The U.S. organic industry maintained steady growth in 2016, with food sales increasing 8.4 percent to $43 billion — breaking the $40 billion mark for the first time.
The sizable growth is even more impressive considering total food sales increased only 0.6 percent.
Organic food now accounts for 5.3 percent of all food sales in the U.S., another significant first for the organic sector, according to the Organic Trade Association in its 2016 Organic Industry Survey, conducted by the Nutrition Business Journal this spring.
Organic non-food sales also posted robust growth, increasing 8.8 percent to $3.9 billion, far surpassing the 0.8 percent growth in all non-food sales of comparable items, such as textiles, supplements and personal care items.
“The organic industry continues to be a real bright spot in the food and agriculture economy, both at the farm gate and the check-out counter, said Laura Batcha, OTA chief executive officer, in the association’s executive summary of the survey.
The robust industry continues to gain ground, gaining market share and making its way into new channels — such as convenience and drug stores, foodservice and the internet.
Organic fruits and vegetables held onto the top position in the organic line-up with $15.6 billion in sales, 36.3 percent of all organic food sales. Those sales were 8.4 percent higher year over year, more than double the 3.3 percent growth in their non-organic counterparts, and now account for 15 percent of all produce sales.
Organic meat and poultry sales shot up 17 percent to $991 million for the category’s biggest gain ever. Meat and poultry is one of the smallest organic food categories, but organic poultry moved beyond many years of supply shortages and grew at a rate of 23 percent — compared with 9.2 percent in 2015.
The other smallest category, condiments, is not a headliner but is showing interesting trends, according to OTA.
“Dips and spices both hit home runs, recording the highest growth rates within the food categories,” OTA reported. Organic dips posted 41 percent growth in 2016 with $57 million in sales, and sales of organic spices increased 35 percent to $193 million.
The survey did note oversupply in produce, poultry, dairy and eggs in 2016. The change in the organic marketplace from undersupply to oversupply “simply exemplified the ebb and flow of supply and demand as the industry grows,” OTA stated.
“The biggest challenge is how to grow at a rate that allows for farmers to be paid fairly for the extra work they do in organic … while also assuring stability of supply, shortage versus glut, spikes in prices versus drops in prices,” said Matt Dillon, Clif Bar’s director of agricultural policy and programs.
Growth in the organic sector also continues to translate into jobs across the supply chain, OTA stated.
More than 65 percent of organic farms sold product in wholesale markets in 2016, and more than 60 percent of organic businesses with more than five employees reported an increase in full-time employment with plans to continue increasing staff in 2017.
“Organic offers in many cases the choice for growth and more viable, stable prices for farmers and food manufacturers,” Batcha said.