Media and public-policy types often get caught up in the buzz over organics, and the produce industry is mostly willing to oblige. The reason: Organic is not only a great brand but the rule regarding organic — specifically the requirement for a three-year transition before land used conventionally can produce crops that can be labeled organic — is an answer to the trade’s prayers: Namely, how can we stop growers from killing the goose that lays the golden egg by overproducing, especially new varieties.
Because nobody can just turn on the spigot and churn out more organic product next month, there has often been a ”shortage” of organic product — which has kept prices — and profits — above those of conventional product.
It is, however, worthwhile to realize that organic food is really a comparably tiny industry. It is also important to distinguish between a successful “brand” and a solution to world hunger.
Steve Savage is a consultant who writes frequently on issues related to sustainability. He recently completed a deep dive into the data available on organic crops. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Dr. Steve Savage
San Diego, California
Q: Your detailed analysis of U.S. organic crops rattles the generally accepted notions about the size and potential growth of the organic market. Based on the latest USDA-NASS data, you make four key points:
•Organic is a very small part of US agriculture.
•Organic is significantly less productive on a per area basis.
•Organic acreage, and to a greater extent, organic production, is skewed to the dry, Western states.
•Farmers are paid higher prices for organic commodities, but when combined with lower productivity, gross income per acre is not always much higher and even sometimes lower.
What feedback have you received on these conclusions?
A: I get two different responses. In the academic community, people say the study is significant in debunking widely held industry and public perceptions about organics, and want to see it published in a peer-reviewed journal to lend validity to the findings.
USDA-NASS is expected to conduct a new organic production survey looking at 2011 information, so there should be another window to see if the trends have changed. A presentation from the Economic Research Service has some interesting stats and figures about organic production. Slides eight and nine are quite illuminating. Marc Gunther, a contributor to Fortune magazine, recently wrote an article on his blog entitled, Steve Savage: Organic is Not the Answer, which incorporates California farm size data that went from at least 2009.
Q: Would there be a reason to question the conclusions?
A: Some people have pointed out definite nuances that make interpretation of the data difficult. It is still the best data set that has ever been done, albeit it doesn’t tell you everything. If the yield of vegetable crop is lower, it could be organic or from a producer growing heirloom tomatoes or purple baby potatoes, and the data can’t distinguish. The sample size wouldn’t be sufficient to segment out those numbers. Another issue is that one can’t discern whether the crop was irrigated or not. Take Nebraska corn as an example where data doesn’t break out irrigation methods. On various crops, the data doesn’t segment out whether it’s fresh versus processed.
Q: How does this skew or cloud results? With the lack of specifics in certain instances, can you make conclusions with any certainty? Are there any notable numbers from looking at the data sets or overwhelming trends you observe when assessing data by categories or in the aggregate?
A: What surprises people — and I can say this with 100 percent certainty — is that organic production is very, very small. How do you get from less than half a percent crop land to numbers you hear of organic accounting for 5 percent of retail sales?
Q: Why do you think the numbers get exacerbated? How do you explain the elevated attention on organics at niche stores, and conventional supermarket chains promoting larger organic selections within traditional formats or through new banner stores? Is it just marketing and media hype?
A: There are a variety of reasons for that difference. It’s complicated. [Editor’s note: Savage elaborates on the complexities here]. The organic premium occurs at the farm level and continues through the supply chain, but organic spending doesn’t equate to large organic production. Also, it’s important to remember that retail represents only about half of the food people eat. Another point is that a whole bunch of organic product comes from outside the U.S. Many people question whether all of it is organic. Organic is a super brand, so marketing money spent on dairy enhances the image for produce as well. There are a lot of consumers that have some type of contact with small organic farms, so it seems like something big. However, 70 percent of organic farms produce just 6.6 percent of total organic sales.
The nice thing about the USDA data is that we’re dealing with real numbers, not anecdotes. I’m kind of a sucker for a nice data set. Most information on organic product is murky. This analysis is confined to U.S. organic crops. How much organic product comes from China? I’m not the only one who questions whether it’s organic.
