Complementing organic

by Jeff Gelski
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It’s hard to match the growth of U.S. organic food sales, which jumped more than 16% in 2005 to $13.8 billion, according to the Organic Trade Association’s 2006 Manufacturer Survey. Fair Trade Certified coffee appears up to the task as it more than doubled in U.S. sales over two years to $750 million in 2006, according to TransFair USA, Oakland, Calif. Fair Trade Certified tea, cocoa and vanilla are growing in sales, too.

Fortunately, the two attributes — organic and Fair Trade — often complement each other in food products and do not compete for consumer dollars.

"In some ways, organics is a stepping stone to Fair Trade," said Nicole Chettero, public relations consultant for TransFair USA. "Consumers are no longer just asking if it’s good for me and the environment, but also is it good for others. It’s kind of the next step of consciousness."

One survey showed consumers will pay a premium for both organic and Fair Trade products. Natural Foods Merchandiser last year asked respondents how much they would pay if changes were made to an item they buy that normally costs $1. Respondents said they would be willing to pay $1.37 for an organic item, $1.33 for a Fair Trade item, $1.32 for an item produced locally or within 100 miles, $1.27 for a natural item, and $1.23 for an item made with recycled packaging.

About 600 companies in about 40,000 retail locations in the United States offer Fair Trade Certified coffee, teas, herbs, cocoa, fresh fruit, rice, sugar and vanilla, according to TransFair USA. One of 20 Fair Trade labeling initiatives worldwide, TransFair USA ranks as the lone independent third-party certifier for Fair Trade products in the United States.

Fair Trade certification has some similarities to organic certification, Ms. Chettero said. Besides making certain farmers receive a fair price for their products, Fair Trade Certification requires growers to use sustainable farm management practices, avoid pesticides, avoid bioengineered products and preserve wildlife habitat.

TransFair USA offers an ingredients program, which Ben & Jerry’s uses for its Fair Trade Certified ice cream flavors. Products may carry the "Fair Trade Certified" label as long as three rules are followed:

• All ingredients in the product that may be Fair Trade Certified must be, with an exception granted for sugar;

• The ingredient list should say which ingredients are Fair Trade Certified; and

• If the product is less than 20% Fair Trade Certified by dry weight, at least one Fair Trade Certified ingredient must be significant, meaning the product can’t live without it, as in the case of coffee in coffee ice cream.


McDonald’s involved in Fair Trade

The estimated U.S. retail value of Fair Trade Certified coffee rose to $750 million in 2006 from less than $50 million in 2000, Ms. Chettero said.

"Coffee is definitely our flagship product," she said.

TransFair USA reported total Fair Trade Certified imports of green coffee into the United States came to 44,585,323 lbs in 2005. Organic coffee made up 58%, or 25,967,653 lbs, of that total.

McDonald’s remains a buyer. McDonald’s USA, L.L.C. in January extended its agreement with Green Mountain Coffee Roasters, Inc. to source, roast and package Newman’s Own Organics Blend exclusively for more than 600 McDonald’s restaurants in Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Maine and Albany, N.Y. Green Mountain Coffee Roasters, Waterbury, Vt., sells more than 100 selections, including Fair Trade Certified and organic coffees under the Green Mountain Coffee Roasters and Newman’s Own Organics brands.

Fair Trade Certified coffee costs more, and the price jumps again if it’s organic. The Fair Trade Labeling Organization’s international board in March voted to increase the Fair Trade Social Premium, which is paid by buyers in addition to the Fair Trade Minimum price, to 10c per lb from 5c per lb starting June 1. The increase will bring the total price for non-organic Fair Trade coffee to $1.31 per lb.

The Organic Differential, another additional payment set by the Fair Trade Labeling Organization’s international board, will rise to 20c per lb from 15c per lb on June 1, bringing the total price for organic Fair Trade Certified coffee to $1.51 per lb.


Vanilla gets certified

TransFair USA has certified coffee since the non-profit organization was founded in 1998. Other products followed. TransFair USA introduced Fair Trade Certified vanilla to the U.S. market in June of 2006 and sourced the vanilla from producer groups in India, Sri Lanka, Uganda and the Comoros Islands. TransFair USA certified 38,951 lbs of vanilla in the second quarter of 2006.

Like coffee, Fair Trade Certified vanilla costs more. Vanilla (green bean) conventional and organic from India, Sri Lanka and Uganda carries a Fair Trade minimum f.o.b. price per kilogram of $5.30 and a Fair Trade Premium of 59c per kilogram.

Suppliers owning licenses to offer Fair Trade Certified vanilla include Dammann, Oakland, N.J.; Danisco, Elmsford, N.Y.; David Michael & Co., Philadelphia; Forestrade, Brattleboro, Vt.; Frontier Cooperative, Norway, Iowa; Mastertaste/Manheimer Fragrances, Teterboro, N.J.; Nielsen-Massey Vanillas, Inc., Waukegan, Ill.; and Virginia Dare, Brooklyn, N.Y.

