|

Conference on
Supporting the Diversification of Exports in the Caribbean/Latin
American Region through the Development of Organic Horticulture
|
Port of Spain,
Trinidad and Tobago |
|
8-10 October 2001 |
| |
|
The US Market
for Organic Fresh Produce |
| |
| by |
| Messrs. Rudy
Kortbech-Olesen, Senior Market Development Adviser |
|
and Tim Larsen,
ITC Consultant |
| International
Trade Centre UNCTAD/WTO |
|
|
|
|
INTRODUCTION
First of all, I would like to thank FAO and its
co-organizers for inviting ITC to participate in this very important
conference. It is a great pleasure for me to be here today to talk
about the US market together with my colleague, Mr. Tim Larsen.
By way of introduction, I would just like to
mention that the International Trade Centre UNCTAD/WTO or simply ITC,
as we call ourselves, is the focal point in the United Nations system
for technical co-operation with developing countries in trade
promotion. I shall be pleased to provide you with more information on
our various activities during a presentation tomorrow.
At this stage, I would just like to give you a
short overview of the US market for organic food and beverages, which
I hope will serve as a useful background to Tim’s more detailed
presentation on organic fruit and vegetables.
With retail sales of organic food and beverages
amounting to about US$ 8 billion in 2000 (probably reaching US$ 9-10
billion in 2001), the United States is the world’s largest market
for this product group. Industry sources expect recent years’ strong
growth to continue over the short to medium term. According to the Organic
Consumer Trends 2001, published by the National Marketing
Institute, in cooperation with the Organic Trade Association, retail
sales might reach US$ 20 billion in 2005.
One of the main factors behind these very positive
growth expectations is a strong and increasing consumer awareness of
health and environmental issues, including a growing resistance
amongst consumers towards GMO farming and genetically modified food
products. Another important factor is the increasingly aggressive and
targeted marketing and promotion by the retail sector, which is likely
to intensify as mainstream retailers are moving into the organic
trade. A similar effect is likely to result from the fact that the
country’s major food manufacturers are also taking an interest in
developing organic product lines.
The recently introduced national standards on
organic agricultural production and handling, are likely to have a
significant positive impact on the further development of the organic
industry throughout the value chain, from farmers to the final
consumer, as there will be increased focus on organic products both
within the industry itself and amongst consumers.
Although the overall picture looks very positive, a
number of potential risk factors or threats should be borne in mind.
For example, occasional oversupply of a given product may not only
have immediate but also more long-term negative effects. Reduced price
premiums for organic produce and insufficient profitability amongst
producers and traders are important factors. Furthermore, other forms
of environmentally friendly and sustainable agriculture are likely to
result in increased competition in the future. Finally, unfavourable
press (e.g. fraud, of which we have seen several examples recently)
and scare stories are also factors that have to be reckoned with.
Even in the likely event that the above market
forecast turns out to be realistic, growth rates are bound to slow
down at some stage similar to what has happened in certain European
growth markets, e.g. Denmark and Switzerland, after years of rapid
growth.
On balance, however, there is little doubt that the
United States market will offer farmers and producers of organic
products interesting business opportunities in the future, whether for
domestic players or foreign traders who are looking for new markets.
As far as developing countries are concerned, the following product
categories are expected to be the most important:
- products, mostly tropical
, that
are not produced in the United States (or only in very small
quantities): examples include coffee, cocoa and tea, most tropical
fruit and vegetables (both in fresh and processed form, e.g. fruit
juices, concentrates and pulp), certain spices and herbs, some dried
fruit and nuts; in the foreseeable future demand is likely to be
mainly for bulk-packed products to be used as raw material or
ingredients for further processing and packaging or re-packing;
- off-season products
,
including fresh fruit and vegetables, that are produced in the
United States, but where there is an unmet demand during certain
periods of the year; potential suppliers will be producers in the
southern hemisphere;
- in-season products
,
e.g. fruit and vegetables, for which there is a temporary or more
permanent shortage because of strong and increasing demand.
