The Economics of Organic

Consumer demand for organic food products led to $37 billion in sales last year, a significant 12% increase from 2014; halfway into 2016, the market's current worth is priced at a healthy $39 billion by some reports. Flourishing with real double-digit growth in most years since the 90s, even 2008's economic downturn didn't slow down organics, sales progression continuing to hold steady around 10%. In fact, the recession revealed a global consumer willingness to pay premiums for quality in a climate that called for more discretion with one's dollars, establishing consumer demand for organic foods as transcending the niche market segment.

Organic is the fastest-growing food and lifestyle consumer trend in modern history, yet less than 1% of the nation's farmland is certified organic by the U.S. Department of Agriculture (USDA). With demand creating what Agriculture Secretary Tom Vilsack calls "a powerful local and regional food movement," why have so few farmers joined up on this profitable market trend?

Farmers aiming to transition to organic are presented with prohibitive challenges that, like most institutional obstacles, boil down to be a matter of economics. The strict production and labeling requirements for any raw or processed agricultural product to be USDA certified organic mean that farms and businesses that aim to grow, handle or process organic products must wait 3 years to become eligible. The lack of a market for transitional crops (non-organic crops grown during a farms transition to organic practices) to offset the sharp increase in production costs causes many farmers to that begin the process to abandon their changeover. Most farmers never even consider a changeover.

Increasing acreage beyond the 1% requires financial and infrastructural support for farmers transitioning to organic. Certified Transitional, created by Quality Assurance International (QAI), an independent, USDA-accredited organic certifying body, is the first and only program recognizing and incentivizing farmers as they transition their land from conventional to organic growing methods. Because there are not enough crops in the U.S. transitioning, products that contain 51% of transitional content produced by these farmers can be Certified Transitional and bear the program's QAI trademark logo, which helps consumers identify and support companies working towards the USDA Organic seal, which requires 70% organically produced ingredients.

The first food product to be certified under the new Certified Transitional program is Kashi's Dark Cocoa Karma Shredded Wheat Biscuits cereal. As it stands currently, all Kashi products are Non-GMO Project Verified, and many of its bestselling products are USDA certified organic. Consumers that already patronize the Kashi's health food goods now have the opportunity to directly support transitional farmers and impact the food supply chain as do consumers advocating for increased nationwide acreage of organic farmland.

Bear Naked, a TerraCycle program sponsor and a Kashi sister brand, is a company that currently demonstrates its commitment to sustainability by lowering the economic boundaries that prevent its packaging from being recycled. Similarly, QAI's Certified Transitional program eases the uncertainty and economic boundaries preventing farmers from going organic in direct partnership with key brands.

So that more farmers have the financial security to go full-term organic, the goal of this initiative to have more companies and producers consider transitional crops when sourcing ingredients. Consumer product manufacturers like Kashi can command premium pricing for Certified Transitional items similarly to items that are USDA certified organic, which means farmers can be paid more for a higher market value crop.

Food manufacturers nationwide are in a position to support "organics-in-training" and ensure supply chain security by joining this protocol. With the demand of organic foods continuing to eclipse supply, companies can either continue to source their ingredients from the limited 1% acreage currently available, or make the economics of organic work for them. Identifying as Certified Transitional encourages the support of farmers in transition and allows companies to bring the consumer into the process of expanding access to organic farmland.