"On the consumer side, Fair Trade vanilla has great potential," said Rick Brownell, vice-president of vanilla products for Virginia Dare. "Vanilla is used in a wide variety of foods so it can appeal to many, many consumers, not just those who purchase a specific product or brand.

"And, because the usage level of vanilla is relatively low, the impact of the Fair Trade price premium has a negligible impact on the end consumer, unlike other Fair Trade products like coffee, for example."

As more vanilla growers become Fair Trade Certified, vanilla ingredient suppliers should find it less difficult to find organic, Fair Trade Certified product. No growers in Madagascar, the top vanilla producing country in the world, have become Fair Trade Certified.

"Currently, our product does not have organic certification because supplies of Fair Trade vanilla beans have been limited," Mr. Brownell said of Virginia Dare’s Fair Trade Certified vanilla. "However, we have advised our suppliers that we want dual certification on future shipments. This is relatively easy for them to do because many of the requirements for certification are common to both."


Sorting out new terms

Besides organic and Fair Trade Certified, other attributes designed to designate product and pique consumer interest have appeared in the food and beverage industries:

Food miles

The term "food miles" takes into consideration fuel requirements needed in the production and distribution of food products, according to "It’s not Easy Being Green: The Future of Mass Market Organics," a report from Nerac, Inc., Tolland, Conn. The term has led to a debate between the merits of organic product versus the merits of locally grown product. For example, supply problems may make it necessary to source organic ingredients from further away, perhaps even overseas, than to buy the ingredients closer to home.

"Though a food product may be certified U.S.D.A. organic, the ‘food miles’ required to transport the product to a local grocer may cancel out the use of earth-friendly fertilizers," according to the Nerac report.

The trend of Americans buying local product has played a role in the National Cooperative Growers Association growing to 108 food co-op members with more than $800 million in annual sales.

"It’s boosting the idea that the more local that food is, the better that food is," said Kelly Smith, director of marketing and communications for the association, about the term "food miles."

Grass-fed beef

Proponents point to studies showing grass-fed beef, or beef produced from cattle finished on forage-only diets, contains elevated levels of beta carotene, alpha tocopherols, omega-3 fatty acids and conjugated linoleic acid.

For one example of grass-fed beef, family ranchers in California, Oregon and Washington raise black and red Angus cattle on natural grasses, legumes and range forage. The beef is branded as Panorama Natural Grass-Fed Beef and Panorama Organic Grass-Fed Beef.

Shade-grown coffee

According to the National Shade Coffee Campaign run by Seattle Audobon, "Shade-grown coffee is grown under a canopy of diverse species of shade trees, often on small farms using traditional techniques. Among the many benefits of using shade-grown coffee production methods, in contrast to sun-grown coffee, are that it provides food and shelter for songbirds, as well as habitat for numerous other species of animals and plants."


Johanns expects more organic growth

The U.S. Department of Agriculture’s 2007 farm bill proposals include recommendations for funding the organic sector.

"There are consumers out there that have really embraced organic production," Secretary of Agriculture Mike Johanns told Food Business News during a visit to Kansas City March 20. "You see it in your grocery stores. So we find that very encouraging. I believe it’s an area that is going to continue to grow."

The organic recommendations include:

● Help small organic farmers who have trouble paying for certification by increasing reimbursement in the Organic Certification Cost Share Program to $750 from $500;

● Increase the cost-share program to all 50 states from the current 15 states and make producers and handlers eligible;

● Reauthorize and fund data collection to identify and publish organic production and market data initiatives and surveys, which should help in the effort to produce data about the supply of organic commodities and pricing data for the commodities;

● Invest an additional $10 million in mandatory funding for organic research;

● Make a broad range of land uses, including organically farmed land, eligible for the proposed enhanced Environmental Quality Incentives Program (EQIP) cost-share assistance; and

● Allow organic agriculture to compete for Market Access Program funding.

"I think we’re doing some good things here, and our organic producers are doing some really great things," Mr. Johanns said. "These proposals really came from the industry. I think by and large they’ve been very well accepted."


Awareness of coffee claims

Percentage of total coffee drinkers age 18 and over who are aware of Shade-grown coffee, Fair Trade Certified coffee or organic coffee:

2003 2004 2005 2006

Shade-grown 10% 13% 15% 17%

Fair Trade 7% 12% 15% 20%

Organic 42% 45% 52% 54%

Source: TransFair USA


Fair Trade/organic imports in 2005

Fair Trade Certified imports into the United States in 2005:

Lbs certified Lbs also Organic as

Product Fair Trade organic % of total

Green coffee 44,585,323 25,967,653 58%

Cocoa 1,036,696 744,238 72%

Tea 517,500 452,618 87%

Sugar 271,680 124,973 46%

Rice 73,824 11,074 15%

Source: TransFair USA

This article can also be found in the digital edition of Food Business News, April 3, 2007, starting on Page 38. Click here to search that archive.

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