within twelve months of this report being released.

Finally, it is possible. Making branded Manitoba products the first choice of consumers can happen. It all starts with a plan and commitment by people.

Appendix A - Manitoba Organic Retailers

The following list is made up primarily of retailers. We contacted most and they provided a list of their primary organic products sold where and when possible.

Winnipeg Retail Stores

A-1 Nutrition
31-2860 Pembina Hwy
261-7240
300-1120 Grant Ave
475-7522
Products: organic flax seed, crushed & whole

Organza Foods
664 Corydon Ave.
453-6266
Products : produce, frozen meats, grocery & dairy

Sunrise Health Foods
542 Academy
786-5844
St. Vital Shopping Centre
255-9213
Portage Place
947-3188
Kildonan Place
661-8065
Products : soups, cereal grains & flax, and whole & flours

Tall Grass Prairie Bread
Co. & Deli Inc.
859 Westminister
783-5097
Products : breads

Nutrition Plus
16-2077 Pembina Hwy.
269-5954
Products : cereal grain flours

Borowski's Health Food Ltd.
437 A St. Anne's
257-7667
Products : whole grains and oilseeds

Bee Maid Honey
625 Roseberry
786-8977
Products : honey

Bosch
105-2800 Pembina Hwy.
275-2617
Products : whole grains

Canadian Nutrition Centre Inc.
1795 Henderson Hwy.
339-0440
Products : cereal flours, beans, nuts

Harry's Foods
905 Portage Ave
987-8840
St. Andrews
338-7538
Products : grocery, produce, dairy & meats

House of Nutrition
770 Notre Dame
775-9044
Products : various

Sangster's
42-1128 Henderson Hwy
338-0770
Products : pasta, oils, grains

Stone Ground Daily Bread Bakery
1399 Pembina Hwy
475-5900
Products : Breads

Canada Safeway
1625 Kenaston Blvd
800-723-3929
Products : grocery, dairy meats, produce

West Fair Foods Ltd.
Real Canadian Superstores
403-291-7700
Products : grocery, dairy

De Luca
950 Portage Ave
774-7617
Products : oil, bread, beverages

Organic Planet
885 Westminister
772-0345
Products : produce

Winkey Food Market
22-2855 Pembina Hwy
261-4888
Products : Chicken

Retailers Outside Winnipeg

Swan Health Foods
115 4th Ave. S
Swan River, MB
734-9118
Products : produce, dairy, grains nuts & flour

Nutter's
19-3rd Ave. NE
Dauphin, MB
638-4081
Products : grains, flax oil, rice, flour

Feelin' Good Health Products
276 Stephen St
Morden, MB
822-6707
Products : cereal flours, flax, grains

The Store
4-27 3rd St.
Beausejour, MB
268-3235
Products : grain, oils, processed cereals

Good & Natural
Victoria Plaza
Steinbach, MB
326-9565
Products : oils, beverages, Eggs

Sangsters
63 A - Main St
Selkirk, MB
482-8590
Products : Pasta, cereal grains

Appendix B - Maps

Appendix C - Technical Assistance and Web Sites

John Hollinger - (Production & Marketing) Organic Agriculture Specialist, Manitoba Agriculture and Food, Carman, Manitoba, 204-745-5643

Dan Wuerch - (Export Market Development) Sr. Marketing & Trade Officer, MISB, Agriculture & Agri-Food Canada, Winnipeg, Manitoba, 204-984-4230

Donna Youngdahl - (Wheat & Barley Marketing) Marketing Manager, Canadian Wheat Board, Winnipeg, Manitoba, 204-983-0239

Dr. Martin Entz - (Production) Professor, University of Manitoba, Plant Science Department, Winnipeg, Manitoba, 204-474-8221

Assiniboine Community College - (Training) Organic Program Co-ordinator, Agriculture and Rural Enterprise Division, Brandon, Manitoba, 800-862-6307

Janine Gibson - (Inspector) Creative Health Consulting, Independent Organic Inspectors Association (IOIA) Steinbach, Manitoba, 204-434-6018

Lara Scott - (Office Manager) Organic Producers Association of Manitoba, Virden, Manitoba, 204-748-1315

Cindy Murray -(President) Organic Producers Association of Manitoba, Erickson, Manitoba, 204-874-2324