Q: Could you elaborate on your mission to get clarity?
A: For two-and-a-half years now, I’ve been blogging about agriculture, and discovering sustainability-related sites, like Jeff McIntire’s Sustainablog. I wrote an article there — Would You Eat Cloned Fruit? — to demonstrate how people can use provocative language to incite reaction but also mislead. If you want to understand controversial issues about food and the environment, you need to be vigilant about being manipulated by emotive terms.
A perfect example is genetically modified organisms. GMO’s become myths and self-propagate, but if you dig into the facts, the fears are baseless. On the Biofortified website, graduate students do reasonable discussions of these issues. It’s not like Monsanto defending itself.
I always hear debates comparing conventional and organic production… are organic yields lower, and it goes on and on with anecdotal data. What does it really mean on a large scale?
Q: Did the USDA data hold the answer?
A: I talked to people at USDA and NASS in charge of this study to understand their data. In a 2007 census of ag companies, they asked the question, “Do you grow organic?” and they got a long list of growers that said yes. In 2008, they decided to send out a more detailed survey to these growers, and to another list generated through USDA’s involvement in certified organic programs, and they received a 95 percent return. I wanted to know if they had inquired whether crop was irrigated or not, but they hadn’t. The information also just focused on harvested acreage. If there are a fair number of organic crops that didn’t get harvested, that wasn’t captured.
They did generate the data for wheat growers through insurance company information, and results were mixed there. Lots of entries just say D, protecting confidential information. For instance, it’s frustrating that very few things in Iowa were fully disclosed, so I don’t have a comparison for organic corn versus conventional corn, yet there is almost no irrigated corn, so the number would have been clearer.
With crops like spinach and carrots that can be harvested with baby or full size versions, it makes the comparison difficult.
Q: Do these discrepancies take away from your overall conclusions? Could you provide other category statistics that are more definitive, and less prone to misinterpretation, and tell the broader story about the size of the organic market?
A: The true size of the organic market is not subject to any of these data collection issues. There are only a handful of crops where organic is more than 2 percent of production.
Within the fruit category, organic blackberries were a little more than 6 percent acreage, and about 3.2 percent production. The second biggest one is apples and that is still at 5.5 percent acreage and at production 4.8 percent. Third, avocados show almost 5 percent acreage, and 3 percent production. Next are raspberries with 4 percent acreage, and just under 4 percent production, but only a little over 2 percent in value; I wonder whether a lot of those are processed. After that, everything is under 3 percent, except plums, pears and prunes are slightly more than 3 percent.
Q: In terms of yields, how do these numbers compare to conventionally grown product?
A: In terms of relative yield, raspberries are one of the closer-to-conventional in productivity, with more than 90 percent average yields. In apples, it’s 85 percent of what conventional would be, while in oranges, it’s only 42 percent of what conventional would be. Organic is less productive, but will vary widely with the crop in question. The biggest proportion for organic is on the fruit side.
Q: How do vegetables fare?
A: Within vegetables spinach is big; 16.5 percent of harvest acreage is organic, but only 6 percent of production because of baby spinach. Lettuce is 12 percent acreage, but 4 percent production; this is really your spring mix. Next is carrots — 9 percent of acreage — and about 3.5 percent production because of baby carrots. Squash follows at 8 percent acreage and 6 percent of production.
Then it drops down to the 5 percent/6 percent range for artichokes, celery and cauliflower. It’s kind of dramatic on artichoke production, which is only 1 percent. For most of these things, the price is higher.
Q: Do higher price points make up for the difference in yields?
A: If you take a look at charts in my study Certified Veg and Organic Certified Fruit, a lot of crops are getting paid two to three times per unit, but when you factor in lower yields, the grower is not necessarily grossing more per acre. Then you need to consider the costs with fertilizers, hand weeding, and other comparisons with conventional production and the economics are not clear. What is clear, consumers are paying a lot more for organic.
