US organic prices dip as demand and choices grow

At the moment, US shoppers are still paying more for organic food, but the price premiums are dropping as organic options multiply. Last year, organic food and beverages cost an average of $0.24 more per unit than conventional food, or about 7.5% more, according to Nielsen.

There’s a lot of variation within those numbers. The average price for a gallon of organic milk is 88% higher than what shoppers pay for a gallon of regular milk. Organic eggs have an 86% premium. Organic bread is double the cost of regular bread.

Parents buying organic baby food, on the other hand, pay just 3% more than they would for conventional baby food. Though, some organic products–such as artichokes, soy milk and Granny Smith apples–may even cost less than their conventional counterparts.

There are many shifting factors behind the prices for organic foods. Premiums for milk and eggs tend to be much higher, for example, because the government has very specific rules for what “organic” means. Jeremy Moghtader, the manager of the campus farm at the University of Michigan: “The rules have real benefits to the animal, the consumer and environment, but they do increase the price of production.”

One reason organic premiums are falling is the increase in products on the shelves. Organics used to be confined to health food stores and high-end groceries, but mainstream stores are increasingly offering them. Kroger says it stocks 9,000 organic items in its stores and notched $1 billion in organic produce sales in 2017.

Consumer demand also impacts prices. Right now, demand for organics is outpacing supply in many categories. US sales of fast-moving consumer goods were flat last year, but sales of organic goods jumped 9%.

While price premiums may continue to drop, it’s difficult to say if they’ll ever go away entirely, said Ryan Koory, a senior economist at Mercaris, a data firm that tracks organic agriculture.



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