Organics Do Well in Produce, but Struggle in Meat, Bread Aisles

Organics Do Well in Produce, but Struggle in Meat, Bread Aisles

Washington — Organic foods are seizing shelf space in the fresh-foods sections of grocers but struggling to break into the bread and meat aisles.

Organic-product sales farmers made to businesses including Dean Foods and Wal-Mart Stores totaled $5.5 billion in 2014, according to a U.S. Department of Agriculture survey of organic growers. The total is 72 percent higher than the last time a similar survey was conducted in 2008.

Sales so far have been concentrated in fresh fruits and vegetables, as well as perishable milk and eggs, due to consumer concerns over synthetic farm chemicals. For organics to go mainstream, they need growth in grains and meats, where genetically modified seeds and livestock practices are harder to change.

“That’s a critical frontier for organics,” said Catherine Badgley, a University of Michigan ecology professor. “I think little by little, we’re getting there, but there are some areas where growth is more difficult to achieve.”

Producers of organic meats and grains are struggling to boost production even as big retailers such as Target and Costco Wholesale are expanding their sales of sustainable products.

That’s because of hurdles fresh foods such as fruits and vegetables don’t face, said Jeff Moyer, executive director of the Rodale Institute, which focuses on research and promotion of organic farming, in Kutztown, Pa.

“Fresh produce is something you purchase as a whole food and consume directly,” said Moyer, a former chairman of the National Organic Standards Board that helps the USDA craft organics rules. “It was a good place for the organic movement to start, because you don’t need 10,000 acres to do it.”

Grains are less attractive to farmers because commodity-crop prices have been high in recent years, the government-backed crop insurance program reduces the risk involved in growing conventional crops, and the three-year process required to transition land from traditional to organic certification, during which farmers lose revenue, he said.

And without organic grain to feed animals, livestock production is limited, he said. Consumer interest has driven a movement toward foods seen as more sustainable and healthy.

Still, organic revenues remain less than 2 percent of all U.S. farmer income, according to the USDA. The farm value of all organic foods remains less than that of the Nebraska corn crop alone. The state is the third-biggest producer of the most valuable domestic farm product.

Retail sales of foods certified by the U.S. government as free of synthetic chemicals or genetic engineering reached $35.9 billion in 2014, an 11 percent increase over 2013 and about 5.1 percent of U.S. grocery spending, according to industry group the Organic Trade Association. The higher total compared to farm income reflects transportation and other costs passed on to consumers. The sector’s average annual growth triples that of overall food sales, according to USDA and association data.

Fruits and vegetable sales continued to be the biggest retail market segment, with $13 billion in sales, 36 percent of organic income and 12 percent of the entire retail sector.

Among farm income, crops account for 60 percent of revenues, with 28 percent from livestock, mainly meat and eggs, and 12 percent from organic livestock and poultry. Milk was the single-most valuable organic product, with $1.08 billion in sales. Farmers sold $420 million of organic eggs and $372 million of broiler chickens. Lettuce and apples were the top-two fresh-produce products.

But organic’s share of the grain and oilseed crops that dominate Midwest agriculture and provide animal-feed remains minuscule. The organic corn crop was valued at $154.9 million, compared to $52.4 billion overall for the most-valuable U.S. crop.

Author: Alan Bjerga Bloomberg News

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