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Organic Reaches for Higher Growth After Inflation's Challenges

“Some” may not be as good as “all,” but should be much better long-term than “none.” That is how Matthew Dillon, co-CEO of the Organic Trade Association (OTA), views producers’ and consumers’ commitments to organic agriculture.

What is “organic?” The USDA provides this definition:

“Overall, organic operations must demonstrate that they are protecting natural resources, conserving biodiversity, and using only approved crop, livestock and processing inputs. The use of genetic engineering (GMOs), ionizing radiation, sewage sludge and most synthetic pesticides and fertilizers is prohibited from organic production.”

Specifics are key to the industry. Otherwise, a producer could claim to be organic without adhering to the federal standards.  

The OTA lays out how uniformity became established.

“The organic regulations developed from the Organic Foods Production Act (OFPA), were implemented in 2002. Prior to 2002, private and State agencies certified organic practices, but there was no uniformity in standards and therefore no guarantee that "organic" meant the same thing from state to state, or even locally from certifier to certifier. National standards for organic products were desired by both producers and consumers to clear up confusion in the marketplace and to protect against mislabeling or fraud.”

Producers and consumers may not be 100% organic in all their priorities. Transitioning from convention to organic overnight may not be reasonable for many producers, especially considering how higher inflation has taxed consumers over the past few years.

“That’s a lot to ask of a farmer,” Dillon told American Farmland Owner from his Nebraska office.

Dillon takes a realistic view of the future: convince producers to buy into the concept of organic, even partially, and expand from there.

Higher food prices overall for consumers can increase pressure for shoppers to find cheaper alternatives. And organic will likely not be the least costly choice as it can be 10-25% more expensive depending on the product.

“At retail, some shoppers traded down within the organic segment. Ultimately, many just bought less as their pocketbooks tightened,” OTA’s Organic Industry Survey 2024 described.

The survey cited 3.4% growth in the organic industry in 2023. The yearly increase was the second lowest over the past decade.  

US Organic vs Total Store Sales Growth and Penetration Graph

“The path of the organic industry, like many other sectors, from the spring of 2020 to the spring of 2024 could be described as somewhat of a rollercoaster. Still, it appears that the industry has figured out how to buckle up and hold on, or in many parts of the country, to weather the storm,” the survey stated.

Dillon knows that growing organic goods may present additional challenges. Higher costs may be the paramount consideration. So, he doesn’t fret over producers who don’t go all in on organic.

“For farmers there's a three-year transition from conventional to organic,” Dillon explained. “In that transition there's a lot of learning.”

Part of that learning involves understanding the finances. “Sometimes, yields will go down,” Dillon said. “So, there's a cost. We call it the ‘Valley of Transition.’ It's not easy.”

Year four of the transition can provide more economic assurance. “What I encourage farmers is to find business partners who can help support them, find the right technical assistance providers, and do the economic modeling, to make sure you understand.”

And then look forward to that four year. “It looks like in year 4, 5, and 6 to get you back towards not just whole, but even greater profitability,” Dillon said.

LEARN MORE: This research that appeared in the National Center for Biotechnology Information addressed the question, “Conventional vs. Organic Agriculture–Which One Promotes Better Yields and Microbial Resilience in Rapidly Changing Climates?” Read the 2022 study’s findings here. 


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