Marketing Environment for
Organically-Produced
Vegetables and Fruit
Dr. Charlie Hall
Dept. of Agr. Economics
crh@utk.edu
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What is “organic”?

"Certified organic" means that agricultural
products have been grown and processed
according to USDA's national organic standards
and certified by USDA-accredited State and
private certification organizations.

Certifying agents review applications from
farmers and processors for certification eligibility,
and qualified inspectors conduct annual onsite
inspections of their operations.
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Organic: Fact & Fiction

Organic is a production claim about how food is
produced and handled.

Organic is not a content claim - it does not
represent that a product is “free” of something.

Organic is not a food safety claim or judgment
about the quality and safety of any product; nor
does it mean a product is superior, safer, or
more healthful than conventionally produced
food.
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Why National Organic Standards?

Consumers wanted a more transparent and
responsive supply chain.
Concerns about the environment
 Demand for certain food attributes


Producers wanted a bigger slice of the economic pie.

Standards would bring:
Uniformity among organic standards;
 Reciprocity among certifying agents; and
 Assurance of organic integrity

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Road to the
National Organic Standards

1990
Organic Foods Production Act

1993
USDA names National Organic
Standards Board

1997
USDA publishes first proposal

03/00
USDA publishes second proposal

12/00
USDA publishes final regulation

04/02
Accreditations and certifications begin

10/02
Full implementation
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USDA’s Role

Accredit certifying agents

Compliance and enforcement

Promulgate new and amended
regulations

Recognize foreign governments

Perform equivalence determinations

Approve State organic programs
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$12.0
25.00%
$10.4
$10.0
20.00%
$8.6
$7.4
15.00%
percent
billion $
$8.0
$6.1
$6.0
$5.0
$4.3
$4.0
10.00%
$3.6
5.00%
$2.0
$0.0
0.00%
1997
1998
1999
Sales
2000
2001
Growth rate
2002
2003
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• 8,035 organic operations in 2003
• 1.4 millions acres of cropland
• 750,000 acres of pasture
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Of the $10 billion in total organic food sales in 2003, fruits and
vegetables remain the largest category, accounting for 42 percent of
sales. The National Business Journal estimates that U.S. sales of
organic products will reach $17.8 billion by 2007.
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Over 5,000 new food and beverage products were introduced to
the U.S. retail market in 2003. Organic product introductions
made up about 10% of these. Beverages, prepared foods, and
snacks led the number of introductions in 2003.
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Top Eight Organic Vegetables Purchased
1.
2.
3.
4.
5.
6.
7.
8.
Tomatoes
Carrots
Peaches
Squash
Leafy vegetables
Apples
Potatoes
Bananas
Consumers tend to
buy more organic
vegetables than fruit.
Source: The Packer, 2002.
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Organic Marketing Channels

One of the most striking differences between conventional and
organic food marketing is the predominant use of direct markets,
such as farmers' markets, farmstands, roadside stands, farm
subscriptions, and mail-order sales.

Cornell University recently estimated that only about 1.6 percent of
U.S. total fresh produce sales occur directly between producers
and consumers. However, direct markets account for between 17
and 22 percent of total organic sales according to a National Food
Manufacturers survey.

USDA surveys of organic fruit and organic vegetable growers
indicate an even higher percentage using direct marketing as their
primary sales outlet.

Organic products sold in 73% of mainstream supermarkets.
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Why do people buy organic?








*
Prefer to have fewer chemicals in my food – 63%
Better for me & my family – 51%
Better for the environment – 37%
Prefer the taste of organic – 30%
Looked better than the non-organic – 19%
Item was on sale – 17%
First time buyer and wanted to try it – 9%
Only choice available – 7%
17% of 1,200 (or 204) respondents, The Packer’s Fresh Trends 2002
report, Vance Publishing Co.
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Three Organic Labeling Categories

“100% Organic”
 Just
that, including all processing aids
 May use USDA seal

“Organic”
 At
least 95% organic agricultural ingredients
 Remaining 5% on the National List
 May use USDA seal

“Made with Organic Ingredients”
 From
95% to 70% organic agricultural ingredients
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Organic Industry Summary Stats

Fastest growing U.S. food segment (20% annually)

2003 sales of $10.4 billion; $4.4 billion was produce.

Accounts for 2% total U.S. food sales; 5.5% of
produce sales.

U.S. market projected at $17.8 billion by 2007

Certified cropland in 2003: 2.2 million acres

Organic products sold in 73% of mainstream
supermarkets; 17-22% is direct marketed.
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