Green Cotton

Photosource: littlepaperplanes.com

According to recently announced 2007 data by the Organic Coffee Collaboration (a project of the Organic Trade Association), the organic coffee market in the US reached the $1 billion last year.

Participants in the Collaboration are: Dallis Coffee (New York City, NY), Elan Organic Coffees (San Diego, CA), Equal Exchange (West Bridgewater, MA) , Fresh Harvest Products (New York City, NY), Green Mountain Coffee Roasters (Waterbury, VT), and Swiss Water Decaffeinated Coffee Company (Vancouver, Canada).

The amount of organic coffee imported into the U.S. and Canada increased 29 percent from 2006-2007 from approximately 65 million pounds to approximately 84 million pounds, according to Mr. Daniele Giovannucci, author of the upcoming North American Organic Coffee Industry Survey. Most of the 84 million pounds of coffee was sold in the United States.

• The organic coffee market has grown average of 32 percent annually between 2000 and 2007 and shows no signs of decreasing.
• In fact, some large companies, such as Starbucks (who happen to be the largest purchaser of organic coffee) have not had enough supply to meet the demand.
• Organic farm conversion takes an average of 3 years to achieve, not to mention the significant human and physical capital required. With that said, it is suspected that over the next several years, the market will continue to increase as more and more coffee chains integrate organic into their coffee bean portfolio.
• Conventional coffee market growth pales in comparison to organic with an estimated 2 percent annual growth rate over the last several years.

What is organic coffee? Organic coffee is grown using methods and materials that have a low impact on the environment and must conform to strict organic growing and processing standards. For example, organic production systems replenish and maintain soil fertility, avoid the use of toxic and persistent pesticides and fertilizers, and build biologically diverse agriculture. In addition, fair wage practices must be adopted. Third-party certification organizations verify that organic farmers use only methods and materials allowed in organic production.

*Organic coffee is grown in 40 countries worldwide, including the United States (Hawaii).

For more information on certification, see the OTA and the Organic Certification, Trade Association body, CCOF.org.

Organic coffee growing so often supports local communities and farmers from Latin America, to Asia and Africa. Finca Alta Gracia is one such farm in the Dominican Repulic, to learn more check out their farm.

Photosource: Linda Coan for the NY Times

The NY Times reported last week on the ‘sticker shock’ associated with organic products. While the organic market has seen unprecedented booms in the last few years, the recent economic downturn coupled with rising fuel and grain costs, have begun penetrate the organic market too. Consumers and farmers alike are feeling the hit.

Facing the front line pain of the increases are the organic farmers themselves, who are being forced to move back into conventional farming and/or pass along the increases onto consumers. Because the price differential between conventional and organic on certain products is so great, some consumers are now opting out of buying organic for the first time.

Two comparisons:

• Eggs: regular eggs now average $1.34 - $3.59 for a dozen, whereas organic ranges from $3.99 - $6.39. For a large egg-eating household that is a 3-fold difference.
• Milk: regular milk ranges from $1.99 - $2.99 and organic ranging form $3.29 - $4.99.

Overall, the consumer price index for groceries has increased 5% in the last year; however, some staples like eggs have jumped as much as 30% and milk as much as 13%. On average, organic products cost between 20 and 100% more than its conventional counterparts.

Some farmers have decided to switch back to conventional due to the high costs in grains and other products. In the last six months, 25 farmers in the Northeast have either retired early or stopping organic farming.

Americans spent $16.7 billion on organic food and beverages in 2006, representing a 126% increase in five years. While there is still room for growth, as organic sales only reach 2.8% of total food and beverage sales, with the rising prices, we may see a plateau in sales for some time to come.

In addition, in 2005, the United States had 14.1 million acres of organic farmland, which is 3x’s the amount in 1997. Yet, it appears that this growth may also be beginning to taper. Prices for organic soybeans, corn, and wheat are at or near record highs. When these staples rise, so does the rest of the food chain and products derived from these grains. In general, making the switch from conventional to organic farming requires a 3-year process, plus tons of paperwork and investment of resources. Farmers are increasingly thinking hard about making that transition.

All this points to the important conclusion that as much as we all want to be green and organic, (as poll after poll suggests that we do), there are limits to this greenness in our wallets. Prices matter, especially in an increasingly challenging marketplace. One question I have: do organic farms receive the same federal subsidies that conventional farming does? Depending on the answer, this could make a big difference in making the grains more affordable…food for thought.

For more information on this story, please see NYTimes.

Save This Page to Del.icio.us