Sticker Shock in the Organic Aisles
Shoppers have long been willing to pay a premium for organic food. But how much is too much?
Rising prices for organic groceries are prompting some consumers to question their devotion to food produced without pesticides, chemical fertilizers or antibiotics. In some parts of the country, a loaf of organic bread can cost $4.50, a pound of pasta has hit $3, and organic milk is closing in on $7 a gallon.
Food prices in general have been rising, but organic food lagged somewhat behind last year because of a temporary glut of organic milk and other factors. Some grocery chains adopted private-label organic products, which are cheaper than brand products, while others hesitated to raise already high organic prices.
In recent months, however, these factors have been giving way to cost pressures in the industry. On grocery shelves across the nation, sharp price increases are taking hold.
Organic prices are rising for many of the same reasons affecting conventional food prices: higher fuel costs, rising demand and a tight supply of the grains needed for animal feed and bakery items. In fact, demand for organic wheat, soybeans and corn is so great that farmers are receiving unheard-of prices.
But people who have to buy organic grain, from bakers and pasta makers to chicken and dairy farmers, say they are struggling to maintain profit margins, even though shoppers are paying more.
The price of organic animal feed is so high that some dairy farmers have abandoned organic farming methods and others are pushing retailers to raise prices more aggressively. Several organic manufacturers worry that sales may slow as consumers cut back.
Over all, grocery prices have increased about 5 percent over the last year, though some staples like conventional eggs jumped 30 percent and milk, 13 percent, according to the Consumer Price Index. That government index does not break out prices for organic food.
Organic food is typically 20 percent to 100 percent more expensive than a conventional counterpart; the gap has narrowed in recent years as discount retailers like Wal-Mart have offered organics and more private-label organic products have become available, according to the industry.
Organic corn is selling for $10 a bushel, organic soybeans for about $20 a bushel, and organic wheat is can sell as much as $22 a bushel. These prices reflect almost a 100% increase over two years ago.
Even with those prices, though, people in the industry say fewer farmers are starting the arduous transition to organic production because they can get record prices for conventional grain. Droughts, a growing global middle class and rising demand for biofuels produced from crops are putting heavy pressure on the world’s food system, sending prices up everywhere.