- novelty
or
specialty products, like
high quality organic wines, certain ethnic food products or
retail-packed food products; this segment is currently of increasing
interest to European food exporters (e.g. Danish and French
cheeses), though some developing countries might also profit from
such opportunities, e.g. wine exporters in Argentina, Chile and
South Africa;
This conference deals with the first three product
groups, and more specifically with organic fresh produce. I am pleased
to let Tim Larsen, who has researched the US market in detail,
continue this presentation. Thank you very much!
Good morning and thank you for the opportunity to
talk about the U.S. organic market. Today I will talk about the
overall market trends for organic fruits and vegetables as well as
market opportunities and entry strategies to develop this market. I
will also briefly talk about the Canadian market.
And even more important than the statistics, I
would like to share comments I received talking to the U.S. industry.
A major natural foods market vice president of produce said:
"We're interested in any new fruit or vegetable", while an
importer/distributor said there are products he cannot find today that
he would buy as soon as an organic producer can provide the product.
What started this organic movement anyway? Why do
consumers care and how did this industry evolve?
All farming was "Organic" before the
1840s when the first chemical fertilizer was patented in Germany. The
late 1940s ushered in petrochemical use in agriculture, when synthetic
fertilizers, herbicides and pesticides became the mainstay.
The USDA was researching organic production in the
early 1900s when Mr. King researched and published a book
"Farmers for Forty Centuries, or Permanent Agriculture in China,
Korea and Japan". This was an early study on composting, crop
rotation, mulching and cover cropping practices. The research was
largely ignored in the U.S. when it was released.
In the 1940s, some groups began to experiment with
"Organic" production. One early proponent was J.I. Rodale, a
successful publisher who established an experimental organic farm.
This led to the creation of "Organic Gardening", which is
the highest circulation gardening magazine in the world today.
Another pioneer was Paul Keene, who established
"Walnut Acres" in 1946. His organic apple orchard was the
source of the first processed foods sold as "Organic".
The Environmental movement of the 1960s brought in
a new group of environmentally conscious consumers. This included the
"back to nature" movement and the establishment of natural
food stores which featured organic foods.
In 1989 a report in the U.S. identified
"Alar", which is a growth regulator in apple production, as
a carcinogen. This lead to a large food scare in the U.S. and further
increased interest in organic foods.
This new round of food safety concerns ultimately
lead to the 1990 U.S. Farm Bill and initiated the establishment of
National Organic Standards.
Much has changed since the 1960s and 70s. Our
organic market has grown from "hippies" to mainstream
consumers.
Celestial Seasonings
started near my home when the founder began to collect local herbs and
selling the herbs as tea in hand sewn muslin bags. Today, they have
sales of over 400 million dollars.
|
Top
|
The
U.S. market for organic and natural food was 6.5 billion dollars in
1999, growing to about 8 billion in 2000. It is one of the fastest
growing segments of U.S. food sales. Produce represents 1.45 billion
in sales and is almost evenly split between the natural food store
sector and conventional retail stores and is an important part of all
retail stores. Produce represents 8.8% of the total sales at natural
food stores and 9.7% at conventional supermarkets. Both the natural
food stores and the conventional supermarkets feel that the produce
sector of their stores is one of the most important factors in
attracting and retaining consumers.
|
Top
10 state locations of natural food stores |
-
California
- Florida
- Texas
- New
York
- Illinois
- Pennsylvania
- Ohio
- Washington
- New
Jersey
- Michigan
|
-
1,937
-
853
-
785
-
715
-
518
-
465
-
414
-
390
-
356
-
353
|
|
Top |
THE
RETAIL SECTOR
First, I’d like to review the "Natural Foods
Market" and the conventional supermarkets. While each is a
critical market for organic produce, they represent significantly
different markets.
The natural food store sector has over 12,000
stores in the U.S. with a focus on selling organic and natural food
products. This sector has several major chains that are often the
focus on trade views on this market. Whole Foods, based in Austin,
Texas and Wild Oats Markets, based in Boulder, Colorado have been
aggressively growing in the past 3 years, but still only represent a
total of 220 stores. This accounts for less than 2% of the total
retail stores in this category, indicating that this market is still
predominately independent retail stores.
