Organic & Integrated Fruit Production


Organic, What Is It?

by Joe Gabriel
Oregon Organic Marketing
Eugene, OR

Where did organic come from? Organic was born out of a movement that addressed peoples concerns for their health and the health of future generations via a healthy environment. Organic grew from a shared commitment to build a sustainable food production system; that would strengthen society's ties to the land. The organic movement also embraced the concept of working with the elements rather than battling the elements. Wendell Berry's book "The Unsettling of America Culture and Agriculture"; epitomized the characteristics of the Organic Movement and voiced a concern for the societal degradation we would experience as our country divorced itself from the land.

Where is organic today? The organic Fresh Produce Market has enjoyed a consistent 20% growth historically. Apple acreage entering the organic program in Washington State in the crop years 2000 and 2001 will increase the volume of organic acreage by 150% relative to certified apple acres in 1999. The amount of pear acreage that will be certified in 2000 and 2001 will more than double the volume of organic pears relative to 1999 certified pear acreage. With this in mind the 20% increase annually for fresh organic produce sales is just a fraction of the growth needed to account for the increased production. A customer of ours in the UK teamed up with a chain store to fund a study of the organic consumer. I feel that the results of this study more or less mirrors the consumer base in the United States.

· 4% of the consumers purchase 60% of the organic produce sold
· 11% of the consumers purchase 10% of the organic produce sold
· 85% of the consumers purchase 30% of the organic produce

The 4% purchasing 60% of total organic produce sold depicts the mature customers or those that have assimilated organic produce into their everyday life, it has become part of their value system, a life style choice. The 11% purchasing 10% of the organic produce sold represents the sector that has embraced the organic concept and begun to make organic purchases on a more frequent basis. This 11% of the consumers have started a metamorphosis, in that they are becoming mature organic shoppers. The 85% of the consumers purchasing 30% of all organic produce sold represent a share of the market that is an incidental organic shopper. This type of customer will try organic out of curiosity and if they have a good experience in that they feel there was a true value for what they paid for, good quality, flavor and the fact that it is organically grown, this consumer will begin to move towards the 11%. One could perceive this as a matriculation process that can take years for a consumer to evolve into the 4% category from the 85% category.

With this in mind we can go back to the increased volumes of certified organic produce becoming available domestically and world wide: South America, South Africa, New Zealand, Australia, Europe, Northern Europe and China. The volume of certified organic fruit becoming available word wide has far outpaced the market growth. Looking at how the market has evolved historically we cannot expect the type of growth needed to match the volumes of fruit produced. The market will continue to grow at a steady pace but will not surge forward because of the nature of the organic consumer. The market share grows as the consumer's awareness and commitment grows, this takes time.

One might think that the chain stores could provide the growth necessary to absorb a good percentage of the increased production. They very well could. However, organic has been a challenge for the Chain Stores. In order to entice the organic shopper the stores must carry an adequate line of organic produce and dry food items on a regular basis. This means creating a duplicate product line in the store for many items on the dry goods shelves and in the produce department. This has challenged the chain stores. The inconsistent supply of organic produce items and the radical price swings does not fit the culture of the chains. Micro managing and promoting an organic program takes time and money. And, for the most part the chains will have the third tier consumer shopping at their stores. These consumers are trying organic on, seeing how it feels to buy and consume organic produce. The chain stores relationship with organic produce - price over quality, lack of consumer education about organic - does not suggest a good formula for growth. The consumers need consistent high quality organic produce and education to reinforce and foster their evolution as organic minded shoppers. For the most part the chain stores are not set up to provide this environment. The jury is out as far as how far and how fast organic produce will evolve within the chain store system.

Organic producers of top fruit must come to grips with the fact that Organic never claimed to be an economic panacea. Organic was and still is a movement gaining momentum, evolving and growing. Organic represents a value system that has evolved into an economic system. The market will grow at the rate the consumer base gains exposure to the organic concept. The one good thing about the chain stores offering organic produce is that many more people have access to organic produce. This could help in the long run because the sooner consumers gain exposed the sooner the process of embracing organic as a value system and purchase organic produce consistently can begin.

Where is Organic Produce going? If you do not have an established market share for your top fruit don't take it organic, beware of those that promise you the world. They suffer from ignorance or seek an opportunity to jump on the organic wave to see where it will take them at your expense. Do your homework; research the information that is given to you. Each grower has the responsibility to take their destiny into their own hands to make sure that decisions made are thoroughly researched. If you do have a market hold onto your hat the fort is under siege. For the next three years and possibly longer the market will turn into a gauntlet. Only two options exist to remedy the problem: the first, market growth that supersedes the increase in production, the second, a decrease in production to match the market. Unfortunately, the latter will be what remedies the problem not the former.

