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Organic produce marketers assess prospects for 2021

Issue Date: January 6, 2021
By Bob Johnson

Following a roller coaster year of the pandemic, leading California organic fruit and vegetable growers say they're generally bullish on market prospects as they look toward 2021 and beyond.

But while the leaders of large grower-shippers such as Driscoll's, Taylor Farms-Earthbound Farms and JV Smith expressed confidence demand will increase in 2021, they remain uncertain where people will buy their organic produce—which affects which mix of varieties they should plant.

"The consumers are clear: They want organic as part of a healthy lifestyle," said Soren Bjorn, president of Driscoll's of the Americas. "In the berries, organic is growing way faster than conventional, three or four times faster."

Organic vegetable production also continues to grow at a healthy pace, as large-scale farmers have brought the products within the means of middle-income shoppers.

But there is lingering uncertainty about the share of organic fruits and vegetables people will buy from retailers, food service and the deli during the recovery.

"The food service segment consumes a lot of head lettuce, but they don't consume much organic spinach and salad mix," said Bruce Taylor, president of Taylor Farms. "We had about a $70 million pile of vegetables to work through in about a 10-week period. That was a huge challenge. Even today, the challenge is: What do I plant?"

Taylor, Bjorn and JV Smith President Vic Smith gave their analyses of the prospects for organics during an online Organic Grower Summit Roundtable sponsored by the Organic Produce Network, a meeting place of large produce retailers and the organic farmers who are large enough to supply them.

All the growers said they had to adapt to the major disruptions in supply chains that came as people bought far less produce at restaurants and delis, and more at retail supermarkets.

"With the produce industry, and especially the leafy greens we focus on, there was extreme anxiety for 30 to 60 days, and then it seemed to level out," Smith said. "There was a shift from food service over to retail, and after that it seemed to settle down."

The impact of these dramatic market shifts during the pandemic continue and could be even longer lasting in strawberries, where farmers must make planting decisions far in advance.

"We make the planning decisions for strawberries a lot further ahead than the vegetables," Bjorn said. "We were not very aggressive last April when we were making planting decisions for 2021, because we were throwing berries away, and that's probably going to come back to haunt us."

Retail sales data presented during the online meeting showed organic produce sales nationwide enjoyed double-digit growth once again in the third quarter of 2020, to top $2 billion in retail sales for the three months, and captured an increasing share of the market.

Sales of organic and conventional produce items combined jumped 20% compared to the previous year when the pandemic hit in March, according to 210 Analytics President Anne-Marie Roerink.

For organic produce specifcally, sales reached more than 12% of retail produce sales measured by dollars and around 6.5% measured by volume during the third quarter.

"Organic fresh produce in the third quarter saw a continuation of trends established in March ... with elevated sales across the entire category as consumers continued at-home eating in the face of restaurant closures," said Matt Seeley, CEO of the Organic Produce Network.

"As has been the case all year, organic growth continues to increase at a faster rate than conventional produce," Seeley said. "The 16% growth in third quarter organic sales was well above the 10% dollar growth in conventional produce."

Opportunities looked to be particularly strong in packaged salads, strawberries and herbs, which led the way in sales of organic fruits and vegetables and continued to grow faster than conventional in both dollars and pounds.

The data on retail sales collected and analyzed by Category Partners indicated there are still expanding opportunities for farmers in these products that lead the way in the organic sections of produce departments.

"I'm bullish on organic," Bjorn said during the growers' presentation. "This is where the consumer wants to go, and it's always a good idea to follow that."

Increased interest in more sustainable practices is driven by younger shoppers, the growers said. One challenge organic farmers could face with these younger customers is the reliance on plastic containers to protect and preserve produce.

"There is a disconnect between organic produce and plastic clamshells, and we need to figure that out," Bjorn said.

(Bob Johnson is a reporter in Sacramento. He may be contacted at bjohn11135@gmail.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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