Organic Food Industry Analysis Essay Example for Free

Organic nutrition Industry Analysis look forThe positive products exertion has shown consistent growth over the last 25 twelvemonths, growing 3,400% (Flynn, 2014). The positive industry earned $35 gazillion in 2014 up from $1 billion in 1990 (Flynn, 2014). Credited with creation the primary trade effectiveness drivers, feed condom and health concerns take in been driving the industry since the depot of the 2009 recession. This research paper examines the radical products industry and identifies how supply and demand affects future prices of native products. native fertiliser assiduity analytic thinking 3 Organic Industry Analysis This paper provides a succinct market analytic thinking of the ingrained diet for thought and product industry. The paper provides background and description of the innate product market. The paper examines U. S. and spherical market trends of the primitive food and product industry by examining demand and supply for organi c fertilizer products. This paper identifies key box store retailers and describes their roles in driving the organic food industry. Analyzing various studies from the USDA and its frugal Research Section (ERS) identified the driving market forces behind the popularity of the organic foods and products, which ar the improvement of health and reduction of pesticides from individual diets.The purpose of this paper is to identify market trends and the driving forces behind the global organic food and product market. The driving forces behind the organic food market are health certain millennials and new mothers who want to turn off chemicals from their diet. Background and Description The term organic has been the topic of controversy for academics and production line leaders since the 1940s. The controversy involves several(prenominal) sub-topics such as lack of foreign standards for organics, cross contamination of organic products during transport, genetically modified organis ms (GMO), chemicals and pesticides, and costs to produce organic goods.The definition of organic is made or cock-a-hoop without the use of artificial chemicals (Organic, 2015). The premise of organic food is not new however, the creation of national standards has objectively standardized what may be considered an organic product. As the global population grows, the demand for food has ca employ farmers to summation efficacy and reduce crop waste however, the methodology utilized to preserve crops may be more of a detriment to human health resulting in the spunkyer demand for unpolluted food sources and products.ORGANIC intentness summary 4 get The organic food market was supply driven for some(prenominal) years however, demand now drives the organic market (Dimitri Oberholtzer, 2009, p. 10). The demand for organic products is increasing every year as people use marginal analysis to justify the gameyer expense for organic products Do the benefits out weight the costs? Cons umer mistrust in conventional food producers, who add harmful dyes, trans-fats, and high fructose corn syrups to products, is another variable driving the organics market.Environmentalists are also another market force mechanism contributing to the demand for organic products because organic farming reduces environmental pollution. The emergence of organic food is directly linked to an amalgam of food safety and health concerns, which directly relate to ingestion of chemicals employ to grow, treat, and preserve foods.The organic food industry has shown consistent global growth over the last twain decades and is projected to continue to grow until 2018 (Research and markets adds report United States organic food market report 2013-2018, 2014). The organic food market has grown 3,400 % in the last 25 years (Flynn, 2014).Organics are divided into several categories such as, fruits and vegetables, dairy, meat, and packaged organic products. In 2014 annual organic food sales, mainly fr uits and vegetables, reached $35 billion, $290 billion if packaged products are included, up from $1 billion in 1990s (Flynn, 2014). The United States and Europe have the highest demand for organic products compared to other nations (Lohr, n. d. p. 68). Identifying dominance organic product consumers is a challenge, but some market research has shown consumers who choose to purchase organic products are generally well educated, millennials, higher income families, and households with children (Dimitri Oberholtzer, 2009, ORGANIC patience ANALYSIS 5 p. 4-5).The United States consumes approximately 44% of the global organics market followed by Europe at 41% (Aggarwal, 2014 p. 3). The remaining countries that contribute to the consumption and export of organic foods may have difficulty in exporting goods due to individual national standards and export acts (Aggarwal, 2014 p. 3). Demand for organic products is not central to 1 part of the world many countries and cultures realize the importance of consuming foods free of harmful chemicals.Supply Demand has grown for organic products however, there is a shortage of organic farming land, which may negatively conflict supply. The organic industry is constrained by its supply chain there are only so many farms to produce organic goods and organic goods can only be shipped so far. According to the 2012 U. S. enumerate of Agriculture, there are now around 17,000 organic farms in the U. S. out of an estimated 2. 1 million entireness farms acreage used for organic agriculture accounts for just 0. 6 percent of all U. S. farmland, while organic food sales begin up over 4 percent of the total annual food sales.