Premium pricing slows for organics

Although organic produce typically enjoys a price premium to compensate for higher growing costs and lower yields, the price differential varies by product and has been narrowing. In some cases, pricing for organic fruits and vegetables has been similar or even below conventional. There can be wide price fluctuations even for the same organic product.

One such an example was found in the USDA Agricultural Marketing Service’s retail price comparison report in mid-February, which showed a 64 percent premium for organic Red Delicious apples sold by the pound.

Surprisingly, a 3-pound bag sold for 8 percent less than its conventionally grown counterpart. For the same two products in mid-April, organic Red Delicious apples enjoyed a 141 percent premium when sold by the pound, while the 3-pound bag sold for 27 percent less than conventional. Similar fluctuations were found for blueberries, lemons, and other items.

Of course, scarcity and oversupply play a role. “Overproduction of organics puts supply and demand out of balance,” said Mark Munger, vice president sales and marketing 4Earth Farms, LLC BB #:148899. “The industry is still trying to find a balance.”

He said some of the problems can be attributed to speculative planting, and it’s a “reflection of the market maturing.”

Although organic produce typically enjoys a price premium to compensate for higher growing costs and lower yields, the price differential varies by product and has been narrowing. In some cases, pricing for organic fruits and vegetables has been similar or even below conventional. There can be wide price fluctuations even for the same organic product.

One such an example was found in the USDA Agricultural Marketing Service’s retail price comparison report in mid-February, which showed a 64 percent premium for organic Red Delicious apples sold by the pound.

Surprisingly, a 3-pound bag sold for 8 percent less than its conventionally grown counterpart. For the same two products in mid-April, organic Red Delicious apples enjoyed a 141 percent premium when sold by the pound, while the 3-pound bag sold for 27 percent less than conventional. Similar fluctuations were found for blueberries, lemons, and other items.

Of course, scarcity and oversupply play a role. “Overproduction of organics puts supply and demand out of balance,” said Mark Munger, vice president sales and marketing 4Earth Farms, LLC BB #:148899. “The industry is still trying to find a balance.”

He said some of the problems can be attributed to speculative planting, and it’s a “reflection of the market maturing.”