Emerging organic issues - The Packer

Emerging organic issues

06/09/2009 01:01:24 AM
Tom Karst

I read today about a Denver company delivering local organic food door to door in Denver. The firm was primarily involved with organic produce but lately has focused on "local" organic produce. Such are the ever changing complexities in trying to understand how the organic and local food movements intersect. The USDA’s Economic Research Service has issued a report called “Emerging issues in the organic industry.” While not a particularly fetching title, the report is worth a second look by organic marketers and others seeking to understand the growth of organic agriculture.

Some highlights from the report:

Since the late 1990s, U.S. organic production has more than doubled, but the consumer market has grown even faster. Organic food sales have more than quintupled, increasing from $3.6 billion in 1997 to $18.9 billion in 2007. More than two-thirds of U.S. consumers buy organic products at least occasionally, and 28 percent buy organic products weekly, accoding to the Organic Trade Association.

Price sensitive?

More recently, U.S. organic producers and manufacturers have had to contend with the impact of a weaker U.S. economy on organic food sales. Surveys suggest that many organic consumers may not be particularly sensitive to the price premium paid for organic products. While frequent buyers of organic products may not change their organic purchasing habits even with the current economic slowdown, infrequent buyers may limit their purchases of organic products, and the rate of gain for new organic consumers may decline.

Organic imports have increased as U.S. demand for organic products has exceeded domestic supply. USDA-accredited groups certifi ed 27,000 producers and handlers worldwide to the U.S. organic standard in 2007, with approximately 16,000 in the United States and 11,000 in over 100 foreign countries.

ERS analyzed organic prices for 18 fruits and 19 vegetables using 2005 data on produce purchases, and found that the organic premium as a share of the corresponding conventional price was less than 30 percent for over two-thirds of the items. The premium for only one item—blueberries—exceeded 100 percent.

Organic producers also face competition from new labels like the “locally grown” label. USDA organic regulations define organic production as an ecological production system that fosters cycling of resources, promotes ecological balance, and conserves biodiversity, but the regulations do not address where organic farmers market their products.
According to an ERS survey of organic handlers, 24 percent of organic sales in 2004 were made locally (within an hour’s drive of the handlers’ facilities) and another 30 percent were made regionally. Partly in response to organic supply shortages, Congress in 2008 boosted funding for organic research and for a certifi cation cost-share program in the Food, Conservation, and Energy Act. Congress also made conservation practices related to organic production and transition eligible for payments of up to a $20,000 annual limit, with an $80,000 cap over a 6-year period, under the Environmental Quality Incentives Program (EQIP).

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