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Organic foods are now ‘mainstream’, says USDA

By Caroline Scott-Thomas , 14-Sep-2009
Last updated on 14-Sep-2009 at 16:52 GMT

Organic food has entered the mainstream with strong growth in all sectors over the past decade, including packaged and prepared foods and beverages, according to the US Department of Agriculture (USDA).

American producers are struggling to meet robust demand for organic foods despite dire predictions for the organic sector during the economic downturn. Some market researchers claim that consumers have increasingly turned to less expensive options that still tap into their ethical concerns, such as local, Fairtrade and free range. But, in this latest review, the USDA said that the organic market has proved resilient, with “double-digit growth for well over a decade”, and that organic consumers have become “increasingly mainstream”.

The USDA’s Agricultural Marketing Service said: “Organic products have shifted from being a lifestyle choice for a small share of consumers to being consumed at least occasionally by a majority of Americans.”

Premium pricing

And while concerns have been raised that consumers may not be prepared to pay steep premiums for organic foods, Economic Research Service (ERS) data has shown that consumers are buying organic foods at significantly higher prices than conventional. The ERS said that the 2006 price for a half-gallon container of milk ranged from 60 percent above non-organic milk for private label organic milk, to 109 percent above non-organic for branded organic milk.

The USDA said that “general themes have emerged” regarding the habits and demographics of organic consumers, although studies have come up with varied results, depending on sample size, geographic location of respondents, and the type of survey.

“Consumers prefer organically produced food because of their concerns regarding health, the environment, and animal welfare, and are willing to pay the price premiums established in the marketplace,” the department said.

Supply squeeze

Part of the reason for these premiums is that as the organic sector has grown, ingredient supply has been squeezed. A USDA report released in June this year said that nearly half of US organic handlers find ingredients in short supply and, in 2004, 13 percent failed to meet market demand for at least one of their products.

Although certified organic acreage has doubled in the US since 1997, organic food sales have quintupled over the same period, from $3.6bn to $21.1bn last year.

Fruit and vegetables still represent the biggest sub-sector of organic food sales at 37 percent, followed by dairy at 16 percent, and beverages and packaged foods at 13 percent each. Areas of fastest growth include the organic beverage sector, which grew by 40 percent in 2008, and organic breads and grains, which achieved 35 percent growth over the year.

Organic food accounted for more than three percent of US food sales last year. Additionally, according to the Organic Trade Association, organic food sales grew at a much faster rate in 2008 than general US food sales, which grew by 4.9 percent during the year – or about a third as much as organics.

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