Cost in Translation

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Cost in Translation

Seriously, now -- why aren't organics getting affordable?
By Christy Harrison
25 Aug 2005
So you like whole-grain bread, pesticide-free plums, and low-fat meat? Better ask for a raise.
A recent study by researchers at the University of California-Davis reported that U.S. shoppers who consistently choose healthy foods spend nearly 20 percent more on groceries. The study also said the higher price of these healthier choices can consume 35 to 40 percent of a low-income family's grocery budget. That's bad news for public health. It's also bad news for the organic-food market, since organics usually carry the highest price tag of all the healthy stuff out there.


Eventually, analysts keep telling us, demand for organics will set the wheels in motion that will drive prices down. But eventually never seems to come. Even though organics sales are growing by about 20 percent a year -- almost 10 times the rate of increase in total U.S. food sales, according to the Nutrition Business Journal -- these cleaner, greener products still carry a hefty premium.
How many shoppers have to jump on the organic bandwagon before we actually see prices fall? How long will that take? And what's the government's role in all this? It depends who you ask.
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Be Fruitful and Multiply
The organic market we know today began evolving in the 1960s and '70s, when rising environmental awareness led to a backlash against pesticides and increased demand for "green" products. Over the last 20 years, the market has flourished, gaining enough stature to merit the introduction of nationwide U.S. Department of Agriculture certification standards in 2002. (Those guidelines have been attacked by some for being too weak; some producers also cause confusion by claiming to be "natural" or "sustainable" without being certified.)
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More than Meats the Eye
Conventional crops are heavily subsidized by the federal government in the United States, making them artificially inexpensive. Couple those subsidies -- which have been in place since the New Deal -- with the cost of cleaning up pollution and treating health problems created by conventional farming, and we're paying a lot in taxes in order to pay a pittance at the grocery store.
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Loaves and Wishes
Subsidies are a useful way to increase supplies, experts say, but they're only effective in conjunction with a well-run market. "Regulations that promote organic agriculture by encouraging supply are not ... sufficient to ensure the continuous growth of the organic sector," wrote Nadia Scialabba, a senior officer of environment and sustainable development for the U.N., in 2001.
Scialabba cited the case of Austria, which was the leading organic producer in the E.U. in the mid-1990s. About 10 percent of farmers in the country decided to go organic because of subsidies offered by the government, but this increase in supply was met with inadequate information, distribution, and marketing channels; as a result, many threw in the trowel. They had the money -- they just needed a market.

Some other policies that would effectively increase supply have been contentious. For instance, the USDA has been criticized for allowing dairy farmers to be certified while still in the process of converting conventional cows to organic status. (Such status depends on the grain fed to the cows.) Somewhat ironically, a ruling this January that reversed that provision could hurt the market, at least temporarily. Some of the companies making "organic" products under the weaker standards might jump ship due to the higher production costs under the stricter guidelines, says Lohr. This could slow progress "as the industry re-orients itself" around the new rules, she says.
Such dilutions and confusion can cause consumers to lose trust in the organic label and stop buying, according to a 2002 report presented by German researchers to the U.N. Environment Program. Lohr predicts that the rules will continue to be challenged in years to come, "because if there's demand for organic, people want to make it easy for farmers to become certified."
One thing is clear: though organics have been around for a half-century, unknowns still rule. Long-range studies are few and far between, says UC-Davis' Blank. And most economists don't wager a guess on when pricing will change. For now, in the absence of federal support, they put their money on consumer education driving the market.
"It's a matter of the public really knowing what they get when they buy organic," Blank says. The necessary increase in demand, he adds, is likely to happen only if shoppers develop a pro-organic philosophy before they ever set foot in the store.


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Christy Harrison is a senior editor at Plenty magazine. She lives in New York City.


complete article @ link

©2005. Grist Magazine, Inc. All rights reserved. Gloom and doom with a sense of humor®.

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1. In some markets yes.

If you move towards more vegatable/ "organic buying" and then look for oraganic all of the time you might end up saving money. It might take you away from whatever you normally would buy however.