Consumer demand for organically produced goods showed double-digit growth for over a decade

Consumer demand for organically produced goods has shown double-digit growth for well over a decade, providing market incentives for U.S. farmers across a broad range of products. Organic products are now available in nearly 20,000 natural food stores and nearly 3 of 4 conventional grocery stores. Organic sales account for over 3 percent of total U.S. food sales, according to recent industry statistics.

* Organic food is sold to consumers through three main venues in the United States—natural food stores, conventional grocery stores, and direct-to-consumer markets.

* A typical organic consumer is difficult to pinpoint, but new research continues to shed light on consumer attitudes and purchasing behavior.

* Organic price premiums continue to remain high in many markets as the demand for organic products expands.

Organic Sales Widen in All Food Categories

USDA does not have official statistics on U.S. organic retail sales, but information is available from industry sources. U.S. sales of organic products were $21.1 billion in 2008—over 3 percent of total food sales—and will reach $23.0 billion in 2009, according to the Nutrition Business Journal.
Fruits and vegetables accounted for 37 percent of U.S. organic food sales in 2008 d

Fresh fruits and vegetables have been the top selling category of organically grown food since the organic food industry started retailing products over three decades ago, and they are still outselling other food categories, according to the Nutrition Business Journal. Produce accounted for 37 percent of U.S. organic food sales in 2008, followed by dairy (16 percent), beverages (13 percent), packaged and prepared foods (13 percent), bread and grains (10 percent), snack foods (5 percent), meat, fish, and poultry (3 percent), and condiments (3 percent).

Most organic sales (93 percent) take place through conventional and natural food supermarkets and chains, according to the Organic Trade Association (OTA). OTA estimates the remaining 7 percent of U.S. organic food sales occur through farmers' markets, foodservice, and marketing channels other than retail stores. One of the most striking differences between conventional and organic food marketing is the use of direct markets—Cornell University estimates that only about 1.6 percent of U.S. fresh produce sales are through direct sales. The number of farmers' markets in the United States has grown steadily from 1,755 markets in 1994, when USDA began to track them, to over 4,685 in 2008. Participating farmers are responding to heightened demand for locally grown organic product. A USDA survey of market managers found that demand for organic products was strong or moderate in most of the farmers' markets surveyed around the country, and that managers felt more organic farmers were needed to meet consumer demand in many States.
Demand for organic products in 210 U.S. farmers' markets
Price Premiums Remain High

USDA's Agricultural Marketing Service (AMS) has reported wholesale prices for a few organic fruits and vegetables for about a decade, and recently added price premiums for poultry and sales volume for milk.

* AMS Market News publishes organic prices for fruit and vegetable crops in a number of the 15 terminal markets where prices are collected, including Boston and San Francisco. See an ERS analysis of organic farmgate and wholesale prices for a comparison of organic and conventional prices from 1999 to mid-2005.

* Market News began reporting organic poultry prices in the weekly Organic Poultry and Egg report in January 2004. The report tracks prices paid to poultry or egg companies by the first receiver (such as a retailer, distributor, or manufacturer).

* In January 2006, AMS began reporting sales (in volume) of organic fluid milk products in monthly milk marketing order reports.

* Iin January 2007, Market News began biweekly reporting on organic grains in the Upper Midwest and Eastern Corn Belt (use the main AMS page to access the latest biweekly reports).

At the retail level, organic produce and milk, the two top organic food sales categories, receive significant price premiums over conventionally grown products.

ERS analyzed organic prices for 18 fruits and 19 vegetables using 2005 data on produce purchases, and found that the organic premium as a share of the corresponding conventional price was less than 30 percent for over two-thirds of the items. The premium for only one item—blueberries—exceeded 100 percent. In contrast, organic price premiums for a half-gallon container of milk ranged from 60 percent for private-label organic milk above branded conventional milk in 2006 to 109 percent for branded organic milk above private-label conventional milk.
Organic Consumers Increasingly Mainstream

Numerous studies have been conducted by researchers in the public and private sectors on the buying habits and demographics of consumers of organic foods. Results have varied depending on the type of survey, sample size, and geographic coverage. However, a few general themes have emerged. Consumers prefer organically produced food because of their concerns regarding health, the environment, and animal welfare, and are willing to pay the price premiums established in the marketplace.

Organic products have shifted from being a lifestyle choice for a small share of consumers to being consumed at least occasionally by a majority of Americans. National surveys conducted by the Hartman Group and Food Marketing Institute during the early 2000s found that two-thirds of surveyed shoppers bought organically grown foods (see Recent Growth Patterns in the U.S. Organic Foods Market for a literature review of organic consumer studies).