20 million Canadians buy organic produce every week, especially organic fruit and vegetables. However, whilst more and more people are turning to organic food, the high prices can put them off.
Many consumers believe that retailers are unfairly making the most of the organic trend to increase the prices. Some even chose to buy directly from wholesalers to avoid an intermediary and save on average 15-20% - sometimes even 50%. For these consumers it is the only way they can afford to eat organic produce.
Competition is high in the sector and some retailers are willing to reduce their profit margins to attract more organic clients. In California, the increase in organic producers led to a decrease in prices.
Organic fruit and vegetables overall are more expensive than non-organic. The price difference is due to a disequilibrium between the offer and the demand. According to Jean-Francois Ouellet, professor of Marketing at HEC Montreal, there are more people that want to buy organic produce than there is organic produce available, “Your retailer or producer knows that if he doesn’t sell you the organic tomato, someone else will buy it. So, he can let himself sell if for a bit more”.
According to the Quebec Association of Retail Grocers, organic food is not considered a luxury product. Firstly, the sale price does not reflect what the retailer spends. In fact, the retailers say that if they kept low prices all year round, they would be out of business. Secondly, organic production is different to conventional production. Acreage is smaller with about 18% less yield but still needs just as much equipment. Thirdly, shelf space costs the retailer more as there is less turnover for the product but it still needs as many employees. The retailer has to increase the prices to get a profit from the space.
Whilst waiting for prices to eventually decrease, consumers can group purchase, buy directly from organic farms or subscribe for organic baskets.