Organic Food is Getting Cheaper, New Report Shows

Premiums on organic food are growing slimmer – and in some cases have disappeared entirely.
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Organic Food is Getting Cheaper, New Report Shows

Premiums on organic food and beverages are falling in the United States, according to recent market research. A new report from Nielsen shows that the average markup on organic products decreased from 27 cents per unit in 2014 to 24 cents per unit in 2017.

Falling prices for organic products can be attributed in part to increased availability of these items at major supermarkets like Kroger, Target, Costco, and Walmart. These stores traditionally boast lower prices than chains specializing in natural or organic products, but even Whole Foods, once known for its high prices and "Whole Paycheck" stereotype, has reduced its prices significantly since it was acquired by Amazon in August 2017.

Consumer demand also has its role to play in falling prices. The U.S. organic market reached a record-breaking $45.2 billion in 2017, according to the OTA, and Hexa Research estimates it will reach $70.4 billion by 2025.

Despite this promising news, there is a great range in prices within the organic category, reports Market Watch. While some organic products, like Granny Smith apples, can cost the same or even less than conventional, others, like bread, can sport double the price tag of their conventional counterparts.

Dairy and eggs, the second most popular organic product category after produce, according to the Organic Trade Association, have some of the highest premiums in the industry, with milk clocking in at an average of 88 percent more than conventional and eggs boasting an 86 percent average premium.

This discrepancy isn’t surprising, according to Jeremy Moghtader, manager of the campus farm at the University of Michigan, who tells Market Watch that premiums for these products are higher due to strict USDA regulations on organic producers of animal products.

These rules, he says, “have real benefits to the animal, the consumer and environment, but they do increase the price of production.”

Rules that can contribute to higher prices for these products include regulations granting organic laying hens access to the outdoors and ruminants like cows access to grazing pasture, as well as a stipulation that organic animals be fed exclusively organic feed.

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