Q: Retail executives say the prices of certain organic items are becoming more comparable to their conventional counterparts…
A: Maybe for big volume products. If you go to Costco, a bag of baby spinach is very cheap, but it’s only in the ground 28 days… Lots of people are making lots of money but I don’t think it’s the growers. It works as a niche for some people.
Q: Are you saying that organic will always remain a niche?
A: I have a sense a lot of people are imagining organic is the way we’ll do everything, I’ve been watching this for 30 years, and people have been saying for 30 years that it’s the fastest growing segment.
Q: At least in the early years, that percentage growth was coming off such a low starting point. Was it even realistic to anticipate growth could continue at such rates?
A: The organic segment still remains so small. That’s why I jumped on this data. There wasn’t anything as comprehensive before. I decided to calculate what it would take to produce all our crops at organic yield. I didn’t include all crops. I took about 30 crops that I felt offered valid comparisons, mostly big row crops and apples. It comes out to be comparable to a land mass the size of Spain, or 71 percent of the land mass of Texas. Clearly there isn’t that much land. It almost doesn’t matter what the explanation of yield is… you couldn’t get there.
Q: Isn’t this kind of information critical in informing public policy decisions?
A: The reason why it matters is we actually have a real looming food crisis. There’s this FAO Global Food Price Index tracking the problem, which is leading to food supply shortages in third-world countries. The world population is growing. Huge populations going into middle class in India and China are eating better, which is a good thing, but the high energy costs and effects of what I’m convinced is climate warming require a more productive food supply system.
The reason why it matters is starving people in Africa. If you look at a crop like wheat, it should have been GMO by now, but European countries blackballed GMO’s. We’re 15 years behind now, running into short supply.
What you do in terms of specialty vegetables is different; it’s a niche. Organic is such a successful brand, traditional branding is difficult in produce, but organic works.
The broader point: USDA has all this grant money to get farmers to convert to organic. It’s about feeding the world. Why would you be encouraging people to do something less productive because it’s a pretty story?
Q: Do you think if more growers converted to organic, it would generate technological advances and economies of scale for a more productive system?
A: I took organic row crop yields that are now 75 percent to 85 percent of conventional. I then plotted out historical data going back to 1980, and for almost every one of those conventional crops, there was a nice increase in yield. Then I did the same for that organic crop and the best cases were yields of 20 years ago, with wheat going back 57 years ago.
Thirty years ago that argument made sense to me. Economies of scale and advances in technology… all these numbers will change. We’re not really making a lot of progress here. There are a few organic pesticides that are quite effective, but some of these are also used in conventional.
Most consumers when asked what organic is, say no pesticides. That’s not true. It’s just a limited list. For fungicides 150 years old, from a toxicity and environmental view, they’re not nearly as nice as modern synthetic fungicides.
One of the take homes is the apple. Apples have disease problems. One reason Washington is such a great place to grow apples is basically because it doesn’t rain during the growing season. Organic yields are fairly similar. But if you go to other states, particularly East New York or Pennsylvania, where there are a significant number of apples, organic yields are significantly lower. What you see is that for the industry overall, you’ve got 71 percent production in the West and, for organic, 97.5 percent of production in the West, because it’s just too hard elsewhere. This is not for lack of trying. Local organic apples would be great sellers in the Boston market.
Q: Here’s an example of where local and organic are incompatible…
A: Essentially, you can’t be local and organic. Basically you should grow things where they grow really well. The organic segment is small because of production limitations. If we’re looking for solutions to real problems of hunger around the world, this is not going to do it. It’s a great niche for some growers, but it gets elevated to this sacred role in society.
Q: What accounts for retailers claiming so much increased interest in organic?
A: One explanation is that the retailers are including organic pasture for dairy and beef, which is bigger, so some of that accounts for their sales. Then there’s the whole issue for imports, where it might not be organic. I’m not a China-basher, but I’m a realist on what is feasible to do in China in terms of regulatory process. China is just one source.
Organic cotton is coming out of Turkey, which accounts for some of that. And organic is more costly, so most statements are percentages of sales or profits, not volume. What I’ve heard from retailers is that they have to charge more for organic because in-store shrink is higher.
