Organic Foods are Big Business

Consumer Assurance

Pricing: the Achilles Heel of Organic Foods

Over the past two decades, the organic food industry has gone from a niche sector to market dominance. What was once available in limited options and at sky-high prices can now be found in mainstream grocery stores around the world. The sector is growing, and is expected to continue its growth trend well into the coming years. With this explosive growth comes significant challenges, particularly in consumer confidence that organic foods are adhering to the high standards that kicked off the organic foods movement.Organic farming practices – those that shun the use of artificial fertilizers, growth hormones, and pesticides – began in the early 1960s. It was an idealistic movement, spurred by concern for healthy lifestyles and environmental protection. For the next 30 years, organic farmers operated on a relatively small scale, providing products to local grocery stores and supplying boutique food products manufacturers. In the 1990s, consumer interest in organic foods swelled. Today, organic foods are big business; in 2017, the organic food industry brought in almost $50 billion in sales. What began as an environmental movement is now as big as conventional agribusiness practices.Commercial-scale organic farms dot the landscape, and as they adopt agribusiness practices, many consumers have lost confidence in the safety and quality of these organic products . While there are minimum standards, particularly those established when the U.S. Congress enacted the Organic Foods Production Act of 1990, many large organic food producers adhere to the very minimums required by law. This is a dramatic departure from the organic food movement’s origins. Today, numerous industry organizations are promoting higher standards for organic food production in the hopes of regaining lost consumer confidence.An organization called the Cornucopia Institute is spearheading these efforts, ranking domestic organic certifying groups and producers based on their adherence to established standards. Some of the certifiers are interpreting regulations that favor larger corporate farming operations, leading to questions about the business relationships between certifiers and the businesses they are supposed to be helping to regulate. Unethical behavior is rampant among the largest growers and producers, further eroding consumer confidence. Cornucopia’s work aims to provide transparency to consumers, letting them know their organic food products are grown and produced to exacting standards that go beyond the minimums imposed by law.In the early days of organic foods availability on grocery shelves, consumers were often shocked by the high prices. As the industry grew and conventional growers began to purchase smaller farming operations, those prices stabilized somewhat but still command a premium over conventionally-produced foods. Larger scale production should mean slashing costs to consumers, but this simply isn’t happening. Growers often believe that consumers are already comfortable with the premium costs associated with organics and that there is no real incentive to lower prices. Although sales are in the billions, pricing will continue to impose challenges on the organic foods industry – potentially keeping many consumers from adopting these environmentally-friendly foods into their buying habits. Industry analysts suggest an overhaul of the industry, raising standards beyond minimums and taking a hard look at pricing structures to help grow the business even more in the coming years.Source: