The organic divide holds

The USDA's Economic Research Service has just released a new set of figures that compare organic and conventional fruit and vegetable prices. In addition, the ERS published a 22-page document titled "Price premiums hold as U.S. organic produce market grows."

As the title suggests,this report is encouraging news to organic produce marketers. Here are some excerpts from the report:

NBJ reports $4.3 billion in U.S. sales of organic produce in 2003, or 42 percent of total U.S. sales of organic foods. Of this amount, fresh produce accounted for the largest share (93 percent). NBJ estimates that sales of organic fruits and vegetables in 2010 could reach $8.5 billion, an increase of more than 300 percent over sales in 2000. Although organic food sales make up a small portion (1.8 percent) of total food retail sales in the United States, some organic fruit and vegetable categories have higher market penetration rates than others. For example, in 2002, organic fresh fruit and vegetable sales accounted for 4.5 percent of total fresh fruit and vegetable sales.

The top fresh organic fruits and vegetables purchased in the United States are tomatoes, leafy vegetables, carrots, apples, potatoes, peaches, bananas, and squash (The Packer, 2002). Other high-selling produce items include strawberries, beans, mushrooms, cantaloupe, celery, broccoli, and oranges. Consumers tend to buy more organic vegetables than fruit. Organic produce has long been the top-selling organic food category, and it is becoming more accessible to consumers as supermarkets and other conventional retail channels continue to add the products to their shelves. In 2003, 47 percent of organic foods were sold through conventional channels, 44 percent were sold through natural food stores, and 9 percent were sold through direct and other marketing channels (e.g., farmers’ markets, restaurants, exports) (OTA, 2004).

The organic industry is also contributing to the fast-growing trend of packaged produce items in supermarkets Dimitri et al., 2003). Natural Foods Merchandiser reports that sales of packaged fresh produce had the highest growth rate among sales of all organic products during 2002-2003, expanding 26 percent to $364 million. Conventional supermarkets accounted for three-fourths of this total. The number of new organic produce items introduced in retail markets has doubled over the last decade, from 14 in 1993 to 30 in 2003 (USD A, ERS, 2005). Branding of fresh produce is becoming more common, much of it due to the introduction of new packaged and fresh-cut products. This trend is apparent in the organic sector, where more growers and distributors are identifying their products with their farm name and logo. Among the most prominent brands are Cal Organic, PureVeg, Earthbound Farms, and Pavich—all of which are California based, and some of which have joined forces (either through mergers or joint ventures) with conventional produce firms (NBJ, 2003).

TK: More coming