Organic Sales Rise

One Area Needing Growth is in the Organic Feed Sector

Jerry Hagstrom , DTN Political Correspondent
Organic products are in more than 82% of American homes. There are a number of states in which 90% or more of households now buy organic on a regular basis, and even the lowest levels all hover around 70%. (Graphic courtesy of the Organic Trade Association)

WASHINGTON (DTN) -- Sales of organic foods continued to grow dramatically in 2016, particularly in meat and protein, but the industry still faces the challenge of convincing farmers to grow organic corn and soybeans that can be turned into feed, leaders of the Organic Trade Association said last week during their annual policy conference.

Organic sales in the U.S. totaled around $47 billion in 2016, reflecting new sales of almost $3.7 billion from the previous year and breaking through the $40 billion mark for the first time, according to OTA's industry survey. Organic food now accounts for 5.3% of total food sales in the United States -- the highest it has ever been.

"Organic food sales increased by 8.4% or $3.3 billion, from the previous year, blowing past the stagnant 0.6% growth rate in the overall food market," OTA said. Sales of organic non-food products were up 8.8% in 2016, also handily surpassing the overall non-food growth rate of 0.8%.

The survey also showed that organic is creating jobs. More than 60% of all organic businesses with more than five employees reported an increase of full-time employment during 2016 and said they planned to continue boosting their full-time work staff in 2017.

"The organic industry continues to be a real bright spot in the food and ag economy both at the farm-gate and check-out counter," said Laura Batcha, executive director and CEO of the OTA.

The $15.6-billion organic fruits and vegetables sector held onto its position as the largest of the organic food categories, accounting for almost 40% of all organic food sales. Posting an 8.4% growth rate -- almost triple the 3.3% growth pace of total fruit and vegetable sales -- organic fruits and vegetables now make up almost 15% of the produce that Americans eat. Across all organic food categories, shoppers are placing high value on freshness and convenience. In produce, grab-and-go salads and ready-to-eat veggies (fresh or frozen), were top sellers, OTA said.

Organic dips, for one, posted 41% growth with $57 million in sales, and organic spices swelled by a big 35% to $193 million, according to OTA's Industry Survey.

Organic meat and poultry climbed more than 17% in 2016 to $991 million, for the category's biggest-ever yearly gain. Continued strong growth in that category should push sales across the $1-billion mark for the first time in 2017, OTA said.

But the meat sector faces the challenge of finding enough feed for the animals. Organic feed acreage has "stalled," even though the industry tries to encourage more farmers to shift to organic. During the years of high prices for corn and soybeans, the number of organic acres actually dropped, Batcha noted.

During the conference, attendees repeatedly noted a recent Washington Post investigation that showed there were imports of feed that was supposed to be organic but was not. The article highlighted the high value foreign grain companies and importers can generate by declaring non-organic feeds as organic.

Batcha also noted that consumers "are concerned about how animals are treated as well as what they are fed," and urged the Trump administration to finalize a rule that would require more outdoor space for livestock whose products would bear the organic seal. Some large organic egg producers have opposed the rule while conventional meat industry groups have said they fear it will lead to increased federal rules on raising animals.

But Batcha said, "Holding back organics is not a solution to your communication problems with the consumer," and that the millennial consumer who shops organic is "increasingly interested in protein and cares about more than what the animals eat."

Batcha said OTA's current priorities are to continue strict oversight over organic production so that consumers retain faith in the USDA organic seal and encourage research into technology that makes oversight easier, especially in regard to exports and imports.

Sales of non-food organic products increased by almost 9% to $3.9 billion. Organic fiber, supplements and personal care products accounted for the bulk of those sales. Adequate supplies of organic textiles are a continuing challenge in the organic fiber market. However, U.S. organic cotton farmers produced a record 17,000-plus bales in 2016, which should help alleviate some supply concerns, OTA said.

At the conference, former Agriculture Deputy Secretary Kathleen Merrigan and Rep. Tim Ryan, D-Ohio, gave the organic food industry some advice on how to lobby Congress and the Trump administration, even when they may be facing a difficult political environment.

Merrigan wrote the original organic food production law when she was a Senate aide during the 1990 farm bill. She told organic farmers and other industry leaders that they should stress that the organic food industry creates jobs and that they need to be here "to maintain what you have" even if the next farm bill does not do much to advance their cause.

"Even if it is not the kind of farm bill we want to have, you gotta be there," said Merrigan, who is now director of sustainability at George Washington University.

Ryan said he got interested in food and nutrition when he was doing research on a book on meditation and realized that stress and nutrition were related.

"We have a disease management system" rather than a health care system, he said. Ryan has written a book called "A Real Food Revolution."

Ryan said he favors subsidies for urban agriculture in places like Youngstown, Ohio, where the decline in manufacturing has left open land.

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow Jerry Hagstrom on Twitter @hagstromreport

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