WASHINGTON — In general, demand for organic commodities exceeds supply and is growing rapidly, which contributes to much higher prices paid for organic ingredients and finished products than items that are conventionally grown and processed. As a result, many livestock and milk producers as well as food processors depend on imports for at least part of their organic raw materials, of which authenticity often is difficult and which has fallen prey to fraud in some cases.
The latest industry survey from the Organic Trade Association (O.T.A.) indicated organic food sales were a record $45.2 billion in 2017, up 6% from 2016 and well above overall food sales growth of 1.1%. But the pace of growth slowed from 9% in 2016 due to slow growth in the organic dairy and egg category, the O.T.A. said. Globally, organic sales exceed $90 billion.
“Organic continued to increase its penetration into the total food market, and now accounts for 5.5% of the food sold in retail channels in the U.S.,” the O.T.A. said.
Organic food-grade prices for wheat, corn and soybeans typically are two to three (or more) times higher than conventionally-grown crops. In September, Silver Spring, Md.-based Mercaris, Inc., the organic and non-G.M.O. trading platform and market information company, estimated the national average price during the July-August period for food-grade organic corn at $11.36 per bu, soybeans at $21.96 per bu, hard red spring wheat at $15.58 per bu, hard red winter at $12.40 per bu, soft red winter at $9.66 per bu and durum at $16.78 per bu. In contrast, prices for conventionally-grown grains last week were around $3.15 per bu (Omaha) for corn, $7.87 per bu for soybeans (central Illinois), $5.60 per bu for hard red spring wheat (Minneapolis), $5.29 per bu for hard red winter (Kansas City), $4.87 for soft red winter (St. Louis) and $7.75 per bu for durum (Minneapolis), according to the U.S. Department of Agriculture and Sosland Publishing Co.
Prices often are equally high for other organic products. For example, the U.S.D.A. quoted organic green beans at $2.99 per lb and conventional green beans at $1.06 per lb as of Sept. 21, organic fuji apples at $2.74 per lb versus 99c per lb conventional, and organic white seedless grapes at $2.71 per lb versus $1.37 per lb for conventional. For milk, the U.S.D.A. said the average advertised price for a half gallon of organic was $3.61 as of Sept. 21, a premium of $1.75, or 94%, over a half gallon of conventional milk.
The bulk of organic grain goes as livestock feed, especially for dairy cattle required to produce organic milk. Because demand for organic grain (both feed and food) exceeds supply, food manufacturers typically contract well ahead of delivery to ensure supply, with the shortfall coming from imports. For example, Mercaris, in its September Market Update, noted “Ships from Romania routinely deliver more organic corn to the U.S. than actually originate from Romania.”
Because of the high prices paid for organic products, the market has enticed some fraudulent activity, which is especially troublesome for imports. U.S. organic imports were $2.1 billion in 2017, up about 25% from 2016, the O.T.A. said.
“Investigations (in the past year) have revealed imported products fraudulently labeled as organic and gaps in the complex organic supply chain,” the O.T.A. noted.
The O.T.A. earlier this year kicked off a pilot project to prevent and detect fraud in the global organic system that was to be completed in September (results unavailable).
“Organic now operates in a global market,” said Laura Batcha, executive director and chief executive officer of the O.T.A. “Fraud is one of the biggest threats to that market, and it cannot be tolerated in the organic system.”
Also in September, the O.T.A. said it was moving ahead with a voluntary, industry-invested organic research, promotion and education check-off program. It has formed a steering committee with governance and immediate programming subcommittees. A comment period seeking input on how to maximize participation in the voluntary program and how to prioritize investments will be held this fall. The U.S.D.A. in May ended plans for a proposed nationwide organic check-off program.