Estonia's inflation shrinking gap between organic, conventional food prices

Organic-branded oatmeal on a supermarket shelf.
Organic-branded oatmeal on a supermarket shelf. Source: Priit Mürk/ERR

While inflation has hit organic food producers as well, the general increase in conventional food prices has shrunk the difference in prices with organic food. Organic producers in Estonia hope that as energy prices go down this spring, the shrinking price difference will lead to a boost in organic food consumption.

Viljar Veidenberg, the owner of dairy goods producer Pajumäe Farm, told ERR that even though the difference in price has shrunk, organic products are still more expensive in stores than conventional ones.

"We raised product prices about a year ago, once it was certain that sharply rising input prices would remain," Veidenberg recalled. "Even though prices have gone up over the last year as well, we've put off another price increase for as long as possible, hoping that costs will stabilize somewhere and we can spare clients from a price increase for as long as possible."

Looking at milk and dairy production together, most major expense lines went up 30-40 percent, he continued, highlighting motor fuel, supplementary cattle feed, various packaging materials and services among them.

"Of these, one of the biggest expense lines, electricity, went up by as much as 117 on year," he underscored, noting areas in their budget that could be offset by raising prices.

Reet Rum, director of organic bakery Pagar Võtaks, said that the prices of organic raw ingredients have gone up 15-25 percent over the past year, which has necessitated a further increase in the company's product prices. 

"We've tried at the expense of profits to keep our price level competitive," Rum said.

According to the bakery director, organic dairy product prices have gone up the most, including a 25 percent increase in the price of organic butter, for example. But organic eggs, flour and sugar have all gotten more expensive too.

"Our pastries have gotten up to 20 percent more expensive and baked good prices have risen by up to 15 percent," she acknowledged.

Priit Mikelsaar, CEO of organic food and product retailer Biomarket, said that while organic food prices haven't remained unaffected by the general increase in prices, based on what he's observed, increases in organic food prices have been more limited than those of conventional foods.

"It can be said that the price difference between organic and conventional products has shrunk, not increased," he highlighted, noting that the price increases of most organic products have remained in the range of 10 percent.

"It's been bigger in the case of some fresh vegetables, but the main factor there has been bad weather," Mikelsaar added.

According to Ökosahver director Kaisa-Leena Liim, price increases in their store have been more modest and smoother than on conventional products sold by retail chains.

"We only raise prices once goods received at old prices have been sold, and despite the increase in costs due to the rise in energy costs, thus far we've still managed to maintain our pricing principles at the same level as a year ago," Liim said. "As a result, we believe the price differences between conventional products and our stores prices have rather equalized for several product groups."

She said that prices have gone up across most categories in their store, but noted that there have been exceptions to this as well.

"The prices of tomato products and domestic flour products, for example, have gone up very little," the director cited as examples. "Also worthy of note is that we were recently able to reduce the prices of imported nuts because our partner's growers had a good nut year."

Liim nonetheless acknowledged that people's buying power has no doubt been reduced by skyrocketing costs, and that that has impacted shoppers buying organic as well.

Organic organization hopeful consumption will increase

Merit Mikk, board member at the Estonian Organic Farming Platform, told ERR that the shrinking difference in the prices of conventional and organic foods has boosted hopes and expectations that people will start to consume more organic food.

"We certainly hope and believe that will be the case," Mikk said.

She cited a consumption survey by the Estonian Institute of Economic Research according to which the increase on year in organic food prices last year was smaller across nearly all categories than in the prices of their conventional counterparts.

"Electricity prices went up for organic producers as well, and they have to look at their costs," she acknowledged. "They can't sell their products below cost."

Nonetheless, according to Mikk, they haven't yet seen an increase in the consumption of organic food caused by the decreasing difference in prices, as high energy prices have driven consumers to seek out the cheapest food instead.

"People's overall purchasing power has fallen since September, and that is definitely one reason this hasn't occurred yet," she said.

Referring to data from the Institute of Economic Research, Mikk noted that plain yogurt, beef products, ground meat, domestic apples and various  herbal teas are examples of products where there is virtually no difference in price anymore between conventional and organic products.

Price differences on grains and flours have shrunk considerably as well.

According to the institute survey, grain and flour prices went up the most among conventional products as well ⁠⁠— including wheat flour by 84 and rye flour by 69 percent, she noted. Organic wheat and rye flour prices, meanwhile, went up by 19 and 14 percent, respectively, and the price of organic oatmeal likewise went up 26 percent even as conventional oatmeal prices increased by 84 percent.

The biggest difference, however, remains in vegetable prices, Mikk said, although for many that is precisely among the main categories of products they would prefer to buy organic.

She explained that domestic organic vegetable prices are driven up not just by organic production methods, but also to a significant degree by the fact that organic producers are growing vegetables on relatively small patched of land, significantly increasing the produce's cost price.

"The different isn't as great in the case of imported organic vegetables or of fruits," she added.

According to Mikk, data from 2020 and 2021 indicates that, both years, organic food consumption went up by more than 20 percent on year, and organic producers are hopeful that this figure will remain steady for 2022.

In 2021, organic food consumption accounted for 5 percent of total food consumption in Estonia.


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Editor: Aili Vahtla

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