A late April report from the Organic Trade Association pegs organic’s share of the fresh fruit and vegetable market at nearly 12%.

But most industry sources doubt that figure.

While the OTA’s 2011 Organic Industry Survey  shows organic produce accounts for nearly 12% of all U.S. fruit and vegetable sales, retail data from the West Dundee, Ill.-based Perishable Group put the organic fresh produce share of the total retail produce market at only 5.4% in 2010.

And FreshLook Marketing data, which will appear in The Packer’s 2011 Guide, puts the number at 3.8% of total retail sales, excluding Wal-Mart.

Estimates on the size of the organic market from a group with a vested interested in the industry must be taken with a grain of salt, said Desmond O'Rourke, president of Belrose Inc., Pullman, Wash.

The 2008 USDA survey of land devoted to organic production tallied just 1% of the U.S. total farm and grassland, he said.

The value of organic apples may be somewhere around 7% to 8% of the industry total, O’Rourke said, and apples are on the upper end of fruits with substantial organic production.

One retailer said organic fresh produce sales can vary but rarely approach the level cited by the OTA survey.

“In most of our stores, organic sales in fresh produce are less than 3% of total fresh produce sales,” said Dan Sutton, director of produce procurement for Albertsons LLC, Boise, Idaho. “In areas with a higher concentration of consumers looking for organic products, the sales mix is much higher, but still nowhere near 11% on an annual basis.”

The OTA survey reports 2010 sales of organic fresh produce were up 12.2% compared with 2009, said spokeswoman Barbara Haumann. Organic fresh produce was $9.79 billion of consumer sales in 2010, according to the survey.

Reported U.S. gains in organic sales contrasted with reverses in another developed market. The United Kingdom’s Soil Association  reported a 5.9% decline in sales of organic products in 2010. The association attributed the decline to shaky consumer confidence in the economy.

The Perishables Group’s 2010 scan data showed total produce sales of $27.3 billion in conventional supermarkets in 2010, said Steve Lutz, executive vice president. A 5.4% share for organic translates into $1.47 billion in organic produce sales at conventional (excluding Wal-Mart and club stores) retail outlets.

FreshLook Marketing’s data shows organic retail sales of $1.34 billion, excluding Wal-Mart.

Pressed about the discrepancy between the scan data and the OTA estimate, Haumann said the association has confidence in its numbers. The estimates are produced in association with the Nutrition Business Journal , she said.

A spokesman for the Journal was unavailable for comment April 27.

“We do stand by our figures, based on the universe that NBJ used, and it is comparable with what we have done in the past,” Haumann said.

The OTA survey found that the sales growth rate for organic fruits and vegetables (fresh and processed) as 11.8% in 2010, up from 11.4% in 2009 and 6.3% in 2008.

Haumann said the variance between the Perishables Group number and association can be attributed to several factors. Unlike the Perishables Group retail sales data, she said the OTA estimate includes processed fruits and vegetables, sales at farmers markets, club stores and mass merchandisers, community supported agriculture (CSAs), national and regional health food stores, exports and other avenues.

“When you look at the CSAs, most of that would be fruits and vegetables,” she said. “Because we don’t break down where fruits and vegetables are distributed, that would be part of the difference.”

Gary Lucier, economist with the U.S. Department of Agriculture Economic Research, said that recent estimates of the fresh produce industry by Roberta Cook, economist at the University of California-Davis, puts consumer value of fresh fruits and vegetables at close to $113 billion.

Lucier said the OTA’s $9.79 billion estimate of the consumer value of organic fresh produce doesn’t seem too out of line compared to Cook’s estimate, representing about 8% of the total fresh produce consumer value.

“It is not inconceivable to me that you would have 8% to 10% of the total sales value as organic,” he said.

The OTA survey did not identify the marketing channels for organic fresh produce in 2010. However, the OTA survey identified market channels for all organic food sales:

  • 41% in mass market grocery stores
  • 20% in national natural food grocery chains
  • 18% in regional natural health food stores
  • 7.5% in club and warehouse stores
  • 5.5% in mass merchandisers
  • 3.4% in farmers markets
  • 1.8% in Internet sales
  • 1% in boutique and specialty
  • 1% in direct exports
  • 0.4% in mail order/other direct

Growth ahead?

The survey found that 78% of organic farms plan to maintain or increase organic production levels in the next five years.

Roughly 40% of organic operations added jobs in 2010, and the survey found that 96% of operations plan to maintain or increase employment opportunities in 2011.

While impressive, the 2010 growth range of organic fresh produce of better than 10% was still less than half what it was in the two or three years before the recession, Lutz said.

In 2005, for example, the Organic Trade Association reported the overall U.S. organic food industry grew at a 17% clip.

Consumers changed the way they spent their discretionary food dollars during the recession, Lutz said.

“We saw some people moving from bulk to value pack, and to see people moving from organic to conventional is another of the value decisions that some consumers either make by choice or by need,” he said.

Rising fuel prices may put consumer food budgets under additional pressure this summer, he said.

While the fuel for cars typically accounts for 16% of the household budget, Lutz said the surge in gasoline costs to over $4 per gallon could increase that the share of fuel costs to 21% or 22%.

“Fuel is eating a much bigger hole in the wallet of consumers,” he said.

Haumann said organic food has an enduring appeal.

“People are very interested in organic foods, even with rising gas prices and all,” she said.