A clever move that could reap benefits for consumers

The decision by the frozen-food supermarket chain Iceland to switch its own-label vegetable line to organic, at no extra cost to the consumer, is a welcome boost. At one level it is, of course, a marketing trick, a nifty way of securing additional publicity for Iceland. We, in common with the rest of the media, are part of that marketing drive. But there is nothing wrong with marketing tricks if they genuinely offer the consumers a broad choice at a good price.

The decision by the frozen-food supermarket chain Iceland to switch its own-label vegetable line to organic, at no extra cost to the consumer, is a welcome boost. At one level it is, of course, a marketing trick, a nifty way of securing additional publicity for Iceland. We, in common with the rest of the media, are part of that marketing drive. But there is nothing wrong with marketing tricks if they genuinely offer the consumers a broad choice at a good price.

For too long, prices charged by the supermarkets for organic produce have been ludicrously high. Only the sky-high prices have meant that the sales are not higher than they now are; many organic products cost twice as much as their non-organic equivalents. That has been blamed on the greater labour-intensiveness and thus the greater cost of farming without pesticides. Equally, however, most supermarkets have been happy to impose a hefty mark-up on organic produce. Iceland insists that it will continue to pay farmers the higher prices they need to survive. The price-saving will come through a cut in Iceland's own profit margins.

In the short term, the shareholders will pay the price of the estimated £8m that Iceland will lose annually as a result of this levelling of prices. But in the longer term, Iceland's directors are making a commercial as well as a green decision. The market for organic produce is growing at a remarkable 40 per cent a year and is likely to be worth an annual £1bn next year. If Iceland can establish a dominant position within the market, it will almost certainly be difficult to budge.

With customers increasingly eager to buy environmentally friendly produce, the lack of organic farmers in this country means that - as has repeatedly been predicted in past years - there is now too little British produce to satisfy the demand. Only 3 per cent of British agricultural land is organically farmed. (The problems of shortages may be made worse if, as we report today, many abattoirs handling organic meat are forced to close.)

Iceland says it has bought up 40 per cent of the world's organic vegetable crop. The worries about GM foods have had a considerable effect; Iceland's decision last year to go GM-free was already riding the wave of public sentiment. Its latest move looks set to be equally well received.

It is a reminder that, all too often, a confident vision is all that is lacking. If supermarket chains are brave enough to believe in future change, the commercial pay-off can be enormous.