Organic Food Industry in the USA

Organic food is big business.

The organic food industry in USA markets has grown rapidly in the last 20 years. In fact, the organic sector ranks high among the fastest growing agricultural sectors in the United States. How does the organic food industry break down in sales? What is fueling the growth in this industry?

Organic Food Industry in USA Markets

In the last 20 years, the organic food industry in USA markets has grown nearly 20 percent. With a 16.2 percent growth shown for 2005, total food sales were $13.8 billion. That may sound like a lot, and it is, but it actually only accounts for 2.5 percent of total food sales in the United States. Even with such rapid growth, there is plenty of room for more.

Markets for organic foods surprisingly are not dominated by organic food stores like Whole Foods Market and similar retailers. Natural food stores account for just 47 percent of organic food sales. Farmers' markets only account for seven percent. Mass markets and conventional grocery stores account for 46 percent of total organic food sales.

This is due largely to the major players in the food industry like Kraft, Kelloggs, General Mills and others, who have expanded into organic foods. In addition, major retailers like Wal-Mart have seen the current and potential growth of the organic industry as a whole and want a piece of the pie.

Experts are torn on the effect this will have on the industry. Major manufacturers and big retailers do make organic foods more available, and perhaps even more affordable to consumers. However, some fear that the quality of products, like organic milk, will be affected adversely.

Industry Statistics

How exactly does the organic food industry break down? According to a 2006 manufacturer survey conducted by the Organic Trade Association, the breakdown looks like this:

Breakdown of Organic Food Products
  39% Breads and Grains 10%
Dairy Products 15% Snack Foods 5%
Beverages (non-dairy) 14% Meats 2%
Prepared Foods 13% Sauces and Condiments 2%

Some areas, organic meats for example, would probably be higher if the current demand could be met. However, it is much easier to grow organic produce and therefore easier to supply consumers. As farmers see the tremendous income potential in organic meats, supply should catch up with demand and prices for these products will become less prohibitive.

Organic Foods Globally

Organic farming isn't exclusive to North America. In fact, North America isn't even the top producer of organic products.

Currently organic farming is common in about 100 countries. Organic farms cover over 59 million acres worldwide. Australia actually leads the world in the production of organic foods, with 24.6 million acres dedicated to organic farming. North America lags behind, taking fifth place with only 3.7 million acres used for organic farms.

In the United States the biggest contributors of organic cropland are:

  • California
  • North Dakota
  • Minnesota
  • Montana
  • Wisconsin
  • Colorado
  • Iowa

Between 2002 and 2003, the production of organic livestock grew an amazing 15 percent in the United States. Even though the organic food industry in USA markets may be a bit slower than markets worldwide, they are rapidly catching up.

Why Such Growth?

While organic farming is good for the earth, the primary push for organic foods seems to be from consumers who worry about the safety of their food supply. Organic means pure, wholesome foods to consumers and therefore they feel like the safest way to go.

The demand for organic beef increased dramatically after the BSE scare in 2003. Botulism and other contaminants have caused recalls in foods that always were looked at as healthy. Links have been found between pesticides and autism, cancer and other health issues. Genetically modified foods are also scary to many consumers.

Consumers are sick of being sick and many have logically decided that the fewer toxins they expose themselves to, the fewer dangers to their health. This seems to be common sense, but reduction in chemical exposure isn't the only benefit.

Organic foods have been shown to not only be more flavorful but they are higher in nutrients as well. Combining fewer chemicals combined with higher nutrients and food value has to make for a safer, healthier food supply. That means a healthier, happier consumer as well.

Organic Food Industry in the USA