Opportunities for organic products in the US market

In the last ten years, organic products as a category have seen an incredible level of growth. As measured by the USDA, the category has increased by more than six times. All this while maintaining a relatively stable price. There is undoubtedly a growing hunger for organic blueberries that the market successfully satisfies.

Historical volumes and prices

Organic Source: USDA Market News via Agronometrics.

For growers, organic fruit premiums have been a strong incentive to enter this segment of the category. From 2014 to 2019, where USDA records are most complete, the average difference between the two categories is $ 2.09 USD / LB.

Prices by type

Source: USDA Market News via Agronometrics.

The table and numbers presented above, however, are an average for the entire year. With a highly seasonal product like blueberries, sharp fluctuations in price throughout the year are the norm. Looking back at 2019, we can see that the premium varies a lot throughout the year, from $ 0.10 USD / LB to $ 3.59 USD / LB… sometimes with only one week between the smallest and largest premiums.

Prices by type 2019

Source: USDA Market News via Agronometrics.

Seasonal variation in prices also means that different origins receive different premiums. What can be a great opportunity for a grower can offer smaller returns for growers who operate in a different region and sell their fruit at a different time of year. When comparing the percentage difference between the volume-weighted weekly organic and conventional prices for organic fruit (where available), the following table provides an average premium for each growing region over the past four years.

Weekly organic average higher than conventional blueberries, by origin

 

There are many insights that can be gained from this interpretation of the market data. An individual study of each origin is possible, but that is beyond the intent of this report, which is intended to summarize the category as a whole. That said, Washington / Oregon does stand out as a source that has seen steady growth for the category over the past three years. New Jersey and Georgia also stand out for the high premiums they receive for organic fruit over conventional fruit during their seasons.

One of the main conclusions of this table is that the increase in volumes of organic blueberries compared to conventional ones is putting downward pressure on premiums. We can see the effects of this in most origins, where the percentage premium is constantly decreasing year over year. Although some premiums show an increase in 2019 compared to 2018, it is important to note that these figures are calculated relative to conventional fruit, which has seen an overall decrease in recent years that has also been echoed in organic products .

Conclusions

The historical growth of the organic blueberry segment is undeniable and the category's relative price stability is impressive. There are new volume opportunities for organic blueberries in the US retail, foodservice and ingredient markets, and in export channels, but as the market matures, extracting this growth will require new tools and skills. .

Farming is an ever-evolving, complex, and risky game of balancing production costs with retail and consumer demand, and price sensitivity. As with other specialty crops, organic and conventional blueberry growers are grappling with the reality of higher input costs and increasingly tight margins in a competitive global landscape.

Understanding the available production windows and timing of harvests play a key role in obtaining sufficient premiums for any type or variety of fruit. This is particularly true for organic crops that may have higher production costs.

As the complexity of global market demand and production variables increases, it becomes more difficult to effectively manage production levels and distribution logistics in conventional and organic specialty crops. Effective growth to meet the demands of the foodservice and retail channels, at a fair and profitable price, will require smart business planning that is based on accurate market data.

In a mature market, increased access and utilization of data sets that provide a more integrated and comprehensive view of the entire value chain is a powerful and effective way to manage the complexity of a global specialty crop that serves multiple channels: grocery retail, food service, manufacturing and export.

There is still considerable volume and dollar growth to be drawn from the domestic and global blueberry, conventional and organic markets. However, growers and their partners will find it difficult to effectively extract this next era of growth without access to the right data and applying the right analytics that provide the necessary insights into market dynamics affecting production, prices and demand.

Source
Agronometrics this work was done for the NABC

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