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published on October 14, 2021 - 11:33 AM
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The pandemic of 2020 ushered in a booming demand for organic produce at retail stores. A new report shows the bump was dependent on the product, and while researchers anticipate a 2021 slowdown, they conclude demand should outpace 2019 growth.

As organic foods became more common, growth in the sector began to lag, according to the research report by Almuhanad Melhim, analyst for RaboResearch Food & Agribusiness.

Between 2013 and 2014, growth was pegged at 12% for the organic sector as a whole. By 2019, growth had slowed to 4%. The rush on retail produce last year, however, drove growth in organics to 13% year-over-year for $56.5 billion nationwide — $3 billion more than projected. The report attributed this growth to increased cooking and eating at home.

“Meals prepared at homes are more likely to have a higher organic-nonorganic ingredient ratio than those prepared in the foodservice sector,” the report stated. Higher disposable incomes from stimulus payments may have also played a role in filing the gap between nonorganic and organic food pricing.

The report does not expect growth to continue at the same pace, however.

The report concludes that the return to offices will reduce the amount of cooking at home and the rise of inflation will decrease the purchasing power that enabled consumers to pay for premium products such as organics.

Melhim forecast that the organic sector as a whole would still grow, but at a slower pace. In the first and second quarters of 2021, year-over-year growth occurred at a pace of 9.3% and 4.1%, respectively.

Growth in the second quarter was almost entirely driven by increased prices as volume only grew .2% year-over-year. However, the combined growth rate remains higher than the 5% year-over-year rate.

Demand for specific organic products depends largely on ease of consumption, the report found.

Packaged salad, berries, apples, carrots, bananas, lettuce and tomatoes lead the way in organic growth.

Tulare County reported 99 organic growers in its 2020 crop report with 12,164 acres. Citrus, grapes, tree fruit and nuts lead the way in acreage. In 2019, there were 104 organic growers reported and 12,929 acres of organic crops.

The amount of organic food production increased 15% nationwide over the past five years to 28,500 certified operations, of which 30-40% is in fresh produce. Acreage increased between 30-40% to about 355,000 acres.

Domestic shipments of organic fruits and vegetables grew 22% between 2016 and 2020 to 1.1 million tons. In the first half of 2021, shipments were 15% lower than shipments in 2020.

As domestic shipments have slowed, demand for imports have grown, with Mexico leading the way, the report found.

The number of foreign certified-organic operations grew by 37% to 17,000 operations in more than 150 countries. Fresh fruits and vegetables constituted half of those operations. In 2020, imported organic food made up 11% of total organic shipments. In 2016, they made up only 3%. In 2021, that ratio increased to 46%, with Mexico accounting for half of those imports.

The report concluded that short-term supply growth should be catered toward individual products. It placed grapes, spinach and blueberries — among others — in a “caution” category. It placed several lettuce varieties, lemons, bell peppers, honeydew and broccoli in the “positive” category.

Oranges, romaine lettuce, cantaloupes and grape tomatoes were in the “neutral” outlook category.


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