Organic produce accounts for about two percent of food and drink sales in Britain.

Fully organic farmed land in the UK, however, has fallen by seven percent this year, including a six percent drop in arable area, and self-sufficiency in organic cereals fell below 50 percent in 2006, the report said.

Helen Browning, the Soil Association's Director of Food and Farming, told a news conference that supply issues threatened future expansion prospects.

"The supply of organic produce is likely to constrain that growth," she said, declining to forecast the extent of the potential slowdown.

Browning said the sharp rise in prices for non-organic cereals had reduced interest in switching among cereal farmers.

"Cereals are a very difficult area. The cost of changing is high. It (high non-organic prices) may reduce the incentive for farmers to convert," she said.

RECORD HIGHS

Feed wheat futures in Britain rose to a record high on Friday and prices have more than doubled since early April, boosted by tight global supplies.

Browning said the shortage of organic cereals was making it difficult for organic livestock farmers.

"Farmers are finding it very difficult to source feed for livestock. I am very concerned about the prospects for some in the pig and poultry sector in particular," she said.

Pig and poultry farms consume a higher proportion of cereals in feed than those raising cattle and sheep which for much of the year are fed on grass.

The report noted for the first time sales of free-range and organic eggs outstripped those from caged birds.

"Consumer concerns over animal welfare appear to be driving changes in the poultry sector," the Soil Association said.

Most organic produce was bought in supermarkets last year with an estimated 75 percent purchased from multiple retailers but there was also a sharp rise in direct sales.