Falling consumer spend and a shift away from premium products over the last year has meant the value of the organic food market has risen by only 1.7% to take it to £2.1bn for 2008.
The modest 1.7% rise compares unfavourably to a food inflation rate hovering just above 10%. The organic market typically rose by 20% each year up until 2006.
Worryingly for the industry, sales of vegetables, making up the largest share of the organic market at 16%, are down by 4.9%. Also hit hard were fruit, bread and fish, which all suffered double-digit declines compared to 2007.
However there was some good news for the organic industry with sales of meat, eggs, milk and home cooking ingredients all rising.
There was also strong growth in the value of the non-food market with sales of organic cotton products in particular rising by 40%. The health and beauty market also rose by 69%.
The report also found that sales of organic food in Tesco, Sainsbury’s and Waitrose -- the supermarkets with the biggest share of the organic market -- all fell in 2008.
Sales also dropped at Marks & Spencer but increased in Morrisons and Asda.