Within the natural foods market, organic produce
accounted for US$833 million in sales in 1999 and represents 69% of
all produce sold in their stores. The produce department represents a
critical category and creating a great looking produce section is a
key to these stores. And they must keep their produce section fully
stocked twelve months a year!
Both the natural food store sector and the
conventional markets sell organic produce, but approach the sector
differently. The natural food stores focuses on organic produce and
will use conventional produce to fill in fruit and vegetable coverage
when organic options are not available. The mainstream supermarkets
feature conventional produce and provides limited organic produce to
complement their conventional offering.
The annual industry report in the Natural
Foods Merchandiser provides detailed analysis of the
product segments in the natural products retailer segment.
|
Top |
Produce is the second
largest sales sector with 1.2 billion dollars in of which 69.4% are
organic. This category also represents the largest dollar sales of
organic products, both as a percentage of total sales and actual
sales.
|
Natural
product store sales by category
Value
in US$ million
| Product |
1999
total sales |
%
of total sales |
organic
sales |
%
of category organic |
|
Frozen/refrigerated |
795 |
5.8 |
323 |
40.6 |
|
Dairy |
440 |
3.2 |
171 |
38.7 |
|
Bulk/packaged
bulk |
836 |
6.1 |
437 |
52.2 |
|
Produce |
1,201 |
8.8 |
833 |
69.4 |
|
Packaged
grocery |
1,956 |
14.3 |
692 |
35.4 |
|
Total
food sales |
7,671 |
0000 |
3,172 |
58.7 |
|
|
Top |
In the conventional
supermarkets organic produce is offered as well as non-organic in
some, but not all stores. According to the Fresh
Trends 2001 Report, organic produce represents just 2% of
the conventional supermarket produce sales. A store check of the two
leading conventional supermarkets confirmed that organic options were
offered in additional to conventional (non-organic) produce. It is
also apparent that the organic offerings focus on the major produce
items, not the more unique or exotic offerings.
Even though organic produce
sales only accounts for 2% of total produce sales, the organic sales
at conventional supermarkets now account for 618 million dollars.
While there are currently 120,000 conventional supermarkets in the
U.S. they do not all handle organic produce. Conventional supermarkets
will be selective and only offer the organic products in stores where
the customer is requesting them. Realistically, the more affluent
markets will have organic products more than the lower income markets.
While we talk about natural food stores and
conventional supermarkets, it is important to also remember that the
U.S. market is really a collection of many markets.
Very few companies launch
products in the total U.S. market. Most companies focus initially on a
few key markets and then roll out a product nationally at a later
stage. You should use a similar strategy when addressing the U.S.
market. Think more about how to approach the Southern California
market, for example, than how to approach the "U.S. market".
|
Top |
The conventional retail stores represent over
120,000 individual stores. A continuing trend in this sector is
consolidations of the retail chains. This has progressed much further
than in the natural food markets. In 1998, the top four food retailers
had a market share of 28.8% and the top 20 retail chains commanded
48.2% of the total retail foods sales.
According to a report by
the U.S. Department of Agriculture the top stores are number 1, the
Kroger/Fred Meyer group with 2,200 stores and US$43.1 billion sales.
Second is Albertson's with 1,796 stores and US$34.0 billion in sales.
The Safeway group is third with 1,435 stores and US$29.0 billion in
sales and fourth is the Ahold USA group with 1,294 stores and sales of
US$23.4 billion.
Top
10 states for conventional stores |
-
Texas
- New York
- California
- Florida
- Pennsylvania
- N.
Carolina
- Illinois
- Ohio
- Virginia
- Georgia
|
-
11,268
-
9,033
-
7,800
-
6,320
-
5,551
-
4,818
-
4,481
-
4,423
-
4,114
-
3,938
|
|
|
Another important sector in
the U.S. market is food purchased at restaurants. While consumer
spending in the food service section now equals or exceeds the U.S.
household food expenditures at retail stores very little is organic.
