Consumer interest in the organic label continues to grow.
The organic industry says U.S. sales of its products jumped 11 percent last year alone, to more than $39 billion, despite tight domestic supplies of organic ingredients. And the number of U.S. organic operations has grown by 250 percent since the government started certifying organic products in 2002, according to new Agriculture Department data released Wednesday.
The industry estimates that organics now make up almost 5 percent of total food sales in the United States. But much of the growth is also in nonfood items like textiles and personal-care items. The Organic Trade Association says those nonfood sales jumped almost 14 percent last year and totaled more than $3 billion.
The industry has been rapidly growing since the United States put strict rules in place for organic labeling 13 years ago – some critics say growing too much, as food giants like General Mills and Kellogg have entered the organic game and many small organic-food companies have grown into large businesses.
Laura Batcha, head of the trade association, says that growth has helped the industry move beyond a niche market.
“The only way to create change is for there to be widespread adoption,” Batcha said.
Organic foods generally are grown with fewer chemicals and artificial ingredients and are produced according to a strict set of government standards. Foods cannot be labeled organic unless their production adheres to those rules, and those extra steps mean prices for organic products are generally higher.
USDA said the number of organic operations grew 5 percent last year and Agriculture Secretary Tom Vilsack announced it will create a new database so consumers can track companies’ organic certifications.
“The more diverse type of operations and the more growing market sectors we have in American agriculture, the better off our country’s rural economy will be,” Vilsack said in a statement.
Despite its successes, the industry is facing some major challenges, including struggles to source enough organic ingredients. Much of the shortage is in organic milk and eggs, due to low inventories of organic corn and soybeans that feed cattle and poultry. The industry says there have also been some shortages of fruits and vegetables, which make up the largest sector of the organic market, due to difficulties finding land suitable for organic farming.
Some of the supply issues trace back to cultural issues in highly agricultural areas, where farmers see organic as an enemy that is disparaging the quality of their conventional product. Growing organics also means you can’t use as many chemicals like herbicides, which many farmers have grown used to.
The industry is also fighting confusion in the marketplace, with many food packages touting “natural” ingredients – a term the industry believes consumers confuse with organic. To combat that, organic producers are pursuing an industry-funded Agriculture Department “checkoff” campaign – think the milk industry’s “Got Milk?” ads – to promote itself and make those distinctions.
The Organic Trade Association data released Wednesday show sales growth in all areas of the country. But the strongest sales remain in the Northeast and on the West Coast, and 73 percent of organic buyers are white. Just 16 percent of those who buy organic are Hispanic and 14 percent are black.
The trade group says sales among minorities have jumped sharply, and note the breakdown closely resembles the demographics of the United States.
“Our survey shows organic has turned a corner,” said OTA’s Batcha.