Amsterdam, May 19 - The Dutch government should consider tax incentives for organic food if sales in the Netherlands are to catch up with other European Union countries, a retail chain said on Friday.
Maarten Rijninks, managing director of the country's biggest specialised chain for organic food De Natuurwinkel, told Reuters he was sceptical the government would go for tax incentives, and its current initiatives would hardly raise sales.
"If the government wants to help and boost organic sales then they can introduce more taxes on non-organic food or lower the tax on organic food. But that's not going to happen because it will cost a lot."
"The government is making a small-scale experiment with lower prices to see what is the consumer reaction. But this experiment will not make a difference because it won't be scaled up and it will remain on paper," he said.
Last month, the Dutch Agriculture Ministry said it would take measures to promote organic farming in addition to some financial support it is already providing to farmers who convert to organic, as results so far "were no reason for joy".
The share of organic farming in the Dutch agricultural sector - one of the most industrialised in the world -- has doubled in the past six years to 2.5 percent in 2005 but remains far short of a government target of 10 percent by 2010.
PRICE EXPERIMENT
The ministry is now helping to reduce prices of organic food in several Dutch towns for a few months to see whether it would increase sales. Officials will then write a report with conclusions and give it to farmers and shops.
But Rijninks said government measures should focus more on creating a larger market and increasing consumer awareness.
"They should concentrate on stimulating the growth rate of the market and the biggest growth comes from more shelf space."
He said prices were not the main issue hindering organic sales growth as people opting for organic were led by high quality and good taste.
Organic producers around the world usually charge a price premium, that ranges roughly between 10 and 50 percent in the Netherlands, which they say reflects better quality and taste and the way the food is produced without chemicals.
Rijninks, whose chain has 50 percent market share in the Netherlands, said sales growth was still slow compared with other EU countries.
"Last year we had a nearly 10 percent growth in sales and total sales of all organic shops grew 5 percent," he said.
"Germany for example grew 15 percent last year, we can do the same. If you look at sales in Switzerland, Austria and Denmark, they are also much ahead of us."
Currently about 2 percent of all food products in Dutch shops are organic. The share of organic farming in the Dutch agricultural sector rose slightly to 2.5 percent in 2005. It comprised about 2.1 percent of the total arable land of 2 million hectares, compared with an average share of 3.5 percent in the EU.