Growing Demand for Organic Ingredients Leads to Supply Challenges

The need for fresh ingredients by consumers has led many farmers to go into organic farming. According to data provided by the USDA, the number of organic farmers in the US has increased by almost 300% since 2002. This growth is to meet the demands of consumers who prefer organic foods more than those grown in conventional methods.

Why Is It Difficult to Completely Go Organic?

Although there is a rapid increase of organic operators in the country, it is crucial to take note that only about 0.7% of the total operable farms within the country are classified as organic.  Many farmers pointed out that the main reason why converting their conventional farmland to organic is difficult because it is expensive as well as time-consuming. In general, farmers have to wait for at least three years to be able to convert their farms. Unfortunately, during the first year of turning their land using organic practices, the produce that they grow is not sold at organic prices. Meaning, they are still paid cheap even when they are spending more on organic practices. This is leading to the supply challenges in the market.

Solutions to The Supply Challenge

To solve the supply challenges, farmers are given several incentives to make the necessary switch. These include the Environmental Quality Incentives Program (EQIP) that offers first-timer organic operators the right technical assistance to grow food the organic way. But, it is not only the government that provides support. Even food manufacturers, as well as retailers, have supported and implemented programs just to encourage farmers to boost their harvest. In fact, companies like Nature’s Path Foods, Whole Foods, Organic Valley, and Stonyfield Farms have provided grants to organic farmers to boost their production.

While organic farmers can supply the needs of food retailers and manufacturers, another problem is where to source specialty ingredients that are not grown in the United States. The solution proposed by the government was to get into digital platforms like Mercaris Auction Platform or to trade tons of organic products into the market.

All stakeholders are doing their best to provide the resources needed by the consumers. For instance, the Organic Trade Association was set up to provide suppliers and manufacturers the necessary information about their produce such as where to source their supplies, market data, and real-time pricing.

On the other hand, retailers like restaurants and grocery stores have also worked closely with organic farm operators to give them the idea of how much they will need to sustain their businesses. For instance, retail giant Walmart has worked with local organic farmers by giving them the outline of how much they need for the entire year so that the farmers can strategize on how they will be able to deliver the demands and needs of the end users.

The truth of the matter is that, while organic farming is prevalent, the number of organic operators is still not enough to be able to create a sustainable supply of products to the retailers and consumer product companies.

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More Than 82% of Americans Bought Organic Food in 2016

Organic food has become more popular over recent years. In fact, more than 82% of American consumers have bought certified organic foods since last year, and the growth is increasing by 3.4% each year.

According to the survey conducted by the Nielsen company and released by the Organic Trade Association (OTA), more than 100,000 households indicated that they had bought organic foods recently. Out of these families, 14.2% of the respondents hail from North Dakota followed by Rhode Island at 12.3%.

organic food nielsen america

There is a growing trend when it comes to the consumption of organic foods. In fact, according to the OTA, the sales of organic produce rose to a record $43.3 billion in 2015 with an estimated growth of 11% annually. This increase has led to the proposal of different research and promotion of more organic products.

In fact, the USDA released a plan to create an industry-funded program called the check-off program that would certify many agricultural products as organic. This program imposes a small fee on each sale made by the producers. The funds generated can be used for research and promotion of organic products.

The Popularity Of  Organic Food

So why are people opting for organic foods? The reason why 60% of American consumers opt for organic foods is for health reasons.  One of the biggest shares of the organic market is organic milk as more and more people are concerned about getting bovine growth hormones from milk obtained from conventional dairy farming practices. Aside from milk, the sale of organic baby food is also increasing.

But what does it take for a product to be considered organic? Aside from being grown in organic means, organic products should also be made without the use of chemicals like fertilizers, pesticides, and hormones.  They should also not contain any preservatives.

The Future Of Organic Foods

While the organic food market is increasing, it still occupies a small segment of the food industry. In fact, it only consumes 2% of the pie in the entire food industry.  Speaking on the future of organic food, even large-scale supermarket chains like Safeway and Target are now providing organic food offerings to their customers.

Aside from supermarket chains supplying organic foods to consumers, there are also many large-scale organic farms in the country. The advantage of such a large agricultural setting is that it tends to decrease the price of organic products as well as improve distribution to consumers. Aside from the benefits for customers, large-scale farmers earn competitive returns from their products.

There is indeed an increasing demand for organic products in the United States, but the market is lagging behind European countries where all supermarkets carry organic brands. Although this may be the case, the United States is off to a good start.

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