Growth in organic market brings challenges, analysts say

Organic production represents only 4 percent of California Certified Organic Farmers total U.S. agriculture production, but consumer demand is spurring strong growth, signaling a watershed point for this agricultural sector, analysts say.

"We've matured tremendously, but with growth comes challenges," said Christine Bushway, CEO of the Organic Trade Association. Bushway, who is based in Washington, D.C., led a California Certified Organic Farmers convention panel on the state of the organic industry. Other panelists were Claudia Reid, CCOF director of policy, and Judith Redmond, co-owner of Full Belly Farms in the Capay Valley. The convention in Ventura drew more than 100 participants.

Bushway said signs of maturity in organic production include organization of the first organic agriculture political action committee and plans to seek a federal marketing order for research and promotion of organic products.

Bushway pointed out favorable trends—growing consumer demand—as well as challenges such as consistency and availability of product. More consumers are choosing to buy organic products, she said. Figures show that three quarters of U.S. families purchased at least one organic product in the past year.

"That first sale is the toughest and we see this as significant," Bushway said.

On the other hand, three in 10 families never purchase organic products.

Even with the economic crisis of 2009, the organic sector continued to grow, and in 2010 showed a 10 percent growth rate, compared to a 0.7 percent growth rate in conventional agricultural product sales. Direct sales of organics to consumers were up 16 percent.

U.S. Department of Agriculture figures for 2008 showed that 4.1 million acres were farmed organically in the U.S. by 14,540 producers. Seventy-eight percent of those producers indicated they planned to continue organic production over the next five years.

Consumer trust that organic products are grown and handled to meet organic standards is also on the rise, Bushway said. Programs such as the USDA "Know Your Farmer Know Your Food" initiative are getting the word out about farming practices and as consumers know more, Bushway said she believes their allegiance to organic will become stronger.

Consistent organic production and supply is a challenge, along with competition from conventionally produced agricultural products, which are often priced lower. Federal budget cuts for programs that support organics may also be on the horizon, Bushway said.

Those challenges can be met, she said, by producers who tell their stories to consumers. Bushway said organic farmers need to continue to push for federal policies that will protect their organic farming operations.

Improving markets for small and mid-sized organic growers is vital, reported Reid.

Surveys found that marketing is the biggest problem for organic growers. Many growers sometimes end up selling their products for prices similar to conventionally grown produce, Reid said.

Organic growers need higher returns to cover their higher input costs and certification costs. They are also facing competition from products labeled "sustainably grown" or "local." Compliance with new food safety regulations is another burden for small and mid-sized growers. Other issues facing organic growers are their limited access to organic price information and limited university research.

Buyers of organic produce also have challenges. Reid said that consistency; fair prices for institutional buyers, unpredictability in supply and communication with growers are notable problems in the organic marketplace.

Where organics can compete, she said, is on the value.

"Be proud of what you grow, build relationships with buyers and use online tools—they can produce results," Reid advised.

Full Belly Farms, one of the highest profile organic producers in California, has followed much of that advice since it began with 100 acres in 1985. Redmond said the operation has grown to 350 acres and has 60 full-time employees. They supply a 1,300 member CSA and sell at three farmers markets per week. They also supply restaurants.

Redmond said it felt like the growth of the farm was parallel to the public recognition of organics.

"We got traction as the market got traction," she added.

Organic agriculture expanded due to the hard work and innovation of farmers, distributors and processors, Redmond said. New growers entering the market now may not see that type of growth. Growth is in the processing sector now, Redmond noted.

There are opportunities for organic growers, she said, but noted that many are stymied by regulations, which she called "rules that only can be followed by those with lots of capital and infrastructure."

Redmond looked back on the early days of the organic farming business and noted that a group of non-profit organizations assisted in its growth by providing opportunities for growers, pressure for research and networking. New stakeholders, including health professionals, came in along the way and expanded on the work of the non-profits, bringing organics to the point they have reached today, she said.

(Cecilia Parsons is a reporter in Ducor. She may be contacted at ceciliaparsons8@gmail.com.)