Organic Demand Falling?

In the UK, the Telegraph reports that demand for organic food is falling by nearly a third, from a year ago, as consumers economize. Are they right?

Several supermarkets have confirmed a decline in organic sales during the economic slowdown but the Soil Association, the country's leading organic organisation, says this is because of the growth of independent stores selling boxes of locally-sourced organic produce for home delivery.

In other words, the Soil Association is seeing a boom in local -- underscored by the enormous growth in farmers markets and CSAs in the U.K. 

I haven't seen any recent comparable figures for the U.S., though a headline in the newsletter from the Northeast Organic Dairy Farmers Alliance read: "Organic pay price declines as processors panic over spring flush of milk and declining growth in sales." The article quotes figures saying that demand for organic milk grew 24% in 2008 but is projected to grow in the single-digits in 2009. Prices farmers get for organic milk have already fallen. The spring flush, by the way, is the time of year when cows produce a lot of milk.

If any market research types want to chime in with the latest data, I'd be interested to see if the U.S. is seeing anything like the reported fall in the U.K.

- Samuel Fromartz

Comments

[OrganicGeorge]

No official data but I've been hearing from Organic bulk industrial ingredient suppliers that many of their customers are asking if they can either take back or sell off their excess inventory.

I've been told that bulk bins are the highest volume sales in most heath food stores including WF, again not official data.

2008 sales rose to low double digits, from the 20% annualized rate we experienced for the last 2 decades.

I personally believe sales will be flat for 2009, but in this economic environment that would be outstanding.

Organic diaries are in a very bad position. Milk prices have dropped across the board but organic feed cost have risen. The main culprit is the corn ethanol programs. Many organic farmers left organics to grow for ethanol, it was an easy and very profitable business for a year or so but now they are high and dry as the ethanol boom has gone bust. So there are now fewer US organic grain growers and most of the organic feed grain is coming from overseas, couple this with the strength of the US dollar and the small organic diaries are caught in the middle with higher cost and lower prices.

If the supermarkets were to lower their margins and pay the difference to the small operators they might survive. I for one am not holding my breath on that act of kindness.