Sales from organic U.S. farms reached $5.5B last year

Chicago | Reuters — Sales from organic U.S. farms reached US$5.5 billion last year, a 72 per cent increase from 2008, the U.S. Agriculture Department said in a report on Thursday that highlighted the consumer trend toward such products.

The USDA data, compiled through farmer surveys, showed that milk was the top organic commodity in 2014 with sales of about $1.1 billion (all figures US$). Sales of organic eggs, which are laid by hens raised without cages, totaled $420 million.

Demand for organic foods, from fruits and vegetables to meat and grains, has risen steadily in the past decade as shoppers have become more concerned about genetically modified products, as well as chemicals used in the food chain.

“We need a higher rate of growth in order to get close to meeting the demand,” Laura Batcha, chief of the Organic Trade Association, said after reviewing the sales data.

Organic agriculture uses methods that avoid most synthetic materials, such as pesticides and antibiotics.

Sales are geographically concentrated, with 10 states accounting for 78 per cent of business in 2014, according to USDA; California alone represented 41 per cent of sales.

Nationwide, the total number of organic farms dropped by three per cent to 14,093 last year from 14,540 in 2008, according to USDA. The decline came among farms that are exempt from government certification because they earn less than $5,000 annually from organic sales.

The number of larger farms that are certified as organic rose 15 per cent from 2008 to 12,634, USDA said.

Differences in survey methods from 2008 to 2014 may have affected the count of smaller farms, said Troy Joshua, chief of the environmental economics and demographics branch of USDA’s National Agricultural Statistics Service. Also, some smaller farms have expanded into bigger, certified operations, he said.

USDA said 39 per cent of the organic farmers surveyed, or about 5,300 producers, said they planned to increase production in the next five years.

Sales at natural and organic retailers rose nine per cent in the past year, compared with a 1.3 per cent gain at supermarket chains and other conventional retailers, according to data from Spins, a market research firm that tracks data from store scanners.

In May, Spam maker Hormel Foods said it would buy organic meat processor Applegate Farms for $775 million.

Last year, General Mills said it would acquire organic food producer Annie’s for about $820 million.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago.

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