(March 23) Many consumers are willing to pay more for organic fresh fruits and vegetables.
But the higher that “more” is, the likelier they are to buy conventional instead.
Those are among the findings of a recent U.S. Department of Agriculture study on the price of organic fresh produce.
Conducted by the USDA’s Economic Research Service, the study, “Organic Premiums of U.S. Fresh Produce,” finds that organic produce continues to lead the way in overall category growth.
Organic retail sales grew from $3.6 billion in 1997 to $18.9 in 2007, when they accounted for 3% of total U.S. food sales. Organic produce accounted for 37% of those sales.
The study’s findings come as welcome news to the Greenfield, Mass.-based Organic Trade Association, and jibe with the theme of the group’s new online consumer campaign, “Organic. It’s Worth It,” said press secretary Barbara Haumann.
“Even if there is a price premium, consumers are willing to pay extra money because they do see the value,” she said.
While the whole category is growing, those commodities that have most successfully narrowed the price gap with conventional are faring the best, according to the report.
It’s pretty much common-sense economics, said one of the report’s co-authors, USDA agricultural economist Travis Smith.
“This is a demand and supply issue,” he said. “Premiums reflect both consumer demand and available organic supply. Our findings are not surprising.”
On average, organic carrots, for instance, cost just 17% more than conventional carrots. They also account for 11% of all fresh carrot sales, by far the highest share among the 10 produce staples studied in the report.
At the other extreme, organic potatoes cost 62% more than conventional potatoes on average. Not surprisingly, they also account for just 0.8% of all spud sales.
The other eight commodities surveyed followed the same pattern: Those with higher premiums made up a smaller percentage of total category sales.
The report was based on 2006 data, and Haumann said she wouldn’t be surprised if the price gaps on some commodities have closed since then.
Nevertheless, even if the numbers are slightly outdated, she said the report will serve as a valuable education tool.
“There isn’t a lot of price premium data out there, so it’s good to see,” she said. “Reporters are always calling wanting to know what the premium is.”