There has been some pullback on organic fresh produce purchases because of the recession, but long-term prospects appear fairly strong for the category, retail and government reports indicated in April.
Fresh produce is still the top-selling organic category in retail sales, according to an April 15 U.S. Department of Agriculture Economic Research Service report.
Consumer research from West Dundee, Ill.-based the Perishables Group shows that more than half of consumers surveyed in March - even in high-income groups - said they would reduce or eliminate organic fruit and vegetable purchases because of higher prices compared to conventional produce.
That trend might continue for those consumers as long as the economy is weak, but Steve Lutz, executive vice president of the Perishables Group, said core organic consumers have shown commitment to the category.
In surveys from March, 6% of consumers said they always bought organic fruits and vegetables, 5% said they usually purchased them and 24% said they sometimes purchased organic fruits and vegetables. At the other end of the spectrum, 36% of consumers said they never purchased organic fruits and vegetables and 29% said they rarely do.
Even so, fourth-quarter 2008 sales numbers show that organic fruits and vegetables have performed better than conventional produce, Lutz said.
"Organic dollars and volume have not fallen off like conventional," he said.
Organic vegetable sales in the fourth quarter were 8.9% above a year ago, while organic fruit dollars were 5.4% higher compared to last year.
By comparison, total produce sales in the fourth quarter of the year were up only 1.6%.
The produce department remains an entry point for many consumers new to the organic segment, Lutz said.
For the fourth quarter of 2008, retail sales data reported by the Perishables Group show that organic vegetables accounted for about 5.4% (with an average of $994 per store) of retail produce sales and organic fruit claimed a 3.4% stake (with an average of $510 per store).
Some organic items - notably baby peeled carrots and packaged salads - account for about 10% of sales for those items, he said.
According to the USDA report, organic carrots accounted for 6% of all domestic carrot acreage in 2005. Meanwhile, organic lettuce represented 4% of total U.S. lettuce acreage and apples accounted for 3% of total U.S. apple acreage in 2005, the most recent figures from the department.
Consumers may see more opportunity to enter the segment in coming years, Lutz said.
"It appears there is more organic production in the pipeline, and we should all anticipate that supplies will be up considerably," he said.
That will lead to downward pressure on price and more incentive for consumers to buy organic produce, he said.
The current U.S. recession has caused some organic consumers to bail out on organic food and buy conventional food as a cost-saving strategy.
Lutz said consumers are likely to choose organic over conventional if they can easily compare the respective value of the choices on a side-by-side basis. If consumers have to look at organic apples in one part of the department and conventional apples in another, they might not do the comparison.
Retailers can also boost growth in organic sales by choosing to stock only organic items. For example, if Costco chooses to stock only a two-pound clamshell of organic spinach instead of offering both conventional and organic stock-keeping units, that creates another pathway to demand growth.
"As price differences narrow, it makes it easier for retailers to make that decision," Lutz said.
The USDA report said that total certified organic farmland was less than a million acres in 1990, when Congress passed the Organic Food Production Act. Now, the USDA estimates more than 4 million U.S. acres are certified organic.
Of that total from 2005 - the most recent year with statistics available - organic cropland totaled 1.7 million acres and range and pasture equaled 2.3 million acres.
California has the most certified organic acreage, with more than 220,000 acres primarily used for fruit and vegetable production.
The USDA report said 53 organic certification organizations, including 19 state programs, conducted third-party certification audits in 2005.