In this edition of the ‘Agronometrics In Charts’ series, we delve into the diminishing price premiums for organic apples and strawberries. Each week, this series highlights a different horticultural commodity, focusing on specific origins or topics and visualizing the market factors driving change.
Historically, organic producers have benefitted from receiving higher prices for their products compared to conventional counterparts. This price premium serves as a crucial offset for the additional costs associated with organic farming practices. However, recent trends indicate that the premiums for key organic fruits, particularly apples and strawberries, have been on a steady decline since 2015, as reported by the USDA. This decline is substantiated by data from the USDA.
The inflation of food prices in 2022 reached levels not seen since 1979, impacting consumers with increased costs for both organic and conventional produce. While both categories experienced price hikes, conventional produce witnessed a sharper increase. This situation has contributed to a narrowing price gap between organic and conventional products. Consequently, organic apple and strawberry producers are experiencing shrinking price premiums, which complicates the justification for the higher costs associated with organic production methods.
The COVID-19 pandemic brought about significant changes in consumer behavior and market dynamics. During this period, the Organic Trade Association observed that many organic producers were reluctant to raise their prices further, despite escalating production costs. This hesitation stemmed from concerns that consumers, already grappling with high food prices, would pivot away from organic options if the price differences became too pronounced. The ongoing trend of decreasing price premiums has persisted, exacerbated by supply chain disruptions and evolving consumer spending habits, which have collectively fostered a more competitive pricing environment. As a result, organic growers face increasing challenges in commanding price premiums that adequately reflect their production costs.
Source: USDA Market News via Agronometrics.
(Agronometrics users can view this chart with live updates here)
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