III. Industry Analysis
The American commercial farming industry continues to be subsidized by the government to bolster low food prices. This is a volatile and difficult industry in the United States, with small and medium-sized farms increasingly being bought by large farms or struggling to survive on their own.
However, for organic foods, trends are positive. Organic foods sales are projected to increase 18% per year over the next three years and were estimated at $23 billion last year, according to the Organic Trade Association Market Survey. This sector is said to represent 3% of overall food and beverage sales. Global demand for organic foods increases by over $5 billion per year.
The farming industry includes multiple segments including poultry meat, beef, dairy, grain crops, vegetables, fruits, and more. Many businesses focus on only one specific segment, while some produce multiple types of crops in order to hedge against price changes in any one segment.
Recently, Horizon, the largest US organic food brand, dropped the term “organic” from its dairy products choosing instead to use the term “natural”. Critics noted that the term “natural” has no regulatory meaning and shows Horizon’s attempt to lower the cost of production by not meeting the requirements for the organic label. This shows a concern in the market about the meaning behind labels and highlights the importance of regulation to create common definitions.
Organic.org published the following list of reasons to support organic foods and beverages:
- Reduce the toxic load: Keep chemicals out of the air, water, soil and our bodies
- Reduce if not eliminate farm pollution
- Protect future generations
- Build healthy soil
- Taste better and truer flavor
- Assist family farmers of all sizes
- Avoid hasty and poor science in your food
- Eating with a sense of place
- Promote biodiversity
- Celebrate the culture of agriculture
Trends in the industry include the following:
- Meat and fish that are organically produced are becoming more popular
- Organic dairy, bread, and grain are becoming more popular
- Organic-only supermarkets are becoming more popular
- Traditional supermarkets are increasing organic purchases to keep up with these competitors.