Organic shortfall in US opens door to importers

Booming demand for organic foods in the US is forcing producers and ingredients suppliers to seek new supply channels to meet orders, according to an international market analyst. While forecasts for organic produce predict robust growth for many years, undersupply remains an issue that has forced companies out of business, or lines to be discontinued. The US imports about $1.5 billion of organic products but exports only $150 million.

"Shortage of organic products is making producers look outbound for raw materials," said Amarjit Sahota, director of UK-based organic and natural products business research consultancy Organic Monitor. "Increasing volumes of organic fruit, vegetables, grains, seeds, beans and herbs are being imported into the US. Finished products are also imported to meet consumer demand. Nearly all market sectors would grow at much higher rates if sufficient supply were available."

Organic orange juice and milk supplies have also spectacularly failed to keep pace with supply. "Lack of organic milk has caused many retailers to have empty shelves," Organic Monitor said.

Partly influenced by hurricane-affected orange crops in Florida, one large organic orange juice supplier has pulled out of the market, a move Organic Monitor estimates may shrink overall volumes by 20 per cent in 2006. Another juice producer, Wisconsin-based Organic Valley, has discontinued its organic grapefruit juice line.

"With American demand for organic foods expected to strengthen in the coming years, supply shortages are likely to continue. Unless more American farmers consider converting to organic practices, exporters are likely to capitalise on this lucrative market," it said.

Organic Monitor notes a similar situation in the UK organic milk market, where research highlighting the nutritional superiority of organic milk has spurred increased sales of as much as 30 per cent, and led to shortages.

A study by the Institute of Grassland and Environmental Research in Wales found organic milk contained at least 64 per cent more omega-3 fatty acids than conventional milk. The Danish Institute of Agricultural Science found organic milk to have 50 per cent more vitamin E than conventional milk. Another study showed organic milk to have higher levels of conjugated linoleic acid.

Market analyst Mintel forecasts that the UK organic food and drinks market will grow by 72 per cent and reach a value of $3.5 billion by 2010.

Ingredients shortages
The organic ingredients market is also struggling to meet demand in certain sectors. America's biggest organic yoghurt producer, New Hampshire-based Stonyfield Farm, for example, is in the process of establishing links with New Zealand suppliers to guarantee supply of organic milk powder.

Ingredients currently listed on the Organic Trade Association's 'ingredients wanted' webpage include apple dry fibre, dry marine algae, brown rice protein, myrrh powder, glycerin and fructose.

Tom Newmark, president of Vermont-based New Chapter, was less concerned with undersupply. "Because we are an established player, we have great relationships with our suppliers worldwide, and so we are very comfortable with our supply chain being able to provide us with all the ingredients we require," he said.

Prescott Bergh, sales manager at Wisconsin-based organic oils, chocolates and starch-based sweeteners specialist Ciranda, said the climate is driving innovation among ingredients suppliers. "It will be interesting to see how far they can push the boundaries to meet organic criteria," he said. "The market is much more robust, with much larger volumes, larger companies, more variety of products on the market.

"One thing I would advise is that if a company wants an organic ingredient they can't find, don't be afraid to ask for it. I know a lot of our product innovation begins with the requests of customers."

US organic food sales have increased by about 20 per cent annually in recent years. According to the Organic Trade Association, the $13 billion market is made up of:

Fresh produce




Dairy products


Packaged foods


Bread and grains




Sauces and condiments


Meat, fish and poultry


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