Data indicate steep organic price premiums in 2010
Organic price premiums were especially high for eggs, yogurt and milk in a U.S. Department of Agriculture report, but the prices did not hold back consumers. The U.S.D.A.’s Economic Research Service used Nielsen’s Homescan data for 2004-10 in creating the report “Changes in retail organic price premiums from 2004 to 2010” released this past May.
The organic price for eggs in 2010 was 82% higher than the non-organic price, which was the highest percentage for all of the 17 product categories in the study but still down from a peak 173% premium for organic eggs in 2005. For organic yogurt, the price was 52% higher than the non-organic price in 2010, which compared with a low of 25% in 2004, and for organic milk it was 72%, which compared with a low of 50% in 2008.
“Yogurt, milk and eggs had organic price premiums that were generally higher than the other products,” the U.S.D.A. said. “This difference was likely driven by supply-side cost issues since organic livestock farmers must provide their animals with organic feed and pasture land, cover the cost of transitioning from a conventional to an organic herd, and only use organic health care practices, which do not allow the use of antibiotics or growth hormones.”
Organic sales still increased in the three categories in the time period of 2004-10. The organic share of total egg sales rose to 3.4% from 0.8%. The organic share of total yogurt sales rose to 5.2% from 2.5%, and the organic share of total milk sales rose to 5.5% from 1.3%.
“Despite the higher premium for these three products, they are among the most popular organic foods chosen by consumers,” the U.S.D.A. said. The U.S.D.A. cited data from the Organic Trade Association showing that in 2012, 89% of households with children who purchased organic food purchased organic dairy products.
In the U.S.D.A. study, organic prices at the retail level in 2010 were more than 20% higher than the non-organic prices for 16 of the 17 products analyzed in the study. Organic spinach, at 7%, was the only product below 20%.
Most premium prices fluctuated, meaning they did not steadily increase or decrease over the seven years. The premium prices steadily decreased for organic spinach, canned beans and coffee. The premium price for organic spinach plunged to 7% in 2010 from 57% in 2004. The premium price for organic canned beans dropped to 54% from 99% over the seven years, and for organic coffee it fell to 47% from 106%. Organic coffee sales made up nearly 3% of total coffee sales in 2010, which compared with 0.4% in 2004.
The yogurt premium price was the only one that steadily increased. Premium prices for processed foods in 2010 ranged from 22% for granola to 54% for canned beans.
Organic bread, with a 30.2% premium price in 2010, barely changed from 30.1% in 2004. The highest organic bread price premium was 46% in 2005, and the lowest was 25% in 2008. Organic bread made up 1.3% of total bread sales in 2010, which compared with 0.5% in 2004.
The premium price for organic soup hit a high in 2010 at 33%, which compared with a low of 16% in 2006. Organic soup sales made up 4% of the total category in 2010, which compared with 0.7% in 2004.
Organic spaghetti sauce had a price that was 53% above non-organic spaghetti sauces in 2010, which compared with a high of 72% in 2004 and a low of 34.7% in 2007. Organic spaghetti sauce made up 2.5% of total spaghetti sauces sales in 2010, which compared with 0.6% in 2004.