As in a number of markets, US organic sales has been slowed by the recession. However, the market’s resilience in the current climate and some important regulatory changes have given organic producers plenty of cause for optimism. Ben Cooper reports.
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By GlobalData
Received wisdom suggests sales of organic food would struggle during the recession, and this has been borne out by figures from the Organic Trade Association (OTA) in the US. But while growth slowed, it did not peter out altogether, and that resilience is not the only thing giving the US organic sector cause for optimism.
The arrival of Kathleen Merrigan as deputy secretary at the US Department of Agriculture (USDA) and Miles McEvoy’s appointment last year as deputy administrator of the National Organic Program (NOP), which administers organic certification in the US, have both been greeted enthusiastically by organic advocates. Both have extensive experience and knowledge of the organic field.
Indeed, there has been a marked rise in commitment to organic under the Obama administration. The NOP’s budget has increased from US$3.9m to $6.9m for the current fiscal year, while its workforce is set to rise from 16 to 31. The administration is planning to raise the budget to $10m in the coming fiscal year and increase its staff to around 40 employees.
Presidential support has not only come in the form of budgetary and personnel changes. The move to plant an organic garden at the White House last year gave the movement the kind of boost money can’t buy.
The announcement of a clarification on the rules on the pasturing of organic cattle has gone a long way to meeting long-standing concerns from campaigners. In a similar vein, the USDA moved recently to review a decision allowing the use of artificial additives, namely ARA and DHA, in baby formula marketed as organic.
The increased budget and scrutiny could not have come too soon. In March, a USDA report detailed shortcomings at the NOP on issues such as spot testing, oversight of organic operations overseas and the vetting of independent certifying agents, as well as a lack of urgency in investigating companies fraudulently marketing products as organic.
McEvoy said that enforcing testing rules was among a number of improvements already in hand, stating that there was a “real commitment from this administration to improve the integrity of this programme”.
The OTA reported in April that, while total US food sales grew by only 1.6% in 2009, organic food sales rose by 5.1% to $24.8bn. Organic champions attribute the continued growth to the resolve of core organic consumers but improving the credibility of the sector will be vital in recruiting new consumers and convincing sceptics.
OTA spokesperson Barbara Haumann describes the 5.1% growth in rise in organic food sales as “very healthy growth in a tough time”. She says that core organic consumers tend to be extremely loyal to the sector and would “sacrifice in other ways before they would even think about not buying organic products”.
Not surprisingly, there has been evidence of some trading down within the sector. One of the factors behind the growth in the US organic market has been the considerable investment made by large food combines, resulting in a wide spectrum of prices. Haumann says the presence of good-quality private-label organic products, along with value strategies adopted by major organic brands, have helped to strengthen sales in tough economic times.
But the entry of giant food corporations, while helping to expand the market in volume terms, has not been without controversy. It is fair to say that the credibility issues raised by campaigners such as the Cornucopia Institute, as well as some organic activists and producers, have focused on how large, industrialised food groups have approached the sector.
Indeed, this tension within the sector has shown itself in how it is represented. The OTA makes no bones that it aims to represent the entire organic sector, including major food corporations, leading in some instances to a palpably tense relationship with some campaigners. The Organic Consumers Association (OCA) is often viewed as the voice of the grassroots organic movement.
Pointing out that the OTA “is made up of many more small operations than large ones”, Haumann says there are many points on which OTA agrees with OCA, but concedes “there are points where their approach is different”. But she also plays down the tension within the industry. “It takes all sizes [of companies] to actually grow this industry,” she says, “and we’re talking about changing agriculture and you need all sizes to do this.”
The OCA is similarly equivocal in its view of OTA. But OCA spokesperson Honor Schauland says the organisation accepts the OTA’s contention that there is a place for large and small companies in the expanding organic sector. “We have to accept that’s where things are,” she says. Schauland acknowledges that, while “wary to champion the industrialisation of organic”, the presence of large-scale operators able to hit aggressive price points has helped “to absorb a little more of an economic crunch”.
She continues: “We’re excited that it’s going mainstream and that it’s going to be able to reach that many more people but we want to maintain very high standards and unfortunately with many corporations their obligation is to their shareholders and their bottom line, and so sometimes we worry that corners will be cut.”
Schauland also worries that the entry of large-scale operations runs counter to some of the organic movement’s other original tenets around local food security and preserving small farms. “I don’t want to criticise it entirely but it doesn’t encompass the entire philosophy behind the organic movement.”
While the markedly different views of the OTA and OCA reflect a certain tension in the sector, there is plenty of common ground. Like Haumann, Schauland acknowledges that the sustained growth stems largely from the core commitment of organic consumers.
This view is echoed by food campaigner Mark Kastel, co-founder of the Cornucopia Institute. Kastel has been one of the leading critics of the industrialisation of the organic sector and has warned of the credibility threat it poses. But rather than attributing the sustained growth to the commercialisation brought by large-scale groups, he believes it has more to do with the “emotional investment” organic consumers have made. “When consumers make this decision to provide organic food for their family, they are going to give up a lot of things first before they would ever go back.”
Moreover, in spite of the criticisms he has made, Kastel says the organic sector overall does not have a credibility problem, something he also attributes in part to the particular nature of its consumers. “There are so many passionate stakeholders here, farmers, consumers and NGOs, that in essence act together as a community as watchdogs. There are millions of consumers who care passionately about these issues.”
What appears to unite all stakeholders is enthusiasm for the increased attention and investment being directed to organic by the Obama administration, and the bolstering of regulation it will bring.
As the market continues to grow, further tensions and debate are inevitable. The OCA is pushing for a similar move on poultry as seen earlier this year on pasturing cattle, while Kastel remains concerned that the OTA is now dominated by a big business agenda.
Also, while President Obama’s commitment to organic has delighted activists, his parallel support for biotechnology has worried campaigners. But, on balance, the organic sector in the US appears to be in better shape after the economic crisis than it was before, something which cannot be said for its counterpart in the UK.
