Organics Growth, It’s All About the Price

The Lempert Report
August 04, 2016

Many consumers and news reports have always looked at organics with a skeptical eye.

While science has failed to prove that organic foods or beverages have a nutritional benefit over conventional foods, the checkout proves that organics are more expensive. 

A new report from the US Department of Agriculture's Economic Research Service published the price difference between organic and conventional options for 17 different types of food. On the low end, organic spinach costs just 7 percent more than conventional spinach (on average). At the extreme, organic milk costs 72 percent more and organic eggs cost 82 percent more. 

What is most interesting about the report is that the USDA notes that the organic premium for certain products — like coffee or spinach — has shrunk pretty significantly in the past decade. Back in 2004, organic spinach cost 60 percent more. Today that's down to 7 percent. The reason is back on the farm. 

In the past organic farmers simply paid more for non-synthetic herbicides and insecticides. Today, organic farming has come a long way and many farmers are using insect predators and integrated pest management techniques to reduce cost and be more effective. 

So why haven’t we seen the price difference reduced in milk and eggs? The feed for animals (like corn and soy) must be grown organically which is in short supply and very expensive. Farmers typically make more money on conventional corn and soy and are reluctant to switch. 

Today sales of organics are $37 billion here in the U.S. and are expected to continue to grow at the rate of ten percent a year.