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France: “Exorbitant” margins on organic fruit and vegetables by large retailers

Sales of organically farmed produce have multiplied by 3.5 (in turnover) in the last ten years. Whilst supermarkets and hypermarkets are constantly increasing their organic share of produce, they sell 35 times less organic fruit and vegetables than non organic (in volume).

According to UFC-Que Choisir, organic fruit and vegetables sold in large supermarkets are on average 79% more expensive than their conventionally farmed counterparts. These “exorbitant margins” are the retailers fault, despite the fact that by decreasing the margins they would sell larger volumes.

According to UFC-Que Choisir, over one year an average household (2.3 people) would spend €660 on organic fruit and vegetables from large retailers compared to €368 for a household buying conventionally farmed produce (€292 more per year). There are of course differences in the prices, organic cauliflower is only 27% more expensive than non-organic (€2.02/kilo excl. tax compared to €1.59/kilo excl. tax). Organic carrots, however, are double the price (€2.33/kilo compared to €1.17/kilo) and peaches are two and a half times more expensive (€6.64/kilo excl. tax compared to €2.64/kilo excl. tax). Even tomatoes and apples, the most consumed fresh products, are about two times more expensive if grown organically. Organic fruit and vegetables sold in specialised organic shops (e.g. Biocoop or Naturalia) are on average 25% cheaper than in large retail stores.  

Whilst organic produce does cost more as yields are not as high, there is more manual labour and the cost of the organic certification has to be payed for by the producers, the difference in price in the supermarket is due to the margins being made by the retailers. At the till, these extra costs should only cost the consumer €141 more, half of what they are paying. The margin is twice as high for organic products as non-organic (96%) For tomatoes the margin even reaches 145% more (gross margin of €0.77/kilo non-organic compared to €2.02/kilo for organic) and 163% for apples (€1.27/kilo compared to €3.12/kilo). It should be noted that gross margin does not imply profit as it includes the retailers costs (personnel, losses, premises). Nicolas Hulot, Minister of Ecological and Solidary Transition has asked retailers to reduce their margins in order to offer the produce to all French households. 


Publication date: 8/31/2017


 


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