If organic food is so popular, why are so few farms transitioning their land?
On a recent trip to Austin, I visited the flagship Whole Foods — a vast space where people gather en masse to render financial sacrifice to that new god, organic food. From the depths of the parking lot, as you make your way up to the store, you’re urged again and again by a sign that simply says, “Love where you shop.” From the doe-eyed look of the supplicants making their way up, and the glazed-eyed look of those carrying their treasure down, most clearly do.
While few Whole Foods stores have the buzz of the Austin flagship, that veritable cathedral of gustatory virtue is emblematic of organic food’s rising social status. According to the Organic Trade Association’s most current figures [PDF], consumer demand for it leapt 16 percent in 2005.
That’s a little lower than the 20 percent figure commonly bandied about to describe the market’s growth, but it’s by no means shabby, considering that the overall U.S. food market grows by just 2 percent to 4 percent per year. It turns out that the $34 billion the food industry drops on marketing every year doesn’t inspire people to eat more — it just gets them to shift around their food dollars from one product to another.
No wonder corporate giants from Wal-Mart to McDonald’s are groping for a slice of the organic pie. Generating 16 percent annual growth for a given product normally requires a massive marketing budget; organic foods fly off the shelf just by being labeled as such.
But if consumers are snapping up organics and corporations are scrambling to give them what they want — if not always exactly what they want — a funny thing is happening down on the farm: growth in organic acreage isn’t coming even close to keeping up with retail-sales growth. That is, existing farms aren’t transitioning acres to organic — and new farms aren’t being rolled out — at nearly the growth rate of organic-food demand.
This is an important point. One of the great motivations of “buying organic” is protecting the land, water, and air from the cascades of poison sprays and artificial fertilizers dumped on farmland each year. Shouldn’t booming demand for organic food translate to a proportionate boom in organic land under cultivation?
California Dreams … and Realities
In the U.S., organic food accounts for [PDF] about 2.5 percent of all food sales. But out in the field, just 0.2 percent of farmland is under organic production. In Europe, by contrast, organic food accounts for a just-higher percentage of all food sales than in the U.S., but organic agriculture is more pervasive — E.U.-wide, it occupies nearly 4 percent of farmland.
Indeed, New Farm reports that Italy alone, not quite as large in size as New Mexico, has more land in organic agriculture than the entire United States!
Why is organic a more popular concept on our supermarket shelves than in our farm fields? The California Institute for Rural Studies released a study [PDF] recently addressing that very question. It raises some bracing facts. If any state would be expected to boast a bounty of land under organic cultivation, it’s California, the nation’s fruit and vegetable basket and source of 40 percent of all farm-level U.S. organic produce sales.
But even in California, organic ag represents just 0.63 percent of farmland. Organic acreage did double between 1998 and 2003, but growth has leveled off and acreage now just holds steady. Total acres transitioning into organic are now nearly balanced by the acres transitioning out. Evidently, many farmers aren’t making enough money growing organically to remain certified, despite the booming retail market.
One reason could be an import boom. The USDA reports [PDF] that although the U.S. was until recently a net exporter of organic food, “the value of U.S. imports now exceeds exports by a ratio of approximately 8 to 1.” The USDA reckoned in 2002 that the country imports between $1 billion and $1.5 billion worth of organics each year. Taking the higher number — since the willingness to import organic has presumably increased after Wal-Mart jumped into the market — imports represent a little over 10 percent of total U.S. sales. That’s about a dime of every dollar you spend on organic food.
It’s not inconceivable that all of that organic streaming in from Mexico and China is lowering organic prices at the farm level, making the transition into organic — and the prospect of maintaining certification — less attractive.
Another possible explanation for the dearth of organic acreage arises from looking more closely at how the retail market is growing. Yes, it’s growing at a robust 16 percent annual clip overall. But some segments of the market are growing more briskly than others. The Organic Trade Association, breaking down [PDF] the growth rates for each segment of the organic market in 2005, found that growth rates for highly processed foods like “sauces/condiments” (24.2 percent growth) and packaged/prepared foods (19.4 percent) far outstripped the rate for homely old fresh fruits and vegetables (10.9 percent).
What does that tell us? Well, the big processors like Kraft — which are barreling into organics both by snapping up small independent health-food companies and by rolling out organic versions of established products like ketchup — wield a lot of clout when it comes to negotiating prices with suppliers. Farmers make a lot more money per pound by selling organic tomatoes at a farmers’ market than they can by selling them to Heinz for organic ketchup. But the prospect of big payoffs from grabbing high-volume corporate accounts has inspired many organic farmers to scale up and industrialize as much as possible — sacrificing some of organic ag’s core principles in the process.
The California Institute for Rural Studies documents that trend: California’s organic farmers are steadily getting bigger. But that’s a losing game. As growth in the fresh-produce market cools and the processed market heats up, the big players will gain more pricing leverage, squeezing organic farming’s already razor-thin profit margins. Seen from that view, it’s no wonder imports are booming and domestic acreage has leveled off.
The Answer is Growing in the Wind
What, then, is the answer? How can consumers leverage their rising willingness to buy organic to significantly decrease the amount of poisons used in growing food?
One way, of course, is to buy whole food from nearby farmers whose practices you know and trust. A fraction of the cash you drop on organic mac ‘n’ cheese goes into supporting a conscientious farmer, as opposed to nearly all of the money you spend at the farmers’ market or in a community-supported agriculture program.
As for the policy level, consider this: According to the USDA, the U.S. spends about $7 million annually supporting organic agriculture — and that encompasses research, support for transition, everything. Compare that to the research budget alone for chemical-intensive farming, which stands at over $1 billion per year, to say nothing of the $20 billion or so per year going into commodity supports.
In Europe, the USDA reports, the public sector supports organic farming to the tune of 70 million to 80 million euros per year. If the U.S. wants to make organic agriculture a real environmental asset, not just a marketing tool for corporations, it might have to be more like the Europeans.
Donate now to support our work.