There are no records or market research to indicate the food service
sales of organic produce but in reality, very few restaurants use
organic produce, so I would not target this sector for the time being.
One positive fact is that the same produce
distributors that supply the natural food and conventional supermarket
sectors are distributing organic produce to the food service sector,
so if you develop the market, your product will have access to both
the retail and the food service markets.
|
|
U.S.
ORGANIC FARMING
The United States is
both a major exporter and importer of a broad range of fruits and
vegetables. This trend of the U.S. as an importer and exporter will
continue in the organic sector as well. A big advantage many of you
will have is that you are located in the Southern Hemisphere are at
least far enough south to provide produce for the U.S. market when
domestic farmers can not.
In the U.S., the organic
sector of agriculture has recorded growth of over 44% in certified
acreage from 1992 to 1997. During the same time, cropland grew by
111%. Additional reports in 1999 indicate a continuing pattern of
growth in organic acreage. The California Certified Organic Farms
group reports their certified organic acreage is up 38%, and the Idaho
Department of Agriculture report increases 55%. The Washington
Department of Agriculture reports a growth of 150%.
|
Total
U.S. certified farm land in acres
| |
1992 |
1993 |
1994 |
1995 |
1997 |
%
change |
|
Total |
935,450 |
995,453 |
991,453 |
917,894 |
1,346,558 |
44 |
|
Pasture/rangeland |
532,050 |
490,850 |
434,703 |
279,394 |
496,385 |
-7 |
|
Cropland |
403,400 |
464,800 |
556.750 |
638,500 |
850,173 |
111 |
|
Total
# of Certified growers |
3,587 |
3,536 |
4,060 |
4,856 |
5,021 |
40 |
|
Cropland acreage used
primarily for vegetable and fruit production as well as edible beans
and herbs. Key vegetable crops include lettuce, potatoes, tomatoes and
carrots.
-
-
|
Organic
vegetable acreage |
| Tomates |
3,780 |
| Lettuce |
5,780 |
| Carrots |
3,323 |
| Potatoes |
4,335 |
| Mixed
veg. (< 5 acres) |
2,699 |
| Mixed
veg, (> 5 acres) |
14,131 |
| Unclassified/other
veg. |
18,550 |
| TOTAL |
52,598 |
Ten states have acreage over 1,000 acres in
vegetable production. Of these states five are limited to summer
vegetable production due to winter weather conditions.
|
Top
organic vegetable acreage states |
| 1.
California |
23,977 |
6.
Oregon |
2,413 |
| 2.
Colorado |
4,621 |
7.
Minnesota |
1,811 |
| 3.
Wisconsin |
4,532 |
8.
New York |
1,615 |
| 4.
Washington |
3,785 |
9.
Illinois |
1,199 |
| 5.
Arizona |
3,081 |
10.
Florida |
1,017 |
Fruit production is lead by the certified organic
grape production with 19,299 acres. Organic grape production is
primarily in California. Apples are the second largest crop, followed
by citrus and tree fruits.
| U.S.
Organic fruit production in acres |
| Grapes |
19,299 |
| Apples |
8,846 |
| Citrus |
6,099 |
| Tree
nuts |
4,908 |
| Unclassified |
10,261 |
| Total |
49,413 |
Of the top ten states
with organic fruit acreage, only 7 states have over 1000 certified
acres. Again California is the leading state by a large margin,
followed by Arizona, Washington and Florida.
|
Top
organic fruit acreage states |
| 1.
California |
32,582 |
6.
Texas |
1,344 |
| 2.
Arizona |
4,3661 |
7.
Oregon |
1,231 |
| 3.
Washington |
2,978 |
8.
Minnesota |
360 |
| 4.
Florida |
2,625 |
9.
Michigan |
336 |
| 5.
Colorado |
1,816 |
10.
New York |
326 |
There is no U.S. government
program existing to encourage farmers to switch to organic production.