In the past 30 years organic farming has evolved and farmers now use organic practices successfully when growing multitudes of crops here in the United States and around the world. I think the question that begs asking is: How do we move toward a sustainable market now that we have established a sustainable farming system? We must educate people to truly understand the cost of food production and the price that will be paid if this country loses its family farms? This is bigger than organic; this is about our agricultural system coming apart. The producers, packers, shippers and sales agents must change the market paradigm. This is our challenge. We must work together to break a cycle that has perpetuated a dominate and control mentality in the market. If you are the only one left standing after the fight, bloodied and crippled and in order to survive had to destroy your peers, what have you gained? And, in the end the winners have become the retail sector and an unwitting consumer that is unaware that the farm gate prices for produce is driving farmers out of business. The organic consumer has and will pay the true cost for produce they consume. They have shown consistently that they will speak with their wallets. The number of organic consumers is growing at a measured rate. We must focus on building a sustainable production and marketing system with this in mind. If you have a way to access these consumers jump in, if you don't proceed with caution.


Northwest Organic Tree Fruit Historical Trends

December 2000

Late 1970s - 1997
· Good demand for Red Delicious, very few varietal apples.
· Export market demand for Red Delicious at a peak, the export market for winter pears is strong.
· Varietal apples in short supply and high demand.
· Pears in short supply and therefore in good demand.
· Market primarily: Natural Foods Distributors, Natural Foods Chain Stores, Co-ops and small Natural Foods Stores, with some Chain Store business developing.

1998 - 1999
· Red Delicious demand falling off.
· Red Delicious export demand declines dramatically, demand for varietal apples increases.
· Varietal apple volumes increasing and cannibalizing the domestic Red Delicious market share.
· Pear supplies continue to lag behind demand and market for pears remains relatively strong.
· South American pears begin entering the European and US markets weakening late season sales of pears due to the availability of new crop pears from the Southern Hemisphere.
· Market changing as a result of: consolidation of natural foods ccain Stores, chain stores beginning to become bigger players, natural foods distributors beginning to sell more to the chains, consolidation of production to service chain stores, and natural foods co-ops and stores losing market share as the natural foods chains consolidate and expand and the chains begin to enter the organic arena.

· Red Delicious demand continues to decline.
· Red Delicious acreage entering the organic program increases dramatically.
· Varietal apple volumes doubling or tripling and continue to cannibalize the Red Delicious market share and at the same time prices for varietal apples are dropping dramatically due to dramatic increase in volume.
· Number of packers/shippers doubles from 1998 - 2000.
· Demand for organic fruit in conventional chain stores continues to rise.
· Imports from the Southern Hemisphere continue to weaken pear sales from March to May both domestically and in Europe.
· Organic apples from New Zealand are present in mid-August and early September, the pipe line is filled when new crop apples are harvested domestically. This dramatically reduced the early season fruit sales both in numbers and price per unit.
· South American and New Zealand organic apples will continue to increase in numbers which will shorten the late season markets - May through August - and in the future will weaken early season apple sales and prices.

2001 - 2003
· Continued increase in apple production domestically in all varieties of apples which results in demand for Red Delicious continuing to fall and prices for varietal apples continuing downward price trends.
· Pear acreage reaches the point that overproduction becomes a factor and winter pear prices plummet.
· Pressure from Southern Hemisphere fruit continues to erode the late season pear market and early. and late season apple markets.
· Scuffling over market share contributes to falling prices.
· Chain stores continue to increase their market share at farm gate prices near or below the cost of production thus perpetuating the cycle of overproduction at the cost of the producer and to the benefit of the retail sector and consumer.

2004 and Beyond
· Red Delicious acreage now matches demand.
· Varietal apple acreage more or less parallels the market share and projected growth.
· Pear acreage more or less parallels the market share and projected growth.
· The effect of Southern Hemisphere fruit on the late and early markets has been factored in to help identify the true market share for domestic apples and pears.
· The chain stores have come to terms with their relationship with organic produce and those chains carrying organic produce have established programs.
· The natural foods chain stores have done the majority of their expansion.
· The organic market share continues to grow at a steady pace, 10% - 20% annually.


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