Although a recent Wall Street Journal report properly touts the impressive upward trend of organic-food sales, data cited in the story show that the actual rate of growth in organic sales is falling slightly, just as mega-retailers poise themselves to enter the organics market.
The industry rule of thumb is that organic food sales are rising 20% a year. However, the WSJ's data, drawn from the respected Nutrition Business Journal, projects that organic-food sales will grow to $15.5 billion nationally this year -- a 12% rise over 2005.
Moreover, the NBJ data shows that organic-food sales grew 16% from 2004 to 2005. This means two straight years of growth below the touted 20% rate -- and slowing. Sales growth is forecast to slip from $1.9 billion to $1.7 billion from 2005 to 2006.
This may indicate that organic suppliers just can't keep with rising demand, or it may mean that consumers aren't convinced they want to pay higher prices for organic food items. Falling growth rates may also foreshadow reduced prices for organics -- netting, in turn, less income for the farmers and workers who bring these products to our shelves.
Most retailers say they can't keep up with rising demand for organic and natural food products. Producers who want to shift to organics say the transition is difficult and expensive. Sales through large supermarket chains may further reduce the farmer's share of the food dollar, discouraging new producers from making the shift.
One key force that drives chains like Wal-Mart is substandard pay for labor. A Senate committee calculated that the federal government subsidizes Wal Mart $2,000 for each worker it hires, due to higher public costs for unemployment insurance and health care.
Organic Monitor reports that Europe is the place to look to understand future U.S. trends, since the market is more mature there. As of 2002, Europe organic sales were growing 7.8% -- and were projected to hover from 5 to 7%.
Comments
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greenfish Posted 7:23 am
05 May 2006
Where does this information come from? It's the first I've heard about this.
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Tom Philpott Posted 8:12 am
05 May 2006
Yet 16 percent is still a hell of a lot higher than overall food sales, which rise at about the anemic rate of population growth. So 16 percent likely looks pretty good to Wal-Mart, at al.
Moreover, I'm guessing the box-box push into organics will lead to a price squeeze on suppliers--everyone from the processing outfits to farmers. They'll than pass a chunk of those savings onto consumers, possibly juicing the growth rate.
Thus, the commodification of organic food proceeds apace. Look for organic farms to get bigger, and farm-gate income from organics to shrink (at least as a share of overall organic revenue).
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bookerly Posted 10:42 am
05 May 2006
Even if organic food sales have slown "a bit", we shouldn't worry. There may be many reasons. And next month or quarter, they may rebound like a flight of birds starting a long migration.
We get too hung up on immediate numbers. Statistics are not exact, they are estimates at best.
I don't have any statistics (there are probably some) but I do see organic food sales growing in China, as well. I wonder if this is true in other developing nations? How about in South America and Africa?
The trend long term is hard to measure, but we should keep plugging away.
Thanks for posting this information!
patrick
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Ken Meter Posted 2:00 pm
05 May 2006
Democratic staff of the Committee on Education and the Workforce (2004). "Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart." U.S. House of Representatives, February 16, pages 4,5,7.
Note that these federal calculations do not include local subsidies that are often given to big box retailers to locate in a given community, which adds to the public subsidy.
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nattydad Posted 12:51 am
07 May 2006
(See especially the Aurora pics).
So many of these products are not up to federal organic standards (which are under constant attack by these companies anyway).
Look for real organic producers that embrace the whole specturm of what attracted many of us to organics in the first place - small family farms with a commitment to stewardship of the earth, not just a slice of the organic profits. Look to Organic Valley Dairy for a good example.
Trolls, phishers, spammers, etc. you all suck! That's why I ignore you. Hahahahaha!
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