In fact, the existing farm support and crop insurance programs
provided by the U.S. government base their support on historical
production and yields which would be a disincentive to a farmer
switching to organic production. There is a pilot program to offer
organic crop insurance, which would provide some crop insurance
coverage for the first time for organic produce. This insurance could
cover hail and other climatic impacts which up to now have not been
covered for organic produce through conventional government programs.
Some individual states are providing assistance in conversion to
organic production.
Another speaker will be talking about the U.S.
organic standards so I will not talk about the standards today. I will
share with you that with the full implementation of these standards by
October 2002 the U.S. industry is already preparing for increased
interest in organic products. Major U.S. food companies are expanding
into the organic market segment and a consolidation within the
existing organic and natural foods product companies will lead to
increased advertising and promotion of organics in general which will
further increase U.S. consumer interest in organic products, including
produce.
|
Top |
CONSUMER PREFERENCES
AND PRICE CONSIDERATIONS
US consumers are
eating more produce. In fact US per capita consumption is 132 pounds
of fruits and over 186 pounds of vegetables. The U.S. consumer is
increasingly focused on personal fitness and better nutrition and
produce is an important factor in a healthy lifestyle. Twenty four
percent of the consumers have indicated that they have started or
increased their consumption of produce as a diet or health
requirement.
The publication. "The
Fresh Trends, 2001 Profile of the Fresh Produce Consumer" provides
us with insights into the US consumer on conventional produce
purchases as well highlights on organic issues and opportunities.
The U.S. consumer has a variety of concerns that
effect their fresh produce purchases. The primary factor is the
anticipated taste of the product. If you will be introducing new
fruits or vegetables, you should include provisions to provide
consumer sampling at the retail level if possible. Equally important
are the general appearance and the perception of cleanliness. Ripeness
and nutritional value are also factors in the purchase decision.
| Primary
factors impacting fresh produce purchases |
| -
87% Expectations of taste |
-
41% Item in season |
| -
83% General appearance |
-
39% Knowledge of how to prepare |
| -
74% Cleanliness |
-
33% Appearance of display |
| -
70% Degree of ripeness |
-
27% Complements main entrée |
| -
57% Nutritional value |
-
14% Where it is grown |
| -
47% Price |
-
12% Organically grown |
The origin of the produce is a lesser factor to the
general consumer. The awareness and desire for organic produce, while
not the primary factor in the purchasing decision, does contribute to
the purchases with some consumers.
Food safety is a factor impacting produce
purchases. Thirty two percent indicated that they felt certain fresh
produce items are more prone than others for food safety concerns.
Another study, indicates that 79% of the consumers report they are
completely or mostly confident that the food in their supermarket is
safe. In the survey on safety, 65% of the respondents expressed
concern about chemical residue on fresh produce. Only 34% felt
confident that the government agencies do a good job of insuring the
safety of fresh produce.
|
Safety
issues impacting produce purchases |
|
|
- 34%
Feel that government agencies do a good job of making sure
fresh produce is safe to eat
|
- 20% Agree
that fresh produce grown in foreign countries is as safe as
produce grown in the U.S.
|
- 16% State
that regardless of the cost, they'd rather buy organic
produce
|
Twenty percent felt
confident that fresh produce grown outside the U.S. was as safe as
U.S. grown produce. A core group of 16% indicated that they would buy
organic produce when discussing the safety of their produce purchases.
It gets a little
confusing when we start talking target prices. While the premium for
organic versus conventional produce ranged from 11 to 167 percent
during our study (store checks), the general consensus is still that
our target should be a 10-30% premium.
One of the largest
distributors recently stated: "We’re seeing an 18 to 25 percent
differential, but that can change depending on supply factors".
Please keep in mind that the production cost (or cost of the imported
produce) is only one factor in determining the retail price. Other
factors include demand, regional transportation costs, local supply
and competition.
Although the
stereotypical organic customer has been perceived as the radical who
will pay any price, a U.S. retailer has observed: " They are the
minority, there is a larger group of people who will buy organic
produce if it is reasonable, and the key word is reasonable."