Erik Eising - (Organic Marketing Consultant), Box 1022, Newton Siding, Manitoba, 204-783-5875, cell 204-856-6951

Robert Kitlar -(Technical Food Expert) Consulting Specialist, Enviro-Test Laboratories, Winnipeg, Manitoba, 800-607-7555

Dan Wiens - (President) Organic Food Council of Manitoba, Winnipeg, Manitoba, 204-944-1993

Sam Rhode - Canadian Organic Livestock Association (COLA), 306-845-3119

Retailer Web Sites

Sites Web des détaillants

Loblaw Companies Ltd
www.loblaws.com

Sobey's Manitoba/Saskatchewan
www.sobeys.com

Overwaitea
www.overwaitea.com

Nutter's Bulk and Natural Foods
www.nutters.com

Wild Oats Community Markets
www.wildoats.com/capers/index

Steep Hill Food Co-op
www.sfn.saskatoon.sk.ca/business/steephill

Ontario Natural Food Co-op
www.kd@onfc.on.ca

The Big Carrot
www.thebigcarrot.ca

Karma Co-op
www.freecfm.com/w/w/karma

Distributor Web Sites

Pro-Organics
www.proorganics.com

Westpoint Distributors Ltd.
www.westpointonline.com

Wild West Organic Harvest
www.wildwestorganicharvest.com

Pure Source
www.puresource.ca

Other Web Sites

Canadian Organic Growers
www.cog.ca

Conseil consultatif canadien de la production biologique
www.coab.ca

Organic Advocates
www.organicadvocates.org

GaiaOne Knowledge
www.gks.com

OPAM
www.opam.mb.ca

Organic Trade Association
www.ota.com

Canadian Organic/Ecological Network
www.gks.com/COEN

Inforganics
www.inforganics.com

Canadian Organic Livestock Association
www.gks.com/cola

Appendix D - Producer Direct Sale

To do an Organic Producer Direct Sale, follow these steps:

Doing a PDS with the CWB is not a complicated process. If you are unsure, please call the Organic Marketing Manager, who will walk you through the process easily.

1. Get a PIN number: To qualify for the program, you must have a current crop year CWB permit book number and be a certified organic producer.

Call 1-800-ASK-4-CWB or 204-983-3635 and request a Personal Identification Number (PIN) application form. The form will be mailed or faxed to you. When the CWB receives your completed PIN application, you will be mailed your confidential PIN. (For your own security, you will be asked for your PIN when you complete your sales contract.)

2. Check the price: contact the CWB Organic Marketing Manager Donna Youngdahl for a PDS price quote at 204-983-3635, or call 1-800-ASK-4-CWB. Initiate sale when overall organic value is acceptable. CWB PDS prices are calculated daily for the U.S., EU, and Japanese markets based on CWB trading information.

3. You can do the PDS sale over the phone: Contact the Organic Marketing Manager and provide the following information to execute the sale:

• proof of organic status by certification company
• grain and grade; verification of grade (elevator, end-user, or CGC)
• tonnes
• destination
• port of exit
• any outstanding cash advance payments owing?

You will be faxed a PDS Sales Confirmation Fax, which includes the contract number, tonnes, grain and grade, administration fee, shipment period, and amount owing, including on outstanding advances.

You will be faxed an Export Licence Application Form to complete and return; then a completed Export Licence will be faxed back to you. You will be mailed the sales contract which you must sign and mail back to the CWB.

Keep one copy of the Export licence for your records, and send two copies with the trucker. Customs will require the export licence at the border.

You have thirty days to ship the grain from the date of the sales contract. Once the grain is shipped, complete and fax to the CWB the PDS Final Weight Report, confirming the final weight and date of the shipment.

Forward Sales

If you wish, you can make a sale for delivery in future months. You will be quoted a PDS price based on the forward cash market, and will be expected to ship during the shipment period specified in the contract.

4. Payments: For a direct sale, the administration fee is $1.50 per tonne, and the payment must be made immediately by wire transfer or cheque. For the credit sale, the overall administration fee is $2.00 per tonne. Payment may be made after shipment, up until the final CWB payment is issued. Interim and final payments can be allocated to any balances owing, and interest on any outstanding balance will be charged at the prime rate of interest from the end of contract shipment date.

