Can it Meet Consumer Demand Amid New USDA Regulations?
It might feel like organic options have been commonplace for a long time, but according to the Organic Trade Association, 2024 may well mark the year of maturity for the industry. It’s been a hard won campaign that’s overcome challenges with actual farming and ranching methodology, building consumer demand, and creating regulation and certification standards.
It’s been one of the fastest growing agricultural sectors for the last several decades and ushered in an entirely new framework by which consumers assess the value of their grocery store purchases. It’s been a driving force of innovation and the catalyst for significant agricultural shifts in practice. Even with new import regulations for organic goods in place, which some say the industry isn’t prepared to accommodate, growth projections remain optimistic.
What’s driving this growth? Soybeans and a healthy perspective.
Demand for Organic Soybeans Grows
People are still buying organic products even with inflation resulting in steady market growth. Between 2022 and 2023 organic sales increased by 3.4% totaling $69.7 billion in the United States. In recent decades, organic products have expanded beyond produce and into commodity grains as well as the meat industries which strongly contributes to growth percentages. Where once we might have looked for organic labeling solely in our grocery store produce sections, we now see the word organic in every aisle.
A strong demand for organic meat has in turn spurred the growth of the grain industry, particularly soybeans. Organically raised chickens must eat organically grown food. Globally the organic soybean market size is projected to value 1.6 billion in 2024 and more than double that number by the year 2030. As more organic products become available the organic industry at large becomes more stable.
However, in March of this year the USDA officially launched its new organic certification regulations. The shift came partly in response to consumer demand for transparency in the industry with many Americans calling the current certification rules a fraud; and partly out of pure necessity as the industry has grown beyond the scope of the initial regulations created in the 1990s. Unlike before, organic labeling will only be granted if organic practices can be proven across the entire supply chain. For the first time ever, brokers and traders and storehouses will also be required to obtain organic certification with far fewer exemptions doled out. While it is intended to foster trust and congruence in the long run, the next year could be a bumpy one for companies dependent on suppliers who are not up to par with current regulations.
Organic and Healthy have Become Synonymous
From a ribeye to macaroni and cheese, shoppers have come to associate the term organic with health and environmental benefits and have so far justified the higher price points for the peace of mind that comes with the labeling. Lower barriers of entry made possible by grants, loans and cost sharing options have resulted in many more organic farms and ranches than there were even a decade ago. The organic industry has made good use of these loans and grants and managed to narrow many price gaps making the sector increasingly competitive.
For younger generations, cheap and convenient are of less value than environmentally and health friendly attributes. In fact, roughly 70% of millennials, who make up 20% of the population, will opt to buy the product that is ethically sourced, healthier, organic or more nutritious even if it is the more expensive option.
It’s a safe bet that teens entering adulthood who were raised by millennial parents who valued organic food start making grocery store purchase decisions on their own that we will see a greater demand for organic options. Millennials like to spend their money on healthy things and it's likely their kids will too. In anticipation of this, the USDA aims to build higher quality supply chains that support traceability. If information is the new currency then the organic industry stands to thrive in the long run, even if new regulations create a few initial hiccups.
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