Your target organic
premium should be in the 10-30 percent range. And remember, if you get
the higher premium one year, chances are other growers will notice and
move to serve that market as well, so don’t make any long range
plans for large premiums.
In
the fruit area, you can see there were no organic bananas available
during the February 2001 store check, while the apples seem to be well
covered. You can also see the trend mentioned earlier. When the
natural food stores such as Whole Foods can obtain organic products,
they do not offer a conventional alternative, while the conventional
markets do. The same holds true for vegetables, though we see some
conventional and organic products in the natural food store.
|
Top |
|
Organic
and conventional produce availability and pricing |
|
.
|
Whole
Foods |
Safeway |
King
Soopers |
|
Value
in US dollars |
Organic |
Convent. |
Organic
Premium |
Organic |
Convent. |
Organic
Premium |
Organic |
Convent. |
Organic
Premium |
|
FRUIT |
|
Banana |
.
|
0.39 |
.
|
.
|
0.59 |
.
|
.
|
0.59 |
.
|
|
D'anjou
Pear |
1.99 |
.
|
.
|
1.49 |
0.99 |
51% |
1.69 |
1.49 |
13% |
|
Fuji
Apples |
2.49 |
.
|
.
|
.
|
1.49 |
.
|
.
|
1.39 |
.
|
|
Gala
Apple |
1.99 |
.
|
.
|
1.79 |
1.49 |
20% |
1.99 |
1.39 |
43% |
|
Granny
Smith |
1.99 |
.
|
.
|
1.69 |
1.29 |
31% |
.
|
1.39 |
.
|
|
Golden
Delicious |
1.29 |
.
|
.
|
1.49 |
1.29 |
16% |
1.69 |
1.39 |
22% |
|
Kiwi
(each) |
0.39 |
.
|
.
|
.
|
0.25 |
.
|
0.69 |
.
|
.
|
|
Lemons |
.
|
0.39 |
.
|
1.99 |
1.79 |
11% |
1.99 |
.
|
.
|
|
Navel
orange |
0.99 |
3/1.00 |
.
|
0.99 |
0.89 |
11% |
.
|
0.39 |
.
|
|
Red
Delicious |
1.49 |
.
|
.
|
1.49 |
0.99 |
51% |
1.69 |
1.39 |
22% |
|
Grapefruit |
.
|
.
|
.
|
1.29 |
.
|
.
|
1.29 |
0.79 |
63% |
|
VEGETABLES |
|
Broccoli |
1.79 |
.
|
.
|
1.99 |
1.49 |
34% |
2.49 |
1.49 |
67% |
|
Brocoflower |
2.99 |
1.99 |
50.25% |
.
|
.
|
.
|
.
|
.
|
.
|
|
Cauliflower |
1.49 |
.
|
.
|
.
|
.
|
.
|
2.49 |
1.99 |
25% |
|
Celery |
1.99 |
.
|
.
|
.
|
0.89 |
.
|
.
|
0.99 |
.
|
|
Cucumber |
3.99 |
1.49 |
167.79% |
2.49 |
1.49 |
67% |
2.69 |
1.49 |
81% |
|
Garnet
Yams |
1.29 |
.
|
.
|
.
|
0.99 |
.
|
.
|
0.99 |
.
|
|
Green
Beans |
2.49 |
.
|
.
|
1.99 |
.
|
.
|
2.99 |
.
|
|
Green
bell pepper |
3.99 |
2.49 |
60.24% |
2.99 |
2.49 |
20% |
3.49 |
2.99 |
17% |
|
Avacado-each |
1.49 |
.
|
.
|
0.5 |
.
|
1.99 |
0.99 |
101% |
|
Iceberg
Lettuce each |
0.99 |
.
|
.
|
0.99 |
.
|
.
|
0.99 |
.
|
|
Red
Cabbage |
0.79 |
.
|
.
|
.
|
.
|
.
|
.
|
.
|
|
Red
Onion |
0.79 |
.
|
.
|
.
|
1.19 |
.
