Organic appetite continues to grow
September 8, 2015
Next week, Sept. 12-19, is Washington Organic Week, an annual celebration of organic farms, foods, and businesses in the state. This week we are releasing our 2014 statistical update of the organic sector, a report we have now produced for 10 years running. With continuous data over time, one can start to pick out some trends and patterns, which are discussed below. I had hoped to also be reporting here on the results of the 2014 USDA organic production survey, which was due to be released on August 31st but was delayed. Those results will be discussed in a future post. Globally, the most current data on organic agriculture come from the annual “World of Organic Agriculture” report (Willer and Lernoud, 2015), free online, which gathers data on the organic sector from 170 countries around the world.
At all levels – state, national, and global – we see organic continuing to grow, being driven by consumer demand. In 2013, there were an estimated 106.5 million acres of agricultural land (cropland, permanent grassland, other) under organic management worldwide, or about 1% of global agricultural land. Most (63%) was in permanent grassland (for organic livestock grazing) which is easy to certify as organic, thus countries such as Australia and Argentina are cited as having the largest area of organic land. About 18% of global organic ag land was in arable crops (e.g., grains, vegetables), and 7% in permanent crops (e.g., tree fruit, coffee, grapes, olives), and both the arable and permanent crops are particularly relevant to our state. North America had 7.4 million acres of organic agricultural land, of which 42% was arable land. From 2004 to 2013, global organic arable land grew from 8.4 million acres to 18.8 million acres (+123%), and permanent crop land grew from 2.2 million acres to 7.9 million acres (+255%). For many crops, a significant area of the organic land reported was in transition, thus more product will be reaching markets in the near future.
Based on the data collected, organic area can be compared to the global area of the same crop under all management, as estimated by the Food and Agriculture Organization of the United Nations (FAO). Examples of the share of global area that various organic crops represent are:
Cereals 0.5% Coffee 7.2%
Oilseeds 0.4% Grapes 4.6%
Vegetables 0.5% Temperate fruit 1.8%
The steady increase in global organic sales (Fig. 1) has been driven by annual growth rates of 10-20% over the last 15 years. Even during the 2008 recession period, global growth was over 7%. Sales increased by about US$9 billion in 2013 over the previous year. North America and Europe have accounted for over 90% of organic sales worldwide for the past decade, and global demand growth has come from these two regions. If Asian markets begin to increase demand, then growth would increase even faster. Already, many companies report difficulties in sourcing organic product, so the sector appears to be supply-constrained at this time. And per capita expenditure on organic food is still very low, even in Switzerland, the country with the highest amount of spending. There, the per capita expenditure is about $280 per year, or about 5% of the annual per person spending on food. Obviously, there is tremendous room for growth.
For Washington State, this strong demand has expressed itself in several ways. The area of organically managed land registered with a certifier (certified and transition) in 2014 is about 20% below the peak reached in 2009. While total area has not rebounded, certain crop categories have. Vegetables peaked in 2008, decreased 33% by 2010, and have now reached a new peak at 20,063 acres. Grains, pulses, and oilseeds peaked in 2010, dropped 40% by 2013, and increased 32% in the past year. Tree fruit, the highest value category, has been slowly increasing since 2012. Based on a survey of growers in January 2015 regarding their intentions to certify more orchard land, the area of organic apples, pears, and cherries could increase by 60-70% in the next three years. Certified organic blueberry area went up over 850 acres since 2009, more than doubling this crop. A few more dairies have become certified, organic dairy cow numbers are up 30% since 2010, but still this sector is smaller than at the peak in 2008. The number of farms with certified organic land has decreased by about 50 since the peak in 2009 to 700 in 2014, with 7 farms in transition.
The biggest change has been in the farmgate value of production, as reported by growers to their certifiers as part of the renewal process (Fig. 2). Sales values dipped slightly during 2009 at the depth of the recession, and then experienced 22-26% annual growth from 2010 to 2013 when they reached $435 million. Most of the growth came from eastern Washington farms, with 86% of the sales in the state from 68% of the acres. Organic sales grew 67% from 2007 to 2012 compared with 42% for all farm sales in the state for the same period (NASS, 2012). The average gross revenue per farm in 2012 was $486,000 for organic farms versus $245,000 for all farms in the state. If all organic sales were considered as one “crop”, then organic would be the eighth largest commodity in the state by sales value for 2013.
Still, with all this growth in demand, the organic share of agriculture in the state remains small. Based on the 2012 agriculture census (NASS, 2014), about 2% of the farms in the state are certified organic (more are under organic management, and either exempt or choosing not to certify); 1-2% of the cropland is certified organic; and about 4% of the farmgate sales are organic. Nationally, less than 1% of the farmland was certified organic in 2012. The share is higher for certain crops in the state: about 9% of all apple and pear acreage in the state is organic. Some 9% of the sweet corn acres and 12% of the green pea and blueberry acres in the state are certified organic.
I expect the organic sector to continue to evolve. Different sized and types of farms will find their niches. Farms will enter organic, find it doesn’t work for them and exit. For example, the net change in organic farm number from 2011 to 2012 was +1; however 52 farms entered while 51 farms exited certification that year. New configurations such as food hubs may improve economic viability for many smaller farms. And the trend toward local foods is likely to benefit in-state organic farmers for Washington markets. One thing seems clear: consumer demand will continue to increase, and with it, more opportunities for production.
NASS. 2014. 2012 Census of Agriculture. USDA National Agricultural Statistics Service, Washington, DC. http://www.agcensus.usda.gov/Publications/2012/#full_report
Sahota, A. 2015. The global market for organic food and drink. P. 120-123. IN: Willer, H. and Lernoud, J. (eds.). The World of Organic Agriculture. FiBL & IFOAM, Frick and Bonn.
Willer, H. and Lernoud, J. 2015. The World of Organic Agriculture. FiBL & IFOAM, Frick and Bonn. 306 pp. http://www.organic-world.net/yearbook/yearbook2015.html?L=0