A closer look at the organic premium

Roland Fumasi provided an insightful perspective on the economic outlook for organic produce at The Packer's Global Organic Produce Expo.

Find The Packer’s coverage of Fumasi, North American regional head for RaboResearch Food & Agribusiness, at this link.

Here is one excerpt from the story:

Overall, Fumasi said the premium for organic produce over conventional produce is stable for many commodities.

“Our rule of thumb is always we’d like to see 40% (premium),” he said, while noting that some growers say they can still do well with 20% to 25% premiums.

Yet apples now only have about a 10% premium, and Fumasi said bankers would like that to be higher to account for the increased cost of production.

The premium for organic iceberg lettuce also has suffered a major decline over the past couple of years, he said.

TK: Following in the context of Fumasi’s remarks, I have assembled a few charts from the U.S. Department of Agriculture’s website that speak to the recent organic premium on apples and iceberg lettuce. In addition, I have put together average price charts for all commodities at the shipping point and the terminal market, conventional and organic.

Indeed, the premium for organic has slipped for some commodities but generally run at above 40% at the shipping point level and 30% at the terminal market, according to the USDA numbers.