Let me present some facts for you to get the big picture.
The US is the largest market for organic food and food products. Its demand has been put at 24.3 billion Euros. Approximately 43% of the world’s revenues from organic food come from the US alone. Other major contributors are Germany 13%, France 8%, China, Canada, UK, Italy together constitute 4%. The total European organic food market put together has been estimated in 2013 at US $31 million (FiBL-IFOAM 2015).
Organic food market size is said to constitute 5% of the total food market.
Some estimate a CAGR growth of 12% for North America. US farmers are nearly totally reliant on genetically modified crops like corn and soybeans. The total imports into the US in 2014 stood at $1.28 billion.
Organic coffee led the pack with implications of $332.5 million. US organic exports in the same year stood at $553 million. Europe, on the other hand, is both a producer and consumer of organic food.
Three major factors are impacting the organic food business.
Firstly, consumers need to be convinced that the product that they are buying is authentic. Certification, therefore, is a business imperative. The cost of certification is not just high but is time-consuming. It takes around three years for a farm to get certified as organic.
Second, there are fairly strong barriers to importing organic food in the major organic food products consuming markets of the US and Europe.
Thirdly, while it may appear that the developing parts of the world with access to cheaper labor should produce organic food cheaply, in reality, that is not so. The organic food business is not just about producing an organic food crop, but the crop also has to be packaged and transported. Logistics costs in most developing economies are just too high, making the final productive uncompetitive in the market.
Unfortunately, most people in the organic food business do not realize that this too is as much a business as any other and requires business strategy and logistics planning and management as much as any other business.
With the right business tools, you will succeed in this business, and not just on sentiment and hype.
Nutrition Facts – a guide to good health