Twenty years ago, spurred on by several food safety scares in Europe and North America, there was a lot of press about organic food and farming. While demand increased, the supply of organic food was very low. Organic food sales in North America were less than $1 billion per year. Consumers wanting organic food went to the farm or to health food stores to buy this niche product. Sceptics said it was a fad that would soon disappear. The recession of the early-1990's reduced demand, but there continued to be more demand than supply. The organic food industry kept growing at 20% per year for the next 15 years.
Ten years ago, there were organic food retail sales of $7 billion per year. While it was still only 1% of the total food retail sales, large companies started to take notice. The larger food companies purchased many of the successful small organic food companies. Organic food sales continued to grow at 15-20% per year. By 2007, organic food sales in the United States were close to $20 billion per year. Lack of availability was a barrier to faster growth. During the last decade, mainstream supermarkets started to sell organic brands and private label organic products. Core consumers still bought over 50% of the organic food sold, but mainstream shoppers were also attracted to it as it became more available.
Today's Consumers & Future Growth
In 2008 we had the recession. Sceptics thought that with reduced or uncertain incomes people would not buy higher priced organics. Organic foods experienced slower growth, but continued to grow 5% in 2009 and 8% in 2010. Over 60% of consumers now buy some organic products. Consumers, who now refer to themselves as 'eaters', have many reasons for buying particular food products. Price continues to be a barrier, but some organic products have come down in price, and many are comparable to other premium brand products. Eaters are empowered to be able to choose the type of foods that they want to eat and feed their families. Some prefer to buy foods that are free from "something". There are many concerns about pesticides, antibiotics, hormones or GMO's in foods. Some see organic foods as being more environmentally friendly. Some eaters just want to experiment and buy a new product.
Sceptics have pointed out scientific studies that show there is no difference between organic and conventional foods. Supporters have other studies to show advantages to organic.
It is estimated that in 2010 there were $29 billion of organic food sold in the USA and over $2 billion in Canada. In Europe, sales of organic foods are over $25 billion per year. Current estimates are that organic food sales will grow at an average compound growth rate of 13% per year for the next 5 years. Sales will double within about 6 years. I see no reason to doubt these estimates.
Demand Exceeding Domestic Supply
In Ontario in 2009, we had 716 certified organic farms with 115,000 acres of organic crops that produced a farm gate value of over $122 million. These numbers are all about 1% of the provincial totals. Compared to 10 years ago, we now have 50% more organic farms and twice as many organic acres, but retail food sales are 5 times what they were 10 years ago. 4% of all food and over 10% of all fruits and vegetables sold in the USA are now organic.
Organic foods have been around for several decades. They have weathered serious challenges from the economy and sceptics, and yet organic food sales have kept on growing. The issue is how we can meet the challenge of this extra growth in demand in Ontario. 75 - 85% of our organic food is currently imported, of which over 75% comes from the USA. Canadian eaters can either eat organic foods grown in Canada or from the USA and other countries.
This is an opportunity for Ontario agriculture to diversify markets. In most cases, organic production relies more on internal production skills and less on off-farm inputs. Challenges are great, but many organic farmers are very satisfied with the results.