|
1.49 |
1.49 |
0% |
|
Red
Potato |
1.29 |
.
|
.
|
.
|
0.79 |
.
|
.
|
0.69 |
.
|
|
Red
radishes (bunch) |
1.99 |
.
|
.
|
.
|
0.99 |
.
|
1.99 |
0.9 |
121% |
|
Russet
Potato |
0.99 |
.
|
.
|
0.79 |
0.49 |
61% |
.
|
0.59 |
.
|
|
Spinach |
6.99 |
.
|
.
|
1.49 |
0.99 |
51% |
1.99 |
.
|
.
|
|
Sweet
Potato |
1.29 |
.
|
.
|
.
|
0.99 |
.
|
.
|
0.99 |
.
|
|
White
Onion |
1.49 |
.
|
.
|
1.29 |
.
|
.
|
1.49 |
.
|
|
Yellow
Onion |
0.99 |
.
|
.
|
0.89 |
0.59 |
51% |
.
|
0.69 |
.
|
Source: Authors
observations, February 2001 |
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IMPORTS
OF FRESH PRODUCE
While the value of imported organic produce is not
known, the U.S. imports over US$ 6 billion in various fruits and
vegetables some of which is organic. Many in the industry feel
that each fruit and vegetable imported could have an organic option
developed.
The U.S. National Organic Standards will be in full
effect by the end of October 2002. Until that time, imported fruits
and vegetables will not be regulated or controlled for
"organic" designation. However, the importer and the
retailer will want to know your organic certification, but it is not a
legal requirement for entry into the U.S.
All fruits and vegetables shipped to the U.S. are
regulated by a variety of US Government agencies. After October 2002,
exporters of organic produce to the U.S. will still be required to
comply with all these agency regulations, and will also have to
document that the claim of "Organic" is recognized by the
National Organic Standards group.
Those regulating importer produce include the Food
and Drug Administration, the Center for Disease Control, the US
Department of Agriculture, the Environmental Protection Agency, and
the Federal Trade Commission.
-
-
|
U.S.
regulation of imported produce |
|
The
Food and Drug Administration (FDA), which is part of the
Department of Health and Human Services and the Public
Health Service |
www.fda.gov |
|
Centers
for Disease Control and Prevention (CDC) |
www.cdc.gov |
|
The
U.S. Department of Agriculture (USDA) |
www.usda.gov |
|
Environmental
Protection Agency (EPA) |
www.epa.gov |
|
U.S.
Custom Service, U.S. Department of Treasury |
www.customs.ustreas.gov |
|
Federal
Trade Commission (FTC) |
www.ftc.gov |
As mentioned, the U.S.
imports in excess of US$6 billion in fruits and vegetables each year.
There is no record of what percentage of these imports represent
organic produce.
While the actual value of
organic produce imported to the U.S. is unknown, the Fresh
Trends 2001 report indicates that U.S. retail produce sales
include 2% organic produce. Those suppliers who can ship produce to
the U.S. during the winter months will find a greater reception at the
market.
In the study we review 45 different fruits and
vegetables. For discussion sake, we are indicating what 2% of the
imports would be worth. This is a good starting point to project
organic sales potential.
The key to accessing the U.S. market is the produce
importer. Retailers, whether the natural food retailer sector or the
conventional retailer, utilize produce distributors for obtaining
their organic produce. Most of the importer/distributors focus on
regional markets. While there are over 130,000 retail food stores
(natural and conventional), an exporter needs only to locate a few
importer/distributors to access these markets.
Produce importer/distributors are responsible for
the importation, warehousing and distribution of the product. Some
importers will function as the importer and distributor within a
region, and sell the produce to other wholesalers for servicing other
markets.
Sales of organic produce will develop market by
market. Again, it is important to visualize the U.S. market by region
rather than one big market. The greatest potential for imported
organic produce is to fill the market void during the winter. The
consensus of the industry is that organic produce offers great
potential, provided the products offered match the quality, taste and
price expected by the market. One distributor commented that his
customers (the retailers) would not stock inferior organics. They
would rather only present conventional produce if a quality organic
product was not available.