Frequently Asked Questions about CWB Delivery Contracts

Do I need to sign a delivery contract to deliver organic grain?

No. Organic sales can be made at any time without delivery restrictions. When delivering to an organic company, the company will provide the CWB delivery contract at the time of delivery. When conducting a PDS with the CWB, the farmer will complete the Sales Contract only. This will automatically initiate a delivery contract for the producer.

What if I am unsure how much of my crop will be sold as organic, and how much will be sold as conventional?

Then sign a delivery contract at the beginning of the year for the entire amount you want to deliver that year. In this case, though, you must deliver at least 85 per cent of the entire amount of grain contracted (as conventional and/or organic) before the end of the crop year, or you will be assessed liquidated damages. All grain delivered, whether organic or conventional, will be applied to the delivery contract you signed up for.

If I sign up for a delivery contract but I am not sure how much will be sold as organic and how much as conventional, do the other obligations of delivery policy apply (for example delivery in accordance with CWB calls)?

The obligations of delivery policy apply to your conventional production. The delivery in accordance with CWB calls apply to the total tonnes contracted. The organic grain could be delivered at any time during the year and will be applied against the delivery contract.

Example.

You have 50 tonnes of conventional grain and 50 tonnes of organic grain, and 100 tonnes contracted with the CWB. You have delivered the 50 tonnes of organic product. There is a 20 percent delivery call in effect. You can deliver 20 percent of the total contract, that is, 20 percent of 100 tonnes. In this case, then, you could deliver 20 tonnes of conventional grain on the call. If the percentage called is less than 40 tonnes, you can use the 40 tonne minimum provision on the first call of each series of delivery contracts for each class of grain. In this case, then you would deliver 40 tonnes of the conventional grain, and have 10 tonnes left to deliver.

What happens if I complete a delivery contract and later do a PDS sale?

The PDS sale would be applied against the original delivery contract; another delivery contract would not be initiated.

For more information about CWB organic programs and CWB payment options,contact:

Ms Donna Youngdahl,
CWB Organic Marketing Manager
Mailing Address:
Canadian Wheat Board
423 Main Street
P.O. Box 816, Station Main
Winnipeg, Manitoba, Canada
R3C 2P5
e-mail: Donna_Youngdahl@cwb.ca
Tel: 204-983-3635 Fax: 204-983-3841

Appendix E

Source: Farm Products Marketing Council

1. "EU 'organic' label has no uniform interpretation," The Birmingham Post via News Edge Corporation, August 15, 2001

2. "Organic food balloons into $7.7 billion market," St. Louis Post-Dispatch, June 19, 2001

3. Helga Willer and Minou Yussefi, Organic Agriculture Worldwide, 2001

4. "The Natural/Organic Food Market in the United States,", MARKET RESEARCH CENTRE, April 2001

5. Sean Pratt, "New organic standards give American growers the edge," Saskatoon Newsroom

6. "The Natural/Organic Food Market in the United States,", MARKET RESEARCH CENTRE, April 2001

7. Helga Willer and Minou Yussefi, Organic Agriculture Worldwide, 2001

8. Sean Pratt, "New organic standards give American growers the edge," Saskatoon Newsroom

9. "EU 'organic' label has no uniform interpretation," The Birmingham Post via News Edge Corporation, August 15, 2001

10. Helga Willer and Minou Yussefi, Organic Agriculture Worldwide, 2001

11. Ibid.,. 2001

12. "The Organic Food Market in Japan,", MARKET RESEARCH CENTRE, July 2001

13. Rosalie Cunningham, "The Organic Consumer Profile," Alberta Agriculture, Food & Rural Development, 2001.

14. Ibid., 2001.

15. Agriculture and Agri-Food Canada, MISB Survey, Manitoba Organic Survey 2001, February 2002.

16. Environics Survey, 2000.

17. Rosalie Cunningham, "The Organic Consumer Profile," Alberta Agriculture, Food & Rural Development, 2001.

18. Helga Willer and Minou Yussefi, Organic Agriculture Worldwide, 2001

19. Smith and Groenen, Organic Farming on the Prairies: Organic Production Manual. Moose Jaw: Saskatchewan Organic Directorate and the Saskatchewan Agriculture and Food, 2000. P. 4-10.