Organic Food Industry Analysis

Topics: Organic food, Organic farming, Sustainable agriculture Pages: 9 (1719 words) Published: February 11, 2015


Organic Industry Analysis

Managerial Economics

Abstract
The organic products industry has shown consistent growth over the last 25 years, growing 3,400% (Flynn, 2014). The organic industry earned $35 billion in 2014 up from $1 billion in 1990 (Flynn, 2014). Credited with being the primary market force drivers, food safety and health concerns have been driving the industry since the end of the 2009 recession. This research paper examines the organic products industry and identifies how supply and demand affects future prices of organic products.

Organic Industry Analysis
This paper provides a succinct market analysis of the organic food and product industry. The paper provides background and description of the organic product market. The paper examines U.S. and global market trends of the organic food and product industry by examining demand and supply for organic products. This paper identifies key box store retailers and describes their roles in driving the organic food industry. Analyzing various studies from the USDA and its Economic Research Section (ERS) identified the driving market forces behind the popularity of the organic foods and products, which are the improvement of health and reduction of pesticides from individual diets. The purpose of this paper is to identify market trends and the driving forces behind the global organic food and product market. The driving forces behind the organic food market are health conscious millennials and new mothers who want to reduce chemicals from their diet. Background and Description

The term organic has been the topic of controversy for academics and business leaders since the 1940s. The controversy involves several sub-topics such as lack of international standards for organics, cross contamination of organic products during transport, genetically modified organisms (GMO), chemicals and pesticides, and costs to produce organic goods. The definition of organic is: made or grown without the use of artificial chemicals (Organic, 2015). The premise of organic food is not new; however, the creation of national standards has objectively standardized what may be considered an organic product. As the global population grows, the demand for food has caused farmers to increase efficacy and reduce crop waste; however, the methodology utilized to preserve crops may be more of a detriment to human health resulting in the higher demand for uncontaminated food sources and products. Demand

The organic food market was supply driven for many years; however, demand now drives the organic market (Dimitri & Oberholtzer, 2009, p. 10). The demand for organic products is increasing every year as people use marginal analysis to justify the higher expense for organic products: Do the benefits out weight the costs? Consumer mistrust in conventional food producers, who add harmful dyes, trans-fats, and high fructose corn syrups to products, is another variable driving the organics market. Environmentalists are also another market force mechanism contributing to the demand for organic products because organic farming reduces environmental pollution. The emergence of organic food is directly linked to an amalgam of food safety and health concerns, which directly relate to ingestion of chemicals used to grow, treat, and preserve foods. The organic food industry has shown consistent global growth over the last two decades and is projected to continue to grow until 2018 (Research and markets adds report: 'United States organic food market report 2013-2018, 2014). The organic food market has grown 3,400 % in the last 25 years (Flynn, 2014). Organics are divided into several categories such as, fruits and vegetables, dairy, meat, and packaged organic products. In 2014 annual organic food sales, mainly fruits and vegetables, reached $35 billion, $290 billion if packaged products are included, up from...

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