U.S. retailers are requiring produce arrive at the
store with the Price Look Up or "PLU" stickers. PLU stickers
provide a standardized set of numbers identifying random weight items
at a retail checkout. The importer/distributor can coordinate this
program for exporters. The PLU system is ready for organic products.
For organic products, the regular 4 digit number adds a "9"
at the beginning, which designates that product as organic.
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PROSPECTS
Importer's interviewed for this study indicate that
import programs offer great potential, if they include a well
organized transportation program to deliver quality products. The
exporter must pack products to U.S. market specifications, or find a
key importer who can repack to the U.S. specifications.
With the finalization of the National Organic
Standards and full implementation in October of 2002 the U.S. industry
will be aggressively promoting organic products, which will greatly
increase the U.S. consumer awareness. There has already been an
increased focus on organic foods by the major U.S. consumer food
product brands. Major companies have purchased existing organic food
companies and introduced product line extensions of existing national
brands with an organic focus. Mergers within the industry have also
consolidated organic and natural food brands to create stronger market
forces.
As these products enter the U.S. market with their
accompanying advertising budgets, the consumer will receive a new
level of promotion for organic products. This will increase the
consumer awareness of all organic products.
The U.S. retail sector will respond to this public
demand by providing a broader range of organic produce. This will also
increase organic produce imports to provide year-round availability.
One distributor interviewed indicated that he was very interested
in exotic produce options. Another indicated "I could buy organic
colored bell peppers 9 months a year if I could find a source."
The growing public awareness and desire for organic
produce makes the United States a significant market for common and
exotic fruits and vegetables. Retailers are seeking year round
availability as the market demand increases.
Our study revealed over 20 vegetables with US
market potential, and over 20 fruits and nuts.
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Top
vegetable prospects include:
| Top
vegetable prospects |
|
Asparagus, fresh or frozen |
Okra, fresh or frozen |
|
Avocados |
Onions |
|
Beans, fresh or frozen |
Peppers |
|
Carrots, fresh or frozen |
Plums |
|
Cauliflower & broccoli, fr/fz |
Potatoes, fresh or frozen |
|
Celery, fresh |
Radishes, fresh |
|
Cucumbers |
Squash |
|
Eggplant |
Tomatoes |
|
Endive, fresh |
Cabbage |
|
Lettuce |
Garlic |
|
Mustard |
Peas, incl chickpeas |
|
|
Top |
Top
fruit and nut prospects include:
|
Top
fruit and nut prospects |
|
Grapes |
Other nuts |
|
Cashew nuts |
Peaches |
|
Melons |
Macademia nuts |
|
Citrus |
Kiwi fruit, fresh |
|
Mangoes |
Brazil nuts |
|
Pineapples |
Plums |
|
Apples |
Water chestnuts |
|
Strawberries |
Filberts |
|
Other berries |
Chestnuts |
|
Pears |
Pistachio nuts |
|
Pecans |
Bananas |
|
|
|
While the title of my
presentation is the U.S. market for organic fruits and vegetables, I
would like to share with you some insights into Canada.
First, Canada has no production capacity in the
winter months. If there is fresh produce in January and February, it’s
imported.
The Canadian market is less developed than the U.S.
market, but the retailers have identified the organic food sector as a
unique opportunity to develop the quality image of their store.
While in Canada I heard that the largest retailers
are aggressively seeking sources for organic products. Their goal is
to add several thousand different organic products in their store
utilizing their own store brand. With expanded processed organic
product offerings, there will be an increased demand for produce as
well.
The Canadian market mirrors the U.S. market in that
the retailers in Canada want to purchase their organic produce from
established wholesalers, so locating a few Canadian wholesalers can
give you the Canadian market as well.
Thank you for the opportunity to talk about the US
market for organic produce. The U.S. consumer is seeking quality
organic products, not just in our summer months, but year-round.
Supplying the U.S. in our off season represents a great opportunity
for your industry. I hope to see your products on our shelves (and in
my shopping cart) soon.
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