The Organic Foods Market in the United States
The organic foods market in the United States represents a multi-billion dollar industry; however, there is still a long way to go in terms of market growth. Experiencing double-digit growth over a wide spectrum of products, both production and distribution of organic supply seems to be a promising industry.
The Organic Foods Market in the United States
Today, certified organics only account for 5% to 10% percent of all food sales in the United States. Nevertheless, organic foods represent a growing market with high potential for aggregate supply growth as well as vertical integration and supply chain enhancement. It is estimated that direct sales though regular farmers markets all along the US account for 7% to 10% percent of all organic food sales. The total amount of permanent or regularly occurring farmers markets throughout the US is of approximately 9.000. The rest of the organic market’s demand and supply is channeled through designated sections in conventional grocery stores or natural food stores. Today there are more than 20.000 organic food stores in the US and more than 75% of all conventional grocery stores feature organic sections.
Currently, the organic foods market in the US represents a total value of more than US$40 billion. In turn, the organic market is spread throughout the food and agriculture industry. The top two organic categories, representing more than 40% of all organic sales, are fresh fruits and vegetables. The produce category within organics is followed by dairy, at approximately 15%, and beverages at 11%. Furthermore, it is estimated that the US imports more than US$500 million worth of organic food products every year.
International Legislation on Organics
It is estimated that the average household in the US spends more than US$320 every year on organic produce alone. Because of the growing markets for organic as well as the niche nature of its clients and products, many farmers are now considering organic operations. However, as of today, the organic production in the US remains somewhat atomized when compared to the large-scale production of agricultural commodity crops. Furthermore, some international markets, such as the European Union hold very high standards when it comes to organic or natural agriculture. Therefore, the EU can easily sell its organic produce to North American market; however, it is not as easy for North American products to make it into Europe.
For example, because of its suspected adverse effects on human health, on April of 2016, the French government legislated a ban on agricultural products cultivated with Dimethoate, a pesticide used to combat the Asian fruit fly. Even though most of France’s commercial partners within the EU already comply with this legislation, the US does not. Given that France imports more than US$1 million worth of cherries from the US every year, this new regulation could have a profoundly negative effect on US-based exporting farmers as well as create volatility in cherry prices in the French market during the coming months.