Green sales dive – but should we care?

Organic food producers are feeling the effects of the downturn as hard-up consumers turn to cheaper alternatives. But, as Eoin Gleeson reports, there is some upside to the adverse economic climate. And the environment could benefit as a result.

Organic food producers are feeling the effects of the downturn as hard-up consumers turn to cheaper alternatives. But, as Eoin Gleeson reports, there is some upside to the adverse economic climate. And the environment could benefit as a result. 

Aren't we all green now?

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Far from it. Over the last ten years, sales of organic food have risen tenfold, establishing a £1.3bn industry that has made a number of its advocates from Hugh Fernley-Whittingstall to Sheherazade Goldsmith minor celebrities. But as the recession kicks in it seems that we are having a collective change of heart. The latest figures from market research company TNS tracking the shopping habits of 25,000 British households show that sales of organic produce are falling fast down by nearly a fifth from their all-time peak in February. The will to pay heavy taxes to finance environmental projects also seems to be evaporating. In May, seven out of ten people told polling company Opinium that they were not prepared to pay more tax to fund projects to curb climate change. And less than a year since the papers were plastered with pictures of David Cameron self-consciously cycling to Westminster, the Tory party is back-tracking on plans to tax four-wheel drives.

Why don't we care any more?

Advertisement
Advertisement - Article continues below

We can't afford to. "The chilly economic climate" has "frozen the shoots of environmentalism", says Alice Thomson in The Sunday Times. Green living "is increasingly being seen as a luxury". The population is also getting wary of Government "greenwashing" using climate change as an excuse to raise taxes for non-green projects. And so they should be. According to the Taxpayer's Alliance, even after taking into account the cost of maintaining the roads, the Exchequer netted £24.2bn from its various green levies on waste, motoring and energy consumption around £800 per household. Yet the price of the damage to the environment by British emissions in 2007 was just £4.6bn, according to a formula devised by the UN Intergovernmental Panel on Climate Change.

What next?

The organic food industry is being forced into a serious rethink. As shown by the failure of US organic superchain Whole Foods (which has racked up losses of £9.2m in Britain in the past year),the public isn't prepared to pay much of a premium for organic food these days even in Kensington, where the firm has its flagship store. Instead, we're trading down to Tesco and then to Lidl. The result? Organic farmers are quitting in droves as "customers abandon the sector en masse", says Juliette Jowit in The Guardian.

Being green isn't going to disappear completely: the instability of the global oil supply means Gordon Brown is unlikely to drop his grand plans to make Britain the "Saudi Arabia of wind power", no matter how much public discontent or disbelief it fosters. (Note that 70% of Britons think there is no chance of the UK hitting its target of generating a fifth of its energy from wind, wave and other forms of power by 2020.) And people are unlikely to turn away from recycling or cycling simply because they don't hit our wallets much. But we can expect a host of green initiatives measures to tax cars, flights and finance more recycling through stealth taxes will be abandoned as voters force governments to prioritise thrift over the "luxury" of a green lifestyle.

Is this bad news for the environment?

Yes and no. To a degree the recession is doing environmentalists' work for them. With fewer people moving house, fewer new washing machines and fridges are leaving the shops. At the same time, planes have been grounded and people are leaving cars at home to take the train to work. Congestion on British motorways dropped 12% in the first six months of this year. In America, the price of a gallon of petrol is fuelling demand for a new breed of electric cars. These trends will all soon go global as the US recession translates into global slowdown. The fact is, says Sean O'Grady in The Independent on Sunday, that "restraining economic growth is the surest way of reducing congestion, carbon dioxide emissions and global warming". With people not being able to fly to Europe on holiday, or drive their car to work, what difference does it make that we are eating a little less organic produce?

Advertisement
Advertisement - Article continues below

And when the economic crisis passes?

We'll be back to our old tricks, says O'Grady. The urge to enjoy the fruits of hard work, "is an irrepressible part of the human condition". But it might not be feeling rich again that refocuses our attention on such things as alternative energy. Instead, it will be a newly-rising oil price. That will remind us that we have to replace 40% of our electricity capacity in the next eight years, and that we can't run an oil-dependent economy forever. The organic food craze might not come back, but the drive to find a solid source of sustainable energy most certainly will.

Just how green is organic food?

According to a study by the Department of Environment last year, much organic food from tomatoes to chicken and milk actually does more harm than good. Organic milk requires 80% more land to produce and creates almost double the amount of substances that could lead to acidic soil and eutrophication (the pollution of water courses with excess nutrients). It also generates a lot more carbon dioxide than conventional methods 1.23kg per litre, compared with 1.06kg per litre. The longer growing time for organic chickens means 25% more energy is used in the process. Add it all up, and it seems that in some ways turning our back on the environment is just the thing to do if we want to be greener.

Advertisement

Recommended

Visit/517688/the-british-equity-market-is-shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Visit/511212/reasons-for-investors-to-be-bearish-but-stick-with-the-stockmarket-bulls
Stockmarkets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019
Visit/510684/good-news-on-jobs-scares-stockmarkets
Economy

Good news on jobs scares US stockmarkets

June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
11 Jul 2019
Visit/510135/trade-war-ceasefire-boosts-stockmarkets
Economy

Trade-war ceasefire boosts stockmarkets

Stockmarkets sighed with relief after the G20 summit in Japan brought a handshake between Donald Trump and Xi Jinping.
4 Jul 2019

Most Popular

Visit/investments/property/601065/what-does-the-coronavirus-crisis-mean-for-uk-house-prices
Property

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020
Visit/personal-finance/mortgages/601045/coronavirus-what-it-means-for-your-mortgage-or-your-rent
Mortgages

Coronavirus: what it means for your mortgage or your rent

Ruth Jackson-Kirby looks at all the key questions for owners, renters and landlords affected by the coronavirus crisis.
29 Mar 2020
Visit/economy/uk-economy/601063/the-uks-bailout-of-the-self-employed-comes-with-a-hidden-catch
UK Economy

The UK’s bailout of the self employed comes with a hidden catch

The chancellor’s £6.5bn bailout of the self employed is welcome. But it has hidden benefits for the taxman, says Merryn Somerset Webb.
27 Mar 2020
Visit/investments/commodities/energy/oil/601069/oil-prices-have-collapsed-and-some-argue-that-they-could
Oil

Oil prices have collapsed – and some argue that they could even turn negative

With an excess of supply and a drastic cut in demand, the oil price has been hammered this year. John Stepek looks at what that means for oil produce…
30 Mar 2020