CONSUMERS must see value in quality, says ANDREW MONK

Consumers are king.

They want it all, they want it looking perfect and they don't want to pay any more for it.

In fact they want to pay less for it - and in the past few years, for some staple lines, many of them have been.

However there are alternatives for consumers to make a choice with higher "values" attached to such products.

These products do offer some hope and example for the broader food and farming industry in dealing with these modern retail dilemmas.

The $1-a-litre milk retail "wars" may have been a marketing success, but the longer-term reality for those in the supply chain is increased pressure to cut already slim margins, or going out of business altogether.

Those in commodity markets, supplying bulk products such as milk, wheat and the like, will remain at the whim of market demands for cheap, homogenised and undifferentiated products with no loyalty, brand or otherwise.

However there are some positive glimmers of hope, inverting this trend of cheap and homogenous foods.

The Australian Organic Market Report, released in the past month, has the organic industry valued at more than $1 billion, but this translates to a market share on average of 1 per cent only in Australia.

In comparison, the US and EU organic market share ranges between 2 to 3 per cent, so there is considerable upside or "blue sky" yet for the Australian industry.

But organic is a niche market and therefore not all consumers are going to regularly buy organic, even though this year 65 per cent of Australian households claim to have purchased something organic in the past 12 months.

Organic foods, according to consumers, are becoming easier to buy (in large measure due to the availability at big retailers, with three in four purchases occurring there) and consumers have a far clearer understanding of what to look for when buying organic, with 31 per cent of Australians now recognising the Australian Certified Organic logo on products and more than a third noting that they would not purchase a product unless it was certified.

Does this mean an end to the $1-a-litre wars?

Unlikely, given their success and many consumers continuing to - wittingly or otherwise - buy into that.

It will take education and promotion of the alternatives to ever change this around.

  • Dr Andrew Monk is chairman of the Biological Farmers of Australia.