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USA: Market Growth Stifled by Undersupply
American consumers can’t get enough organic foods with producers unable
to meet demand. As a result most sectors of the organic food industry
are suffering undersupply, which is stunting market growth.
Shortage of organic products is making producers look outbound for raw
materials. Increasing volume of organic fruit, vegetables, grains,
seeds, beans, and herbs are being imported into the US. Finished
products are also imported to meet consumer demand for all things
organic.
The flood of imports is making the organic food trade gap to widen. It
is estimated that over US $1.5 billion of organic products are imported
into the US, compared to about US $150 million in American exports.
Scarcity of raw material is leading Stonyfield Farm, the dominant
producer of organic yoghurt, to look at sourcing organic milk powder
from New Zealand. The company is to send inspectors to New Zealand to
ensure the organic milk meets American standards. The low number of
organic livestock producers in the US has been responsible for the
organic meat industry to experience undersupply for a number of years.
American producers have resorted to imported organic beef from Australia
and Latin American countries.
Supply shortages are taking its toll on the market. Nearly all market
sectors would grow at much higher rates if sufficient supply was
available. For instance, lack of organic milk has caused many retailers
to have empty shelves throughout the year. The organic juices market
appears to have become the major casualty however with news that a
leading organic juice producer is to exit the market because of shortage
of raw material.
The organic food company cannot find enough orange juice to meet its
growing production needs and has decided to withdraw from the market and
focus on other product categories. The Florida hurricanes depleted
orange juice stocks and imports are prohibitively expensive. Organic
Monitor predicts the refrigerated organic juice segment could contract
by up to 20% in 2006 because of the company’s market withdrawal.
Although competitors are likely to increase market share, few have the
distribution and marketing resources to replace its strong presence.
With American demand for organic foods expected to strengthen in the
coming years, supply shortages are likely to continue. Unless more
American farmers consider converting to organic practices, exporters are
likely to capitalize on this lucrative market.
Related Reports:
#3002-44 The North
American Market for Organic Meat Products
#3001-47 The North American Market for Organic Juices
Posted: December 15th 2005
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