Organic food sales totaled $43B in 2016
- U.S. organic product sales were about $47 billion in 2016 — an increase of nearly $3.7 billion from the previous year — according to the Organic Trade Association’s 2017 Organic Industry Survey.
- Organic food sales saw the biggest leap, increasing by 8.4% — or $3.3 billion — over 2016.
- The largest chunk of organic food sales — about 40% — was in fruits and vegetables. This sector, which was worth about $15.6 billion, posted an 8.4% growth rate. OTA's study says this is about triple the 3.3% growth rate last year for all produce. Organic produce makes up about 15% of all the fruits and vegetables Americans eat.
According to a recent TechSci Research report, the global organic food market is projected to grow at a CAGR of more than 14% from 2016 to 2021. The new OTA survey supports this belief as the organic sector once again showed signs of an upward trajectory. In fact, organic food now accounts for 5.3% of total food sales in the U.S.
Growth like that is great for the industry, but there may be a problem lurking in the shadows. In order for supply to keep up with the rapidly expanding demand, more farmers will need to get on board the organic train. This is quite a challenge. Transitioning to organic farming is a long and expensive process, which takes three years, many process changes, and copious inspections. earlier this year, the U.S. Department of Agriculture partnered with the OTA on a new transitional certification program, which could make it more enticing for farmers to make the switch.
It’s a move that many who support organics said is greatly needed as the shopper base has expanded far beyond the traditional core group of hard-core organic loyalists. Many analysts saying those who buy organics has more than doubled in a short time. However, others are not sure if consumers will understand what transitional certification means — or if they will be willing to pay higher prices for food bearing that seal.
Organics may also get their own government-authorized check-off program, which could help raise $30 million a year to spend on research and marketing. The program was authorized in the 2014 Farm Bill, and the issue of how to establish it was opened for public comment earlier this year. If the program comes to be, those funds could also help expand the organic supply.
It’s not just organic food seeing a rise in popularity. Sales of organic items for consumers' wardrobes, bedrooms and bathrooms are also on the rise. Non-food organic products saw sales increases of almost 9% to $3.9 billion, according to the report.
Follow Keith Loria on Twitter