Benchmark study yields key insights into global organic food trade

Posted on 16 Apr 2015 by Tim Brown

A landmark study on the trade flow of organic food products across the borders of the United States has revealed a robust global appetite for organic food but US farmers are losing out on some valuable opportunities by not growing more organic.

The research shows that new lucrative markets are developing from Mexico City all the way to Hong Kong for US organic producers.

According to the study conducted by Pennsylvania State University’s Dr Edward Jaenicke, associate professor of agricultural economics, released Wednesday by the Organic Trade Association (OTA), exports of US organic foods as well as imports of organic into the US have risen significantly in the past few years. This watershed report compiles, for the first time ever, a comprehensive picture of the officially tracked organic food products sold by US exporters and bought by US importers.

In 2014, American organic growers sold more than $550m worth of products tracked by the US government through organic export codes to buyers around the world, with the United States rightly claiming the position of global supplier for fresh organic produce.

Imports of organic products outpaced exports, amounting to nearly $1.3bn in 2014. The import picture tells two stories: one of an increasing appetite by Americans for organic foods not widely produced in this country, like coffee, bananas, mangoes, olive oil, to name a few, and the second story of a growing domestic market for organic feed grains but insufficient home-grown organic crops to meet that demand.

While America’s coffee lovers gulped down more than $300m worth of foreign-grown organic coffee, helping to boost the import total, imports of organic soybeans and organic corn—the main ingredients in organic feed for the expanding US organic dairy, poultry and livestock sectors—showed sharp gains.

“This important study is a ‘Help Wanted’ message for American farmers,” said Laura Batcha, OTA’s CEO and Executive Director. “This report is the first of its kind, and it yields some key findings to help guide the organic and non-organic farm community, public policymakers, and all organic stakeholders in making future industry investment decisions. It shows substantial missed opportunities for the US farmer by not growing organic—whether to meet the demand outside the US or to keep up with the robust domestic demand for organic.”

Powered by the latest data from the US Department of Agriculture and the Office of the US Trade Representative, the OTA-commissioned study analyzes trends in international trade for those organic products the US government currently tracks: organic products that have been assigned a harmonized tariff schedule code. The products analyzed represent the major organic foods bought and sold abroad.

A global appetite for US organic

Apples, lettuce, grapes, spinach and strawberries are the top five organic products exported by the United States. Exports of organic apples alone jumped 40% in 2014 from the previous year, compared to a small three percent growth rate for non-organic apple exports. In fact, the pace of growth for the exports of almost all of the 26 organic products tracked was markedly higher than that of their non-organic counterparts.

Exports of organic produce account for an increasingly greater proportion of total exports. Of all the cherry tomatoes exported by the US, for example, 42% are organic; 33 percent of the spinach exports are organic, along with 27% of the onions, and 23% of the carrots.

“We found that many of the American-grown organic products are really out-performing in the export market,” said Monique Marez, OTA’s Associate Director for International Trade. “This shows a thirst for organic products—and specifically for US organic products—that is resonating around the world.”

Organic imports filling in the gaps

On the import side, the top five organic imported products are coffee, soybeans, olive oil, bananas and wine.

The United States is a nation of coffee drinkers with only one state—Hawaii—able to grow coffee. Organic coffee imports accounted for more than $330 million of the total organic import value in 2014, the largest category by far of the organic imports.

The second-largest organic product imported by the US is soybeans. The US is the world’s largest soybean grower, and normally exports more than one-third of its soybean crop. Domestic production of organic soybeans, however, has stagnated at very low levels since early 2000, despite the growing demand for the product by organic feed users and organic processors. Organic corn is the tenth most imported organic food product, even though the US leads the world in corn output. Like soybeans, organic corn production in the US has fallen far short of demand, with domestic output only marginally rising in the past decade.

Organic soybeans and organic corn command high price premiums in the US Organic feed-grade soybeans now sell for around $25 per bushel versus the average price for conventional soybeans of around $9 per bushel; organic yellow feed corn sells for around $14 per bushel versus the conventional price of around $4 per bushel.

“Going organic is not easy, but this report identifies that there is opportunity for US farmers in both the domestic and global organic market. This study provides critical new data not only for farmers, but for the industry, lawmakers and other policymakers to design programs and supply chain partnerships that will encourage more organic production and help our farmers make the transition to organic,” said Batcha.