Q. How does supply affect the sustainability of the current organic market?

A. Fifty-two percent of respondents in the Organic Trade Association’s (OTA) 2006 Manufacturer Survey reported that a lack of dependable supply of organic raw materials has restricted their company from generating more sales of organic products. Thus, there is room for more growth based on existing demand.

Certified organic acreage in the United States still only represents about a half of a percent of all agricultural acreage in the country. The good news is that an additional 1 million acres became certified organic in 2005, bringing the total number to slightly more than 4 million acres, according to the U.S. Department of Agriculture’s Economic Research Service www.ers.usda.gov/data/organic). In 2005, for the first time, all 50 U.S. states had some certified organic farmland.

ERS figures also showed livestock numbers are up substantially, reflecting the growing demand for organic milk and meat in the United States. According to ERS, nearly one percent of dairy cows and 0.6 percent of layer hens in the United States in 2005 were managed using certified organic practices.

Q. Are there any solutions being considered to increase domestic supply of organic products?

A. Much more certified organic acreage is needed. Some processors of organic finished goods are actively working with farmers to transition to organic production. OTA is also developing comprehensive information to encourage conversion. In addition, OTA believes the U.S. government has a role to play to encourage more farmers to switch to organic production. That is why OTA is actively seeking provisions in the 2007 Farm Bill, now under development, to provide parity of access to U.S. Department of Agriculture (USDA) resources in the American agricultural system to those who choose to farm organically. OTA is suggesting that USDA offer such resources as technical assistance for transitioning to organic practices, funding for research, and market data and risk management tools that, in the long run, will increase the supply of organic ingredients for the marketplace.

Q. How closely is the international organic supply chain monitored to ensure foods meet standards?

A. All products sold as organic in the United States, regardless of place of origin, must meet the requirements of the U.S. national organic standards. This means providing a paper trail from farm to final selling point verifying that organic practices have been followed in producing and handling the product. This includes proof of certification from third party certifying organizations accredited by USDA.

Q. There still seems to be confusion among consumers over the definition of organic versus natural. How should that be addressed?

A. Unlike “organic” which is regulated under national organic standards, the term “natural” is not regulated at the federal level in the United States except on meat and poultry, where it only means minimally processed and no added artificial ingredients or colors (see www.fsis.usda.gov/oa/pubs/lablterm.htm).”

Organic, meanwhile, refers to how products are grown, processed and handled, and the use of organic on the label of a food or beverage product denotes that it meets or exceeds U.S. national organic standards. Certified organic producers and processors must adhere to rigorous growing and processing standards verified by a third party, either an independent or a state certification organization accredited by USDA. Organic farms build healthy soils without the use of toxic and persistent pesticides and fertilizers, and without sewage sludge, irradiation, or the use of genetically engineered organisms. Organic livestock must receive 100 percent organic feed, and are not derived from cloned stock. Processed food products that carry the organic label must maintain the organic integrity that began on the farm. In contrast, the term “natural” may have little or nothing to do with agricultural practices, nor does it indicate the use of independent inspectors. There are currently no consistently defined and regulated agricultural practice standards in place for the term “natural.”

Sometimes the term “natural” is used to describe certain retail stores that specialize in selling organic and so-called “natural” products. This can be a source of confusion as well, but it is a traditional term in the industry since its inception.

The hurdle is to undertake educational campaigns that clearly spell out these differences to consumers.

Q. Are we seeing demand for organics plateau, and what does that mean for the industry?

A. No, demand has not reached a plateau yet. Consumer surveys estimate that at least 56 percent of U.S. consumers, and possibly as many as 73 percent, purchase organic products on occasion.

Although the rate of growth for retail sales of organic food is slowing, from over 20 percent a year to nearer 15 percent, annual sales still are growing at double-digit rates, which far exceed the sales growth rate for all foods in general. In fact, in 2005, organic food sales represented 2.5 percent of all retail sales of food, up from 1 percent in 1999. Consumer demand continues to drive the U.S. market for organic products, and still exceeds supply. Thus, there is much room for continued growth.

Not only do “natural” food stores and all of the major mainstream retailers see organic as a growing category, but more and more mainstream manufacturers are adding organic products to their traditional brand lines. In addition, small product developers continue to create the new products of their dreams. Meanwhile, more manufacturers are now offering organic fiber/textile products, and sales of other non-food products, such as organic flowers and pet foods, are gaining ground.