Britain's soaring appetite for organic food is being hampered by supply problems in the industry, according to a new report published today.

The organic food and drink market is now worth about £1.5bn a year in Britain - up by about 70% since 2002 - and is set to increase by another 54% by 2012, according to market analyst Mintel. However, its Organic Food in the UK report says the market for organic food in Britain has not achieved its full potential because supply cannot meet demand.

David Bird, a senior market analyst with the firm, said: "The lengthy conversion process from regular to organic farming takes several years to complete. Because of this many producers have not been able to react quickly to satisfy the growing demand for home-grown organic food."

He said the industry needed to persuade more farmers that going organic would be worth their while.

The report says organic fruit, vegetables and dairy products have been the most successful organic items to date but demand for meat is expected to enjoy the biggest boost in future with an estimated 71% sales jump in the next five years.

Recent studies show the amount of land under conversion to organic production in Scotland is growing faster than any other area of the UK - up 110% in 2006. Many consumers are now participating in "box schemes" - where suppliers deliver organic fruit and vegetables to their homes or workplace. However, the industry was yesterday divided in Scotland over the report's findings.

Hugh Raven, director of the Soil Association in Scotland, said the lack of a publicly funded organic conversion scheme for farmers in Scotland for almost two years had contributed to the industry's supply problems.

He said "very rapid expansion" of demand in some sectors of the organic produce market, particularly meat and poultry, had also created a shortage of supply in organic animal feed.

Mr Raven said the Scottish Government is consulting on developing Scotland's first food policy, adding: "What we need that to do is address supply bottlenecks strategically and provide public funding to resolve them."

Gus Niven, general manager of Iglu restaurant and cafe bar which has specialised in organic, wild and local produce in Edinburgh's New Town for the past two years, said: "There is no doubt there are some supply problems with organic produce in Scotland. Part of the problems are seasonally related."

Steve Mitchell, of Damhead Holdings, one of Scotland's leading suppliers of organic foods, took a different view. He said: "We have had no real problems with supply. Our customer base has grown very quickly."

Tom Hayes, who lives with his partner Holly in Edinburgh, has been participating in an organic fruit and vegetable box scheme for eight months. He said: "We used to buy most of our food from supermarkets but we changed our buying habits after learning of the health, environmental and economic benefits associated with organic products."