Organic opportunity

05/01/2007 02:00:00 AM

Most growers aren't looking to convert their entire conventional production to organic, because it's just not feasible. The three-plus years it takes to transition from conventional to certified-organic production plus the increased input costs have caused growers to think twice about converting acreage.

But organics are part of an undeniable trend that continues to pick up steam. And organic farming is a perfect opportunity, especially for smaller farms, to draw additional business, says Marty Mesh, executive director of the Florida Certified Organic Growers & Consumers Association, Gainesville.

Organic food was a $13.8 billion industry in 2005, including $4.9 billion in fresh produce sales, according to the latest numbers from the Greenfield, Mass.-based Organic Trade Association.  Organic fresh produce sales are expected to reach $6.4 billion in 2007, the association says.

With large retail chains such as Wal-Mart Stores Inc., Bentonville, Ark., Target Corp., Minneapolis, and Lakeland-based Publix Super Markets Inc. beefing up their organic offerings, organic produce is gaining more exposure every day.

Wal-Mart announced in March 2006 plans to increase organic offerings in its 300 top-tier stores, with each store carrying more than 100 organic items during peak periods. But just over a year later, in an April 12 story from Business Week magazine titled "Organics: A Poor Harvest for Wal-Mart," organic growers supplying Wal-Mart's fresh produce said large orders that originally came in following the organic push have been significantly cut back or stopped altogether.

Wade Groetsch, president of Florida juice producer Blue Lake Citrus Products Inc., Winter Haven, told Business Week he stopped shipping his organic orange-tangerine blend juice to Wal-Mart after a few months. Groetsch said the sales weren't enough to justify packing and shipping costs.

The Packer newspaper followed up on the story, contacting Tonya Antle, vice president of organic sales for Natural Selection Foods LLC, San Juan Bautista, Calif., which sells its Earthbound Farm brand in Wal-Mart stores.

"We've had nothing but a success story with Wal-Mart, and they have continued growing the number of items they're carrying and the number of distribution centers that are carrying organics," Antle told The Packer. "They're very supportive of the brands that they work with and are willing to give some valuable real estate to the organic category within their produce departments."

She added that the exposure and access to organic produce that Wal-Mart has given its customers has been invaluable.

That being said, organics have gained consumer interest and growers are looking at the category as an option to diversify their offerings.

"Organics are one of the best growing areas in produce," says Bob Spence, vice president of business development for Pacific Tomato Growers Ltd., Palmetto. "Retailers prefer to deal with fewer suppliers and logistically, they're looking to fill fewer trucks. Organics are another leg to the stool to offer retailers."

Crunch the numbers

Compared with the rest of the country, Florida still isn't a major organic produce growing state.

Mesh says current certified organic products in Florida include citrus and citrus juices, mixed vegetables, tomatoes, watermelons, blueberries and grapes. Mesh estimates that his organization has certified 7,500 organic acres of citrus and vegetables in Florida. He estimates current Florida acreage of certified organic citrus and vegetables at 12,000 acres to 15,000 acres. 

According to the U.S. Department of Agriculture Economic Research Service,  Florida boasted 3,169 acres of certified organic citrus, 1,813 acres of organic mixed vegetables, 168 acres of organic tomatoes and 124 acres of organic lettuce in 2005.

California dwarfs those numbers in comparison, with 56,667 total acres of organic fruits and 58,327 acres of organic vegetables in 2005, according to the service.

"Florida has lots of room for organic acreage growth," says Barbara Haumann, press secretary for the Organic Trade Association. "Florida consumers also are interested in organic produce."

This is reinforced by a phone survey of 634 Florida households conducted by the Florida Certified Organic Growers & Consumers Association, which found that about 45 percent of those surveyed said they occasionally purchase organic products. More than 70 per-cent said they believed that organic agriculture, if practiced on a wider scale in Florida, would help protect the state's environment.

As more consumer-preference research and studies are published, the hard evidence builds that organics have staying power.

Why dabble in organics?

There is a big hole to fill between the current organic supply and demand.

"Growers need to recognize that packaged salads and baby peeled carrots make up nearly 40 percent of organic produce in conventional grocery stores," says Steve Lutz, executive vice president for West Dundee, Ill.-based Perishables Group Inc. "The rest of the products are battling for their 60 percent of the segment. This is a long-term trend?not a fad?that will play out over many years as consumer demand increases."

Mesh says organic citrus is a market Florida producers would have a great opportunity to fill.

"I believe the demand for organic citrus in Florida has exceeded the supply for many years," he says. "The potential for organic citrus is huge."

At Pacific Tomato, Spence says demand is still outpacing supply on a year-round basis with the company's organic grape tomato supply.

The company started shipping organic grape tomatoes under the Sunripe label in 12-count, 1-pint clamshells a little over a year ago, Spence says. The tomatoes are available year-round from Pacific Tomato's production operations in Palmetto-Ruskin; Immokalee; Melva, Va.; and Cecil, Ga.

Another company that packs the Sunripe label, Pacific Collier Fresh Co., Immokalee, started packing and shipping organic green and yellow squash, cucumbers and bell peppers late last year, Spence says.

Christopher Grallert, vice president of marketing and sales for Santa Sweets Inc., Plant City, says 30 percent of the company's business is in organics.

"We plan to grow organic production significantly as demand increases," Grallert says.

Santa Sweets is the growing division of Procacci Bros. Sales Corp., Philadelphia, with acreage in Florida, North Carolina, California and Mexico. For five years, the company has offered organic versions of its grape, UglyRipe, round, roma and cherry tomatoes, Grallert says.

The company also offers three organic melons grown in Mexico: the Can-A-Dew, Can-A-Sweet and miniature watermelon.

Grallert says he thinks that because crops grow slower under organic conditions, the result is better pest resistance, longer shelf life and enhanced taste.

Why incur the additional costs?

The bottom line is, organics cost more to produce.

"Granted, the inputs are higher," Lutz of Perishables Group says. "Consumers recognize that and are willing to pay more for organics."

Pacific Tomato's Spence says the cost to produce organic produce runs from 30 percent to 100 percent more than the company's conventional crops. He said weather and location are major factors affecting growing costs.

"The more we learn about it, the more we can control," he says. "It depends on what the market provides and if you can still make money."

Grallert says Santa Sweets organic production costs range 50 percent to 75 percent higher than conventional production.

The increased cost results from a variety of inputs, such as additional monitoring of crops and management of pests. Other costs include protective barriers for weed control, special fertilizers and composts, and additional shipping charges from farther-away specialty suppliers, Grallert says.

"Pest and disease control is a challenge, without chemicals or with," says Mesh of the Florida Certified Organic Growers & Consumers Association. "Farmin' ain't easy."

Longer crop rotations can help manage disease control, he says. Other considerations growers must take into account with organics include variety selection, timing of plantings, layout of farm space, and beneficial plants and insects.

Tillage, cultivation and intercropping can be used in lieu of chemicals for weed management, Mesh says.

"In the long term, as growing materials are more available and more organic acreage is in production, the market (conventional vs. organic) will level itself off,"Grallert says.



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