Abstract

The report provides the assessment of the current state of the supply and demand patterns of organic vegetables and fruits on the territory of the United States of America. The consumption of organic foods has resulted from the growing health awareness of American nation. By the end of 2013, organic product sales reached the mark of $35 billion dollars. Notwithstanding the agricultural capacity of the U.S. farmlands and the efforts performed by the United States Department of Agriculture, local organic products are still facing a harsh competition from the side of imported organic vegetables and fruits. The report emphasizes the fact that the organic agricultural sphere of the United States has evolved from being a large exporter of organic products to spending over one billion dollars to perform organic product import. Organic foods, being the most claimed products on the U.S. market in terms of safety is currently facing economic complications associated with the gap between the demand and the supply of organic vegetable and fruits, requiring:

  • Application of adequate labeling programs;
  • Educating non-organic farmers on the possibilities of the shift to organic farming;
  • Encouraging state institutions, including public schools to develop contracts with the state producers.

Keywords:  supply, demand, organic foods, organic fruits, organic vegetable, domestic market, consumer, agriculture.

Supply and Demand of Organic Fruits and Vegetables 

Research and development of international agricultural patterns has identified organic foods as the primary modern worldwide agricultural trend dictated by consumer demand. The global popularization of certified organic products has introduced numerous profitable and sustainable businesses to the corresponding market. This suggests a congruent stable growth of the organic products supply arrangements and standards. Among all naturally grown products, organic fruits and vegetables are the most claimed products on the U.S. market. Higher incomes strongly contribute to the organic purchasing decisions of consumers and stimulate both demand and sales of organic fruits and vegetables. In addition, the overall national health awareness became the major precondition of the increased consumption of fruits in both the United States and the global community. While the demand on organic vegetables and fruits within the U.S. agricultural market is extremely high, the organic producers presently fail to meet the demand due to the shortage of the forenamed agricultural products that enables the application of the import system. 

Developing Consumer Demand on Organic Vegetables and Fruits

The organic food domestic market of the United States is addressed as the exceedingly mature organic domestic market followed by the markets of Germany and France (Laux, 2013).  Organically grown foods are referred to as credence goods, which cannot be visually distinguished from the presented conventional products. The application of the USDA organic label has promoted across-market organic certification and labeling rules affecting the organic quality consumption standards. Fruit and vegetable consumption is addressed as the key element of general health patterns and an important part of specific human dietary habits. The demand on organic fruits and vegetables stimulates the vast development of the  organic food market of the United States. Major concerns related to the safeness of the consumed vegetables and fruits have both spurred the interest in organic foods and induced the high demand of premium-price and top-quality organic vegetables and fruits. According to the data presented by the Organic Trade Association, U.S. organic product sales reached the mark of $31 billion dollars in 2010 followed by the mark of $35 billion dollars in 2013 (Laux, 2013). Such annuals increase reveals an 11 percent growth of demand on organic agricultural products. A product analysis of the organic food market segment demonstrates that the group of vegetables and fruits maintain the top-position presenting $11.6 billion in sales (Wells, Bond & Thornsbury, 2014). The increase of the total amount of organic sales during the last four years from 2010 until 2014, reveals a ten percent annual increase against the background of a three percent growth in total U.S. food sales. According to the latest surveys, consumer demand on organic vegetable and fruits has surpassed the domestic production levels during the last twenty-five years of its development (Greene, 2014). As the customers drive the demand expansion, the target solution is the growth of the domestic organic production patters. Such institutional factors as import shares and market growth have the capability of exceeding the U.S. domestic demand on organic foods. Technically, U.S. organic market is capable of meeting the demand on the major portion of the organic vegetables and fruits; except the tropical and subtropical fruits (Lohr, 2001, p.72). As the import tool in widely implemented, the latter prevents the U.S. farmland from reaching its highest production levels. The primary efforts of the Energy Act of 2008 under the U.S. Federal organic policy are displayed in its financial aid to those farmers who chose to manifest a shift to organic production (Greene, Dimitri, Lin, McBride, Oberholtzer  & Smith, 2009, p.20). The assessment of the dynamic growth of U.S. organic sales throughout the years provides a prospect of its potential expansion in the coming years. The growing demand on organic vegetable and fruits combined with relatively slow pace of development of the domestic organic supply mechanisms creates the necessity of organic imports. The rates of the latter have been growing in an arithmetical progression with the growth of demand on healthy organic vegetables and fruits (Greene, 2014). 

