SANTA CRUZ, Calif. -- Growing competition could soon lead to falling prices for organic produce, according to a survey of 1,000 growers released here by the Organic Farming Research Foundation.
Twenty-seven percent of respondents said they expect to see price declines, while 52% said they expect prices to remain stable. The growers, representing more than 16% of the U.S.' certified organic farmers, indicated that while organic farming remains labor-intensive, its profitability and growth into a $9 billion industry have begun attracting more competitors, including commercial growers.
Certain nationally distributed commodities, such as bagged organic salad mixes and organic carrots, are primarily responsible for the predicted declines, according to Bob Scowcroft, executive director, OFRF.
"There's now a body of knowledge that allows larger farmers to grow products such as organic carrots on 100-acre blocks," he said. "These larger growers have the infrastructure -- packing houses, mechanical equipment, bagging systems and trucking systems -- that is leading to the price pressures some smaller growers are feeling."
The growth of organics in mainstream channels, such as big-box retailers, club stores and traditional supermarkets, is driving this change, he added.
Many small organic farmers said local sourcing and support for local small business is part of the appeal of organic products. Yet Scowcroft said he's seen very little backlash against larger companies at consumer-oriented conferences.
"Organics were perceived as elite products, and now you're seeing them at Wal-Mart Supercenters. Many consumers see that as a great thing."
According to the report, volume by total acres produced indicates that 40% of organic vegetable, herb, flower, mushroom and honey products were sold either directly to traditional supermarkets or supermarket buyers in 2001, while about 20% were sold to natural food stores or natural food chain buyers. Distributors accounted for another 13% of production; processors, mills and packers accounted for 7%.
The remaining 20% were split between a range of outlets, including restaurants, farmers' markets and subscription services.