Interest in Organic Food Offers Opportunities: Natural Products More Common in Stores

By James Mayse, Messenger-Inquirer, Owensboro, Ky.

Jan. 24–Five years ago, organically grown products were largely confined to specialty stores.

Today, they are spread through almost every aisle of the average grocery.

Organic products — which are grown according to specific standards and have not been treated with herbicides or pesticides — have become more than a niche market. Although it is costly to become a certified grower of organic products, there are opportunities for Kentucky farmers who want to grow organic produce.

“There are really good opportunities for folks who have the product,” said Tim Woods, an associate extension professor of agricultural economics at the University of Kentucky. ” … The high-end chefs are interested in anything organic.”

Although the industry has grown over the years, interest in organic products increased dramatically because of grocery stores such as Whole Foods Market, Woods said.

“Most people who were buying these products recognize they have to pay a lot more,” Woods said. “These are lifestyles retailers are trying to target.”

The lifestyle is LOHAS, or “lifestyle of health and sustainability.”

People who purchase organic products at Whole Foods and other stores are willing to pay more for their food because of the perceived benefit of eating products not treated with chemicals — and because they believe organically grown products have less of an impact on the environment.

“What people are getting when they’re buying an organic product, they’re not so much buying it for the marginal health benefit, but as an insurance policy,” Woods said. “… There is increased interest in how that product is managed, and its subsequent effect on the environment. The whole framework behind organic is to work toward a sustainable production system.

“As consumers are becoming more and more concerned about the kinds of foods they eat … they’re more and more conscious about the choices they’re making on their food,” Woods said.

While large traditional grocery chains were happy with 2 percent profit margins, stores such as Whole Foods Market were bringing in “10 times the profit of Wal-Mart,” Woods said. The profit margin in organic foods was too big for large retailers to ignore.

When large retailers began stocking organic products, they were deliberately targeting the traditional organic buyer — who buys the product regardless of the higher price. But Wal-Mart is also trying to reach the average consumer with organic products.

Trying to capture both ends of the buying spectrum has been a challenge, Woods said.

“Wal-Mart has made it a mission to make organic affordable,” Woods said, adding the store chain is attempting to sell organic products at prices 10 to 15 percent higher than nonorganics.

That price has not been attractive to many of organic farmers.

“A lot of farmers are saying, ‘We don’t want to play,’ and I can’t blame them,” Woods said. Growing organic products “is a lot more expensive,” he said.

While organic products are grown to specific standards not followed by the rest of the industry, nonorganic farming was not the cause of widely publicized E. coli outbreaks in 2006. In those cases, the products were contaminated during processing and packaging, Woods said.

“Most of the food safety compromises take place at the packaging level,” he said. “That can happen equally with organic or conventionally produced products.”

For now, organic farming is growing most rapidly on the West Coast. Most of the organic farmers in Kentucky are operating on a small scale, Woods said.

“I’m not aware of anyone in Kentucky who is selling to the big retailers,” he said.

Although less than 2 percent of the food consumed in the United States comes from organic products, the market has potential for state farmers, Woods said. Natural food health stores are proliferating, and organic farmers are finding direct ways to market their products.

“People have found most of their best opportunities either through farmers’ markets or to a dedicated customer group,” Woods said.

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Copyright (c) 2007, Messenger-Inquirer, Owensboro, Ky.

Distributed by McClatchy-Tribune Business News.

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