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Organic market stunted by undersupply, says consultancy firm

 

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19/12/2005

- The US

organic market

growth is being stunted by undersupply, resulting in shelves remaining

empty, companies withdrawing from the market and others looking

internationally to supplement supply needs, says consultancy firm

Organic Monitor.

 

 

The sectors hardest hit by supply shortages are the organic orange juice, meat and dairy sectors,

according to the firm's director Amarjit Sahota.

Organic

Monitor, which provides business research consulting on the global

market for organic goods, identified that one leading organic orange

juice producer is to withdraw from the market as it "cannot find

enough orange juice to meet its growing production needs and has

decided to focus on other product categories."

Sahota

could not reveal the name of the company involved, but suspects that a

public announcement will be made in the coming weeks, as production is

likely to stop by early next year.

Organic Monitor predicted that

the nation's refrigerated orange juice segment could contract by up to

20 percent in 2006 because of the company's market withdrawal.

Indeed,

the recent hurricanes that hit Florida- the nation's primary

citrus-producing region- have depleted orange juice stocks, and with

imports being "prohibitively expensive," and producers unable

to pass high price increases onto consumers, the market is suffering

supply shortages for these products, said Organic Monitor.

"Many

companies, such as Organic Valley, have already stopped producing

organic grapefruit juice, because there is not enough supply. The same

thing is happening now with orange juice," Sahota told

FoodNavigator-USA.com.

According to Organic Monitor, the shortage of organic products is

making producers look to other countries for raw materieals.

"Increasing volume of organic fruit, vegetables, grains, seeds,

beans,

and herbs are being imported into the US. Finished products are also

imported to meet consumer demand for all things organic," said

Organic Monitor.

"Scarcity

of raw material is leading Stonyfield Farm, the dominant producer of

organic yoghurt, to look at sourcing organic milk powder from New

Zealand. The company is to send inspectors to New Zealand to ensure the

organic milk meets American standards," it added.

According

to the consultancy firm, the low number of organic livestock producers

in the US has also resulted in the organic meat industry experiencing

undersupply for a number of years, with American producers resorting to

imported organic beef from Australia and Latin American countries.

Indeed,

with consumers increasingly opting for 'healthier' products, the

organic industry is set to enjoy good growth. According to a recent

study by the nation's Organic Trade Association (OTA), by 2025 organic

products will be considered "commonplace."

And the

OTA's 2004 Manufacturers' Survey reveals that the organic foods

industry reached $10.8 billion in 2003 and has grown at an average rate

of 19.5 percent per year since 1997, while market researcher

Euromonitor predicts that sales of packaged organic foods alone will be

worth $8.6 billion at retail by 2009 - up from 5.1 billion in 2003.

A

recent study commissioned by leading organic supermarket Whole Foods

Market reveals that nearly two thirds of the nation's consumers have

opted for organic goods in 2005, compared to just over half in both

2003 and 2004, an increase of almost 17 percent.

Yet according to Organic Monitor, a shortage of supply is stifling

sales.

"Nearly all market sectors would grow at much higher rates if

sufficient supply was available. For instance, lack of organic milk has

caused many retailers to have empty shelves throughout the year."

 

 

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