Organics: Five Things to Know About this Emerging Fresh Produce Segment

Organics: Five Things to Know About this Emerging Fresh Produce Segment

September 22, 2016

Your kitchen garden may very well be organic, but buying and selling organic produce is a completely different story. Often looked at as a holistic, ecologically balanced approach to growing fresh foods, organics actually have to be certified by the United States Department of Agriculture (USDA) to be labeled accordingly.

There’s no denying that organics are on the rise, so here’s what you need to know about the impact organics will have in the fresh produce segment:

1. It’s no longer a niche.
Once the bastion of the earthy, “true believer” vegetarian set, organic fruits and vegetables have moved into a much broader social circle. Largely due to the collective purchasing power of the Millennial generation (whose parents, the Baby Boomers, can be credited for the origin of the organic food renaissance in the 1960s and 1970s), market forces have demanded that organics become mainstream.

Consider this: According to the Organic Trade Association, in 2014, conventional grocery store formats sold 50% of all organic food in the United States. These traditional retailers ensure shoppers have access to higher margin, organic, fresh produce by expanding their offerings. What was once a limited selection that focused on organic salads is quickly turning into diversified commodities including greens, crucifers, root vegetables, citrus, and tropicals.

2. Supply is woefully off-pace with demand.
Within conventional fresh produce, the industry has carefully articulated supply over years of trial and error. There are exceptions, but for many of the most sought-after produce items, a sophisticated growing supply chain has evolved to take advantage of global-production regions to provide year round supply.

With organics, however, serious challenges remain. Agronomic practices are not consistent even among conventional growers. Within organics, an additional level of complexity exists, since all producers who want to market their produce as organic must comply with the United States National Organic Program. This can be a barrier to entry for farms in emerging growing regions.

In lesser-developed agricultural areas, global seed companies often provide farmers who purchase their seed with access to agronomists for a resource. Access to knowledgeable agronomists has helped expand conventional agricultural production. The organic seed industry is not as consistent in this area of grower support, which leaves a gap in growers’ knowledge of organic practices.

As with any new technique, over time, more growers will be able to consistently and successfully farm using organic methods. Without question, given the demand for organics, the impetus is on agribusiness, growers, and supplier marketers to pursue and develop consistent quality and year round availability.

3. Organics are in sync with current food trends in the United States.
With an almost fanatical obsession, U.S. citizens enjoy individualizing their diet. Food descriptors like “low carb,” “no antibiotics ever,” “cage free,” and “gluten free” all serve to customize food preferences. The term “organic” provides a broad and powerful platform in food labeling and marketing, with production methods that are authentically different and backed by a quality assurance approach with a degree of federal oversight.

Additionally, compared to other food claims, consumers can easily grasp the idea of organic farming and its perceived wholesomeness relative to conventional farming; it is an accessible concept that is appealing in its austerity.

4. The health advantages of organics are hotly debated, perhaps even negligible.
Some studies seem to indicate that fresh fruits and vegetables grown organically are more nutritionally robust. Biologically speaking, the more a plant is forced to respond to natural stresses (insects, weather, lack of nutrients added to soils, etc.) without the aid of synthetic support (like pesticides or fertilizers), the more biochemical reactions occur in a plant. These can then create higher levels of nutrients. However, there is no study that concludes all organic produce is inherently more nutritious. The truth is that all fruits and vegetables have varying amounts of nutrients, regardless of the manner in which they were grown.

Pesticide residue on conventionally grown fruits and vegetables were once thought to be strongly correlated with adverse health effects, but studies have not confirmed this belief. In fact, research found that residues on conventionally grown produce are consistently lower than allowable tolerances by the Environmental Protection Agency (EPA).

Without a scientifically backed nutrition or health rationale, the argument in favor of organic produce is now more confined to the overarching benefits to the environment.

5. Greater expansion in retail and foodservice is anticipated.
In 2016, data shows the greatest growth in the value added fresh organic vegetable segment. The snack tray segment has shown a 71% increase in sales dollar growth, with the meal prep segment increased by 107%.

Reprinted with permission by Organic Trade Association, Source: Nielsen Fresh Census Data 52 Weeks Ending 4/30/16*

From a category perspective, it’s clear that what happened in the conventional value-added segment is now happening with still-fledgling organics. Expect much more innovation and growth in this area.

Foodservice is no slouch, either. With organic products entering menus in a fragmented way (such as organic tea), as organic supply becomes more readily available with a supply chain to support it, more restaurants will emerge to support this demand.

Organics are here to stay. With an eye on lessons from the conventional produce segment and a practical, yet consistent, approach toward furthering organic supply and ultimately capturing broader market channels, now is the time to pursue an organics strategy that anticipates and answers market needs.

Ray Griffin

Ray Griffin - Director of Global Sourcing, Asia Pacific, Robinson Fresh

A 30-year fresh produce industry veteran, Ray Griffin is the director of global sourcing for the Asia Pacific region at Robinson Fresh.
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