Bad news for farmers, and good news for retailers and their customers: Established organic farmers are facing increased competition, according to two recent surveys.
Small- and medium-sized farms are transitioning fields to organic in hopes of earning more profit. Commercial farms are doing the same, on a much larger scale, to satisfy growing demand from big retailers. Some produce buyers told WH they see wholesale and retail prices for organics declining as a result.
"As more large growers get into the business, it's making organic products much more affordable," said John Odahara, produce director for Santa Barbara, Calif.-based Lazy Acres Market. "In California, we're lucky because we have so many growers, but basically it's an issue of supply and demand."
Other retailers agreed.
"At one point recently, organic broccoli was actually cheaper here than conventional broccoli," observed Duane Wentz, merchandise manager for produce at Yoke's Foods, Spokane, Wash. Increased price parity is likely due to increased competition among growers in the region, he added.
In a recent survey of 1,000 organic farmers by the Organic Farming Research Foundation, 34% of respondents said they had trouble selling at least a quarter of their harvest at a premium price. In a separate poll conducted by Iowa State University and the Organic Trade Association, 37% said finding markets that will pay a premium for organic foods was their biggest challenge.
One retailer expressed surprise that prices were declining. "Prices for organic produce are still very high here," noted Mel Niewind, produce buyer for The Market Place, Annandale, Minn. Niewind said those higher prices, as well as occasionally inconsistent quality from growers, are factors he believes are discouraging trial in the area.
It seems price and competitive pressures are spread unevenly among organic growers, depending largely on what they grow and where they grow it. Organic tomato producers in Kentucky, for example, complained in the OFRF study that their local farmers' markets were "flooded" with similar products. Meanwhile, several growers of organic berries on the West Coast claimed overproduction of conventional berries had deflated the entire regional market.
While overall, conventional growers are bringing the efficiencies of their packing and distribution operations to the organics business, changes are gradual. Some 41% of respondents to the OFRF poll said they had been able to sell their entire crop at an organic premium.