HAMBURG - Germany's organic farms are enjoying a dramatic rise in sales but a supermarket price war means farmers are making little money from bio food, the head of Germany's organic food industry association said.
The association BOLW estimates German sales of organic food rose by about 12 percent in 2004 to 3.5 billion euros ($4.23 billion), in the absence of official figures.
Sales in the first quarter of 2005 rose by 15 percent, said BOLW chairman Felix Prinz zu Loewenstein.
"I am confident this trend will continue and hope we can achieve a 15 percent sales rise for the full year," he said.
"Sales are being driven by fresh products such as fruit, vegetables, meat and cheese."
"A major reason for the growth is a special feature of German retailing -- large numbers of specialist shops selling organic foods."
As in other countries, German food retailing has in recent years been increasingly dominated by a small number of huge supermarket chains.
But these have also begun stocking more organic food in the past year, noting that it is achieving high sales despite higher prices.
Germany's Agriculture Minister Renate Kuenast of the Green Party made expansion of organic farming a top priority when she took office in 2001, calling for a strategic move away from industrialised farm methods.
Kuenast's ministry provides powerful publicity support for organic foods which Loewenstein said has helped the industry.
"An intensive information campaign has been undertaken over the past three years with state support," he said.
"I think people are concerned about the quality of the food they eat and this has helped them recognise organic food and understand its characteristics."
PRICE WAR HITS PRODUCERS
A supermarket price war has been raging in Germany for over two years as several discount chains have expanded market share rapidly by slashing prices.
Organic food has not escaped the heavy price pressure caused by discounters.
"Many of our prices are linked to conventional food prices and when the conventional prices go down into the cellar our prices also fall," he said.
"I do not think that farmers are generally economically better off because they are organic. The overall situation is too difficult. Organic farmers have considerably higher costs."
This means higher prices for organic produce are only enough to brake the decline in German farming.
At the end of 2004, the association calculates Germany had 9,559 organic farms, seven less than at the start of the year.
But in 2004, 15,700 German conventional farms closed.
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