From The April/May 2003 Issue of Natural Grocery Buyer

A Fruit For All Seasons

International sourcing meets off-season organic demand

Josh Dinar

Organic arugula the stuff of global trade? You bet. Organic food is big business. Although many growers and retailers cling to the ideal of locally grown, seasonal produce, there is staggering demand from consumers for organics—and plenty of companies moving to meet that demand. Mainstream consumers want coffee. They want kiwis. They want oranges and berries and melons and vegetables—never mind that the local growing fields are covered in snow. So organic produce is coming from around the globe to mainstream markets where shoppers are gobbling it up.

This new breed of organic consumer may be a little less savvy about all the reasons for buying organic, but they make up the majority of organic shoppers. They created a need for national organic certification standards and forced companies to increase growing and distribution efficiency and technology through the call for lower prices. They created a demand for organics that simply can't be met on a local level—or even a domestic one. And big business, before it does anything, looks to meet demand.

The global organics trade might still be considered in its infancy, especially when compared with the international distribution of conventional agriculture. But it is, by many accounts, hurtling toward adolescence.

"There is a huge trend toward organics in general," says Kathy Means, vice president of the Produce Marketing Association in Newark, Del. "What we've seen in the past five years is a very businesslike and strategic approach toward organics. Many conventional suppliers are spotting this trend and utilizing their resources to become a part of it."

In many cases, this means looking beyond U.S. borders to complete a year-round supply chain and to lower production and labor costs. From Mexico, Latin America and South America to Eastern Europe, Southeast Asia and Oceania, countries around the world are finding the organic trade a lucrative export industry, and are seeing huge percentage growth in export revenues almost across the board.

According to the U.S. Department of Agriculture's Foreign Agricultural Service, many countries that were completely without an organic sector in the 1980s are now deeply entrenched and committed to its growth. In Argentina, for example, sales of organics grew to $34 million from zero a decade ago. In Australia, revenues reached $149 million in 2000, up from $57 million in 1996, and officials estimate that within 25 years, 30 percent of all food grown on the continent will be organic. Organic sales in Brazil increased 86 percent between 1999 and 2001, with revenues of more than $100 million. Over a two-year period, the number of hectares dedicated to organic farming in Mexico grew more than 140 percent.

Currently, most of these countries are growing almost exclusively for export, primarily to the developed nations in North America and Europe where demand exceeds domestic supply. That these less-developed countries don't yet consume their domestic crop—many of them export 80 percent or more of their total yield—doesn't worry Joe Smillie, senior vice president of Quality Assurance International, a certification agency based in San Diego.

"By sourcing organic from foreign countries, we are in essence jump-starting a domestic market there," he says. "We help bring [organic agricultural] technology to these markets where the climates are conducive to a particular crop and, by allowing that country to fulfill our supply, we create not only a healthier environment, but help build a local economy. The domestic trade grows from there."

For Smillie, the schism between the organic "purists"—those who believe that the notion of an "organic Twinkie" is blasphemy and that the mass transport of organics undermines the whole point of the original movement—and the organic "capitalists" is a nonissue, or at least should be. "This country is capitalistic," he says. "Organics don't exist in a vacuum, and they won't work on a socialist level. Human beings have traded since time immemorial. The global trade of organics isn't an aberration—it's what we've done since day one. We want our coffee and our bananas, so we get them."

Of course, a good deal of the foreign organic supply comes from U.S. companies operating abroad. Cathy Greene, an agricultural economist at the USDA Economic Research Service, says the data is still too flimsy to provide a coherent trend analysis, but there is plenty of anecdotal evidence to suggest U.S. suppliers are finding adequate benefit in sourcing a portion of organic product from outside the country.

Los Angeles-based Melissa's/World Variety Produce Inc., for example, has logged 25 percent to 30 percent annual growth of its organic products (compared with the 2 percent to 3 percent growth of its conventional SKUs), and sources up to 40 percent of its products from Mexico. "We have to follow the season," explains President Robert Schuler. "Mexico is a great growing area with a lot of crop to offer, and we rely on that crop to help make up the rest of the season in California."

Likewise, the Sewickley, Pa.-based Certified Pure Ingredients sources largely from Chile, but also from Argentina, Russia, Turkey, Serbia and Poland to be contraseasonal and to help bring organic prices closer to those of conventional. "It's all about demand," says President Eric Johnson. "No one place produces anything year round, and this growing worldwide supply has added good support to the industry."

Another of the nation's top suppliers, Los Alamitos, Calif.-based Frieda's Inc., imports its organics from New Zealand, Mexico, Canada, Chile, Peru and Guatemala. "We import products from dozens of countries around the world," says President Karen Caplan. "We are thrilled when growers contact us and can certify that their product is grown organically because we know American retailers are always looking for organics on a year-round basis."

Although many industry insiders are confident organic globalization is on its way, there's also a fairly uniform consensus that it's not just around the corner. "There is a fairly substantial vegetable market in Latin America and Mexico, and some air-freight pallets of high-value items like asparagus, but overall there's still a real infrastructure immaturity that can't be overcome soon," explains Bob Scowcroft, executive director of the Organic Farming Research Foundation in Santa Cruz, Calif. "The global system is set up for massive shipping and air freight around the world, but that infrastructure is littered with pest embargoes and other obstacles that make organic use of the existing system impossible."

Still, the organic trade has surmounted plenty of difficult obstacles in the past decade or two, and the ever-strengthening support for regional organic agriculture, along with the U. S. National Organic Program implementation, has raised awareness of—and demand for—organic products in general. No one doubts there is profit to be made in organics, for domestic and foreign companies alike. In short, all signs show the market right now is easily absorbing the current supply and is poised to absorb much more. Many nations are steadily working toward harmonizing their individual organic standards to facilitate fair and unhindered trade. "The direction," says QAI's Smillie, "is obvious. The reality is just a matter of time."

Josh Dinar is a Boulder, Colo., freelance writer.