A new report from Rabobank is tempering expectations for organic production as growth in the sector is beginning to slow. The six-page report, “Organic Produce Premiums Under Pressure,” notes that organic food sales grew an average of 10 percent per year between 2010 and 2016. However, the previous two years’ growth was only tracked at 6 percent.
Some of the slowdown in growth can be attributed to higher production volume, creating lower prices for some organic produce. Retail prices increased an average of 1.3 percent a year for the top organic products between 2013 and 2015, but then declined by an annual average of 0.4 percent between 2016 and 2018.
Organic food sales hit a milestone this year, but there is some concern related to the future of the sector. The report noted that organic growers generally require at least a 40 percent premium over conventional produce in order to make organic production cost effective. Author of the report, Roland Fumasi, senior analyst for fresh produce for Rabobank, noted that although difficult, the long-term goal for organic producers should be establishing a means to produce organically at a price point similar to conventional production.
Listen to the report below.