So sorting out the comments, with less than half a percent of the land being used for organic crops, does that translate to a big chunk of sales?
The single biggest organic crop in terms of area is hay — at least a quarter of the whole acreage of organic. Organic hay sells for less. A lot of organic crops are for animal feeds.
Q: How does this impact the produce industry?
A: For the produce industry, organic is smaller than it seems considering the buzz. Going to booths at the PMA Show, you’d think organic accounted for 30 percent of the industry, yet organic is only significant in a handful of crops.
It’s hard to do the productivity analysis for vegetable crops. For fruits, it’s more straight-forward.
People in the apple industry have told me they can’t imagine going beyond 10 percent organic. They have really good control on conventional apples. Pheromone confusion only works if you maintain a small population of coddling moths, a really problematic pest.
Q: So in this case, boosting the organic crop could actually compromise the conventional crop? Organic is usually portrayed as the hero and conventional the villain!
A: The one thing that does bother me about the organic industry is the marketing people. The tendency is to bash the rest of the growers to promote product 40 years out of date. It’s unbecoming. The inference is that if you don’t buy organic, you’re exposing your family to danger. The vast majority of pesticides on conventional is as safe as what is used on organic, and fungicide more safe. Our produce in the U.S. is great. Maybe we should stop beating each other up because we’ve got a niche with organic and that’s fine.
I’m not interested in going after organic. I have no animosity towards diehard organic groups. I’m just looking for facts to put things in perspective. It doesn’t make sense to promote more organic based on myth. California only has so much water; at a few percent, no one cares, but if you try to do large percentages of fruit organically, it becomes a problem. And because of disease issues, organic is even more dependent on water.
There are geographical limitations and in certain cases, it’s just not compatible to do organic.
For those interested in this subject, it pays to really go through all the links in this interview, as Steve Savage has done an enormous amount of valuable work in analyzing the available data.
None of this really impacts on whether retailers, shippers or growers should sell or produce organic. The answer is that as long as there is a market, they should take advantage of it — although in planning to convert to organic, growers need to consider whether on their particular crop, in their particular location, any organic premium earned would be sufficient to outweigh any reduction in yield.
Of course, the fact that there is a market doesn’t mean there is a lot of evidence supporting the benefits of organics. Steve’s work doesn’t speak to any health claims for the consumption of organic, but it is very hard to justify environmental claims if lower yields mean that more land must be placed into agricultural use to produce the same quantity of food.
Another implication of Steve’s work and this data is that those who expect organic to become more competitive over time may be disappointed. Of course, with more research and experience, as well as greater scale, organic may become more productive. However, that is likely to be outweighed by the fact that as organic acreage increases, it will often have to move into land less optimal for organic growing. If we were to try to convert acreage on a crop 100% to organic, say apples, eastern and Midwestern crops sizes would collapse because conditions there are not suited to organic growing.
One challenge to the organic community is the whole issue of overseas certifications. We ran a piece on Organic Certification In China, and it was pretty obvious that this US certification agency was not really capable of providing assurance that organic certification in China meant what it means in the United States. This really should be a top priority being addressed by the organic community. One suspects it won’t take many scandals to tarnish the organic “brand.”
There is also the question of rethinking the organic standards. Banning GMOs from organic production may please a particular market but, long term, it may relegate organic production to an antiquated seed base. Right now, if one cross-breeds a high yielding corn with a good tasting corn to come up with a new variety, that is fine for organic production. The production, however, of the EXACT SAME new variety — this time with the genes moved through genetic engineering rather than cross breeding — is now banned from organic production. This doesn’t really make much sense.
For some, the shock will be that although there are crops in which organic is substantial, overall organic production is so small. For others, though, Steve’s piece will raise the larger issue of how to feed the world. We dealt with that in a piece titled Feeding The World In 2050. Whatever the argument that affluent people in affluent countries should buy organic, it seems irresponsible to block impoverished nations from using GMOs and other technologies to feed the population.