Organic industry growth breaks record
Organic product sales grew 11 percent in the United States, straining U.S suppliers of organic foods, but a new proposed certified transitional label may persuade more farmers to start producing organic.
Organic product sales grew 11 percent in the United States, straining U.S suppliers of organic foods, but a new proposed certified transitional label may persuade more farmers to start producing organic.
According to the Organic Trade Association鈥檚 (OTA)聽2016 Organic Industry Survey, 2015 was a record-breaking year for the U.S. organic industry. As its largest annual dollar gain ever, total organic product sales hit US$43.3 billion in 2015, up 11 percent from 2014 sales.
The number of consumers choosing to purchase organic products over their conventional counterparts is rapidly expanding for a variety of reasons. Some eaters are concerned about the environmental impacts associated with conventional methods of agricultural production, while others worry there could be health implications related to pesticide use and genetically modified organisms. And, some consumers聽choose organic because they believe it to be the healthiest option. Whatever the reason, consumer demand for organic products has been growing by double digits each year since the 1990s, and a recent Consumers Report聽survey聽showed that 84 percent of American consumers would purchase an organic product over the same conventional product.
The unfettered growth of the organic market has been constrained by supply chain challenges, as U.S. agricultural production cannot meet the ever-growing demand for organic products.聽According to a聽State of the Industry Report聽by the OTA, organic sales account for almost five percent of the total food market, yet less than one percent of U.S. cropland is used for organic agriculture. More growers must transition to organic production in order to meet the growing consumer demand, but face significant financial challenges in doing so.
The U.S. Department of Agriculture enacted the聽National Organic Program Standards聽in 2002, which define various compliance and regulatory standards a grower must meet to label any food, fiber, or feed products as organic; including a mandatory three-year transition period. According to a 2015聽Report on Economic Barriers to Organic Transition聽prepared by the California Certified Organic Farmers (CCOF), the three-year transition period has a significant impact on growers. The 鈥渘eed for capital investment, high operating costs, risk management, and regulatory compliance costs at the same time that the product is not yet eligible for the organic price premium鈥 presents a financial challenge. For many growers, the economic risks associated with running a three-year deficit without the ability to profit off the organic label is simply too high. 聽聽
To combat this, the OTA has asked the USDA to establish a certified transitional聽label that growers can use on products while navigating through the three-year transition period. A transitional crop is one grown on land that is in the process of converting from conventional to organic certification. The proposed label was recently submitted to the Agricultural Marketing Service. It would require that growers be one year into the three-year transition and that certifiers be accredited through the AMS program.
Some retailers, including聽Kashi, a food company owned by Kellog, have already been working towards a certified transitional聽standard in partnership with Quality Assurance International, a USDA-accredited certifying agency. In聽May, Kashi聽announced聽their commitment to purchase only certified transitional wheat in the production of their new cereal,聽Dark Cocoa Karma.
The use of the certified transitional label,聽according to the OTA, has the 鈥減otential to support producers through the significant task of transitioning their farms to organic by providing exposure to the certification process and organic regulation,聽access to USDA support programs for producers, and, potentially premiums for their certified transitional crops.鈥 They hope the label will help create a market where transitional products can be sold at a premium price, providing growers with increased financial security and reducing a significant economic burden many face when converting to organic production.
This article first appeared at Food Tank.