By Muchena Zigomo

JOHANNESBURG, Nov 3 (Reuters) - South African food and clothing retailer Woolworths (WHLJ.J) said on Tuesday 3 November it had embarked on a new, environmentally friendly farming initiative through which it will grow all its local fresh produce by 2012.

South Africa Woolworth's womenswear

The company, which has no connection to the collapsed British retailer of the same name, said the new 'farming for the future' drive would raise fresh produce output and reduce the use of some artificial inputs on crops.

It would also reduce costs for farmers without significantly raising final product costs for consumers.

"Our goal here is to grow quality produce while minimising any negative effect on the environment and reducing farmer's dependence on chemical fertilisers, herbicides and pesticides," chief executive Simon Susman said in a statement.

Woolworths, South Africa's equivalent of Britain's Marks & Spencer, said early trials of the new initiative, which it has been developing for the past three years, have shown that yields and produce quality are more consistent, while land, water, insecticide, pesticide and fertilizer usage is reduced.

"Unlike conventional farming, this method will improve soil health through decreased use of fertilisers, pesticides and herbicides and reduces chemical run-off into water tables, river systems and dams," soil scientist Kobus Pienaar said.

"Your conventional farming removes some minerals and nutrients from soil and over a period of time farmers need more artificial fertilisers."

He said the new system had borrowed from both conventional and organic farming, which has strengthened Woolworths' up-market food division in South Africa in recent years.

However, with South Africa in its first recession in 17 years, Woolworths has been battling a slowdown in consumer spending, with the retailer's largely middle class customer base opting for cheaper options from some of its products, including organic fresh produce.

"We will continue to pursue organic farming but the yields can be inconsistent. We realised this was not a large scale solution - rather a selective choice to offer our customers," Susman said.

Experts are divided on the nutritional or health benefits of organic food over conventionally produced food, with a recent study released by the London School of Hygiene & Tropical Medicine showing that there was no significant difference between the two.

The study said consumers paid higher prices for organic food partly due to its perceived health benefits, creating a global organic market worth about $48 billion in 2007. (Reporting by Muchena Zigomo)