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The Origin of the Insufficient Supply of Organic Fruits and Vegetables

The Unites States organic market is to be addressed as a comparatively fresh formation in terms of its supply mechanisms. Such factors as modern technological development, product convenience, local-farm production, and import have intensely affected the national standards for organic products. The forenamed standards were originally introduced through the National Organic Program (NOP) issued by the United States Department of Agriculture (USDA) in October 2002 (Jerardo & Thornsbury, 2009) According to the USDA, United States has transformed from being a large exporter of organic products to spending over one billion dollars to perform organic product import. Thus, the U.S. organic supply is experiencing certain economic difficulties associated with organic production, remaining the global leader of soybean and corn export. For instance, the production volume of organic mushroom has presented an outstanding 65 percent increase in 2014 as compared to 2012, representing a five percent share of American total mushroom production (Wells, Bond & Thornsbury, 2014, p.20). Various retail initiatives have been applied to stimulate efficient supply patterns. A surplus consumer demand is becoming a primary marketing problem, as the U.S. organic farmers fail to provide sufficient organic supply. The forenamed limited organic supply has transformed into a serious economic issue which has affected the overall expansion tendencies of the organic supply chain. The major goal of the organic supply is to provide year-round, stable fruit and vegetable delivery by means of both domestic and imported production. In addition, the supply of organic vegetables and fruits is grounded on access to self-space in cross-nation supermarkets, which is achieved by means of organic market consolidation. According to the data presented by USDA, the overall value of U.S. organic sales has faced a ninety percent increase between 2007 and 2012, still representing solely 0.8 percent of the total agricultural production of the United States (Greene, 2014). The most sensitive segment of U.S. organic imports is related to the importation of tropical and subtropical products such as mangos and bananas, locally produced in limited quantities. Agricultural experts reveal their concern of the gaps in domestic production of fresh grapes, lettuce, and apples, which resulted to be the top three imported organic products in 2013 (Greene, 2014). The growers and producers of vegetables and fruits are actively searching for the solution of the domestic supply shortage. The significant organizational deficiency of the domestic production and general supply chain requires systematic supplementary funding. However, the representation of locally grown exotic vegetables and fruits is relatively restricted today as the organic demand exceeds its provision (Wells, Bond & Thornsbury, 2014). The most acute problem of the organic supply issues is that the price of the locally grown vegetable and fruits may not offer a price as attractive as the price as the imported organic foods. Securing a niche in the U.S. organic market for domestic market fruits and vegetables is a huge challenge requiring the reconsideration of the present price distribution and popularization campaigns. In other words, the effects of import competition on domestic organic production cause a significant financial stress faced by local farmers. Consequently, the continuous supply of organic foods produced by local farmers has the capacity of decreasing its demand and supply deviations. 

Recommendations 

  • Fund an adequate labeling program that will distinguish imported products from the foods grown on local farmland.
  • Educate non-organic farmers in about the repayment program of the certification fee and other available financial help. This would increase the amount of vegetable and fruits grown under certified organic farming systems and raise its relation to the overall farmland.
  • Manifest further support of the 2014 Fart Act in the frameworks of the Nation Organic Program (NOP) offered by the USDA to regulate organic standards, labeling, and certification.
  • Facilitate meetings, conduct surveys and analyze the consumer purchasing patterns in order to assess the criterion of choosing domestic organic products.
  • Reinforce the collaboration between various producer groups to ensure adequate product distribution.
  • Change the system of the overall production of organic vegetables and fruits in a way to improve handling, distribution, and retail schemes of the whole sector. Present an increased tax on the vegetables and fruits grown with the help of pesticides.
  • In addition, it is vital to promote encourage various state institutions, including public schools to sing contracts with the state producers of certified organic vegetables and fruits. 

Sales on organic food have dramatically grown over the last years, forcing many farmers to turn to organic practices. Incommensurate speed of the domestic supply patterns if the major economic issue associated with the growing demand for organic vegetables and fruits. The United States Department of Agriculture has presented federal policies and acts to ensure the development of the U.S. domestic organic market. The potential expand of the organic supply is grounded on private investments and financial aid provided by the U.S. Federal organic policy. The demand, in its turn is supported by higher incomes and the health concerns of the modern food consumer. Nonetheless, the gaps between the demand and the supply of the organic market continue to grow requiring the revision of the federal agricultural policy. 

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Feb 7, 2019 in Marketing
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