Skip to main content

Opportunities for Organics in the US Market



Opportunities for Organics in the US Market

In the last ten years organics as a category has seen an incredible level of growth. As measured by the USDA the category has increased by more than six fold. All this while maintaining relatively stable pricing. There is undoubtedly a growing hunger for organic blueberries that the market is successfully satisfying.

Historic Volumes and Prices | Organic


Source: USDA Market News via Agronometrics.
(Agronometrics users can view this chart with live updates here)

For producers, organic fruit premiums have been a strong incentive to get into this segment of the category. From 2014 to 2019, where USDA’s records are more complete, the average difference between the two categories is $2.09 USD/LB.

Prices by Type


Source: USDA Market News via Agronometrics.
(Agronometrics users can view this chart with live updates here)

The chart and the numbers presented above, however, are an average of the entire year. With a highly seasonal product like blueberries, heavy fluctuations in price throughout the year are the norm. Looking back on 2019 we can see that the premium varies greatly throughout the year, ranging from $0.10 USD/LB to $3.59 USD/LB… sometimes with only one week between the smaller and larger premiums.

Prices by Type 2019


Source: USDA Market News via Agronometrics.
(Agronometrics users can view this chart with live updates here)

The seasonal variation in pricing also means that different origins receive different premiums. What may be a great opportunity for one producer may offer smaller returns for growers operating in a different region and selling their fruit at a different point in the year. By comparing the percentage difference between the weekly organic and conventional prices weighed by the volume of organic fruit (where available), the table below offers an average premium for each growing region over the last four years.

Average Weekly Organic Premium over Conventional Blueberries, by Origin

Origin
2016
2017
2018
2019
Argentina/Uruguay*
217%
191%
136%
California
190%
149%
122%
134%
Chile*
204%
178%
175%
131%
Florida

182%
124%
186%
Georgia

187%

193%
New Jersey


239%
204%
Peru*

191%
207%
170%
Washington/Oregon
167%
148%
167%
173%

There are many insights to be gained from this interpretation of market data. An individual study of each origin is possible, but that gets away from the intent of this report which is meant to summarize the category as a whole. That said, Washington/Oregon stand out as an origin which has seen consistent growth for the category over the last three years. New Jersey and Georgia also stand out for the high premiums they receive from organic fruit over conventional during their seasons.

One of the biggest takeaways from this table is that increasing volumes of organic blueberries relative to conventional are putting downward pressure on premiums. We can see the effects of this in most origins where the percentage premium is steadily decreasing year after year. Although some premiums show an increase in 2019 compared to 2018, it is important to keep in mind that these figures are calculated in relation to conventional fruit, which have seen a general decrease in recent years that has been also echoed in organics.

Conclusions

The historical growth of the organic blueberry segment is undeniable and the category’s relative stability in prices is impressive. New volume opportunities exist for organic blueberries in the US retail, foodservice and ingredient markets, and in export channels, but as the market matures extracting this growth will require new tools and skills.

Agriculture is a continually evolving, complex and risky game of balancing production costs with retailer and consumer demand, and price-point sensitivities. As with other specialty crops, growers of conventional and organic blueberries are currently struggling with the realities of increased input costs and ever tighter margins in a competitive global landscape.

Understanding available production windows and the timing of harvests play a critical role in earning sufficient premiums for any type or variety of fruit. This is particularly true for organic crops which can have higher production costs.

As the complexity of global market production and demand variables increase, it becomes more difficult to effectively manage production levels and distribution logistics on conventional and organic specialty crops. Effectively growing to meet retail and foodservice channel demands, at a fair and profitable price point, will require smart business planning that is informed by accurate market data.

In a mature market, increased access to, and utilization of datasets that provide a more integrated and comprehensive view to the entire value chain is a powerful and effective way to manage the complexity of a global specialty crop that serves multiple channels - grocery retail, foodservice, manufacturing and export.

There is still considerable volume and dollar growth to be mined from domestic and global, conventional and organic blueberry markets. However, growers and their partners will struggle to effectively extract this next era of growth without access to the right data, and application of the right analytics that provide the necessary insights into the marketplace dynamics affecting production, pricing and demand.

Written by: Colin Fain of Agronometrics for the North American Blueberry Council (NABC)
Original published in www.nabcblues.org on June, 2020 (Link).

Comments

Popular posts from this blog

Blueberry boom: Worldwide growth creates challenges for NW producers

Overview of the northwest blueberry season by Doug Krahmer of Berries Northwest, Cort Brazelton of Fall Creek Farm and Nursery, Kasey Cronquist of the U.S. Highbush Blueberry Council and Mark Hurst of Hurst's Berry Farm, complemented by charts from Agronometrics. Original published in www.capitalpress.com  on July 30, 2020 ALBANY, Ore. — On a seasonably warm July afternoon in the fertile Willamette Valley, Doug Krahmer stood between rows of organic blueberries and watched as a large mechanical harvester rolled slowly through the field, rattling bushes heavy with ripe fruit. Measuring a little more than 15 feet tall, 11 feet wide and weighing 7 tons, the harvester seemingly floated in the distance over neat rows while fiberglass rods, or “fingers,” shook the berries onto a conveyor belt that swooped them to the upper deck and into plastic crates. From there, the crates were loaded into refrigerated trucks and driven from the farm north of Albany, Ore., to a packing shed ea

Agronometrics in Charts: Demand for berries skyrockets in 2021

This time for the ‘In Charts’ series we will give an update as to how the average prices of berries have been behaving. Specifically, we will look at the prices of blueberries, raspberries, strawberries, and blackberries in the United States market and compare them with previous seasons. An increase in demand, brought on by the tendency to consume “superfoods” such as berries during the Covid-19 pandemic, seem to have pushed prices up despite the fact that volumes imported by the United States have been similar or higher than those of previous years. Let's look at each particular case: Blueberries Blueberry prices experienced a significant increase from week 3 of 2021, showing the highest prices of the last 5 seasons for the same date. If we observe the following chart, we can see that, for week 7 of 2021, the average price of conventional blueberries was $7.60 per kilo. This is 24 percent higher than in 2020 when the average price was $6.14 per kilo. Volumes for blueberr

Peru's blueberry oversupply takes its toll on export price

Overview of the Peruvian blueberry season, complemented by charts from Agronometrics.   Original published in FreshPlaza.com   on November 25, 2020  This year's Peruvian blueberry season began in June with the export of 1,010 tons worth 5 million dollars. These figures represented a 25% increase in volume and a 77% increase in value over the same month of 2019. The lower production in the northern hemisphere due to weather problems allowed producers to achieve attractive prices of $ 5.15 per kilogram in June. Volume (in Kg) of blueberry from PerĂº in the US market Source: USDA Market News via Agronometrics . (Agronometrics users can view this chart with live updates here ) The good reception of Peruvian blueberries and the increase in prices encouraged exports during July, a month in which the country shipped 4,808 tons (+ 108%) for 26 million dollars (+ 102%). In this month, the increase in the Peruvian supply generated a slight 3% fall in the typical prices of the month,