June 15, 2009

Demand for Organic Food Continues to Outgrow Supply

Brent Kim

Brent Kim

Project Officer, Food Production & Public Health

Center for a Livable Future

Now is the time to grow organic.  According to a new report released by the USDA, the demand for organically produced food continues to outpace supply.   Organic food sales have increased more than five-fold since the late 1990s, while organic production has slightly more than doubled in that time.

Organic food accounted for three percent of total U.S. food sales in 2008.  Organic produce and dairy products were popular items, accounting for over half of total organic sales.  Organic grain also remains in particularly high demand, representing a major bottleneck for use as feed in the organic livestock sector.

The clientele fueling this demand is far more diverse – and at times surprising – than any pigeonholed assumptions about the typical organic consumer.  According to recent surveys, African Americans spent the most on organic produce in 2004.  The same year, lowest household income (less than $25,000 per year) was correlated with the highest per capita spending on organic produce.  In general, there is little or no substantial differentiation across race, age, education, geography or income among the growing population of Americans who purchase organic products.

To meet the demand of the expanding consumer base, U.S. organic acreage has doubled between 1997 and 2005.  Still, only 0.5 percent of U.S. pastureland and 0.5 percent of U.S. cropland are certified organic.  The slow rate of organic adoption has been credited to multiple factors, including increased operating costs, the need for skilled labor, the mandatory three year “transition period” before certification, criticism from neighbors and a lack of government infrastructure support.  While provisions in the 2008 Farm Bill (recommended reading:  Foodfight:  A Citizen’s Guide to the Farm Bill) are hoped to spur domestic production via financial incentives and technical assistance for conservation practices, many suppliers have turned to imports – in 2007, USDA organic certification covered producers and handlers in over 100 countries.

The effects of the growing demand for ‘locally produced’ food on the organic market remain uncertain, though recent surveys suggests consumers, given the choice, would prefer to buy local over organic.  Ideally, the expansion of local and organic foods available through community supported agriculture (CSA) programs and farmers’ markets will create a market synergy wherein both local distribution and organic production can help the other to succeed.

The market continues to shine brightly on the economic prospects of organic production, even despite the recent economic slowdown.  Although USDA organic certification might benefit from tighter requirements for conservation practices and ethical animal stewardship, since its introduction in 2002 organic certification has proven to be a market success. Given the potential public health and environmental benefits of sound organic practices, this is good news for organic producers and global health alike.