Why Is It So Expensive?
Naturally grown food has always been a little more on the pricey side within the grocery industry, but many people find it worthwhile to invest in a product that they believe will benefit their health in the long run, regardless of price. However, with the economy taking a downturn, many consumers of organic products have begun to rethink their spending habits on sustenance that perhaps hasn’t truly proven itself to be healthier in the long run.
While commodity prices in general have been rising, organic food costs had temporarily lagged behind in previous years because of an influx in availability. However, the industry has been increasingly pressured to raise prices that are already much higher than the comparable conventional grown items, which has led to decreased sales overall. Regardless of possible health benefits, many consumers are not financially stable enough right now to afford milk that is $7.00 a gallon or pasta that is $3.00.
Factors Contributing to Higher Natural Foods Cost
Prices are getting out of hand for many of these retailers due to higher fuel costs, rising demand, and a tight supply of the grains. The rising demand from China and other developing countries have greatly increased demand in corn, wheat and other grains and has reached a point where farmers are experiencing unheard of prices. The organic market has therefore reached a point where there is little or no profit margin and retailers are struggling to keep up with the demand and the price.
Food prices in general have risen over the past few years indicating a shift in the economy that has affected all types of food industries. With the price of organic milk reaching $7.00 in some cities, many manufacturers have had to rethink the necessity in producing such a commodity which is unneeded in many American households.
The Gap Between Naturally Grown and Regular Food Prices
While the gap between organic and regular food is beginning to decrease at discount retailers like Wal-Mart, prices still remain 20 to 100 percent more expensive across the nation with one noticeable exception - organic and fair trade coffee is at near the same price levels of regular coffee which is good for the consumer but it starting to hurt small farmers. The price of organic grain is one of the reasons for the influx in prices all around, as the price jumped because hundreds of dairy farmers rushed to complete their transition to organic production in 2007 before stringent government regulations took effect.
This led to a temporary surplus of organic milk which served to keep prices down, but added to the demand for organic animal feed. Many farmers have quit the organic business because of rising prices, thereby impacting much of the organic world. There is still a major difference between the farmers who grow pesticide/herbicide free non-GMO grain and the farmers who produce organic livestock.
The Future of the Organic Market
It is difficult to predict market prices and will be difficult to determine how well the organic market will do in the coming years. While there is still a prominent organic consumer base, this may begin to trickle off if the economy does not get back on track.