(Young, 2014) The organic farm shortage is an important variable to the organic industry because consumers who tend to purchase organic products generally want to support local farmers in a grass roots type of endeavour excluding climate specific food such as, bananas, coffee, limes, and pineapples (Greene, 201 3). Contributing to the supply shortage in the United States are strict national standards set in place by the USDA and strict requirements for voltage farmers smell to transition into the organic industry.Also contributing to the shortage in organic food and ORGANIC INDUSTRY ANALYSIS 6 products are large box retail stores, such as Whole victuals Markets, Wal-Mart, Tesco, and Target. Wal-Mart is the United States largest grocer and is competing for organic goods to remain competitive against its competitors, such as Target, which has made agreements with organic producers to supply products for its stores (Hopkinson, 2014). Partnering with organic companies, large retail box stores have created their own brands of organic products to reduce costs associated with providing customers a good range of product choice. Price Changes collectable to Supply and DemandHistorically, organic food is more high-ticket(prenominal) than conventional food (Dimitri Oberholtzer, 2009, p. 5). Or ganic food prices come with a premium due to costs snarled in growing and harvesting crops. Prices are set through the suppliers because the organic standards restrict the certification of potential farmers. The certification process slows down potential farmers launching the industry, which reduces the number of producers available to farm the produce and make products. The reduction in organic products available reduces supply and increases demand.Market shelf placements of organic foods are get premiums and farmers are realizing the advantages of entering the market. As demand rises for organic products, the current producers are not able to nonplus sufficient crop production compared to industry growth. In any competitive market, when demand rises so does opportunity.Due to the premium prices associated with producing products in the organic industry, many farmers may potentially conform to industry standards and convert their farms. The potential for commercial organic farm s may also increase due to the undeniable growth of the industry. As more competition enters the organic industry, prices will drop.Large retail box stores, such as Whole Food Markets, Wal-Mart, Tesco, and Target may also have a significant effect on the price of organic ORGANIC INDUSTRY ANALYSIS 7 foods and products. Wal-Marts expansion into the organic market has the capability to reduce organic food prices alone due to the numbers of stores across the nation. In conclusion, the undeniable growth in the organic industry is a product of consumer mistrust of conventional growers, mainly due to toxic chemicals used in the production of food.The growth of the organic food industry is directly related to food safety and health conscious consumers who do not mind spending more money to consume uncontaminated products. Consumer demand has been the driving force of much of the organic industry since the end of the recession in 2009.The high consumer demand for organic food is part of an i nitiative from well-educated people, millennials, higher income families, and households with children, resulting in a 3,400% in the last 25 years creating a $35 billion industry (Flynn, 2014). With the high demand for organic goods, suppliers are unable to confirm sustainable level operations due to lack of organic farmland. legion(predicate) of the problems associated with the organic food industry are centered on strict certifications that are necessary to maintain product integrity the stringent certifications are creating supply shortages. The strict organic standards hinder potential farmers from entering into the organic industry. For example, farmers must be pesticide free for at least three years before beingness certified to produce organic food. Large retail box stores are recognizing the growth of the organic food industry and are currently adding more products annually, but even so, demand exceeds supplies.As the organic food industry continues to grow, prices for org anic goods should reduce due to the increased competition in the market. ORGANIC INDUSTRY ANALYSIS 8.References Aggarwal, P. (2014). Supply chain management of locally grown organic food A leap toward sustainable development. Retrieved from http//www. cognizant. com/InsightsWhitepapers/Supply-Chain-Management-of-Locally- grown-Organic-Food-A-Leap-Toward-Sustainable-Development-codex928. pd Dimitri, C. , Oberholtzer, L. (2009).Marketing U. S. organic foods recent trends from farms to consumers. USDA, Economic Research Service, (58). Retrieved from http//www. ers. usda.gov/media/185272/eib58_1_. pdf Flynn, D. (2014). Report Organic industry achieved 25 years of fast growth through fear and deception, Food Safety News. Retrieved from, http//www. foodsafetynews. com/2014/04/report-fast-growing-organics-industry-is- intentionally-deceptive/. VL0ILWd0xjo Greene, C. (2013).Growth patterns in the U. S. organic industry. Retrieved from http//search. proquest. com/docview/1518534011? account id=35796 Hopkinson, J. (2014). Will Wal-Mart gobble up organic food supply? Retrieved from http//www. politico. com/story/2014/04/walmart-organic-food-105631. html Lohr, L. (n.d. ). Factors affecting international demand and trade in organic food products. USDA, Economic Research Service. Retrieved from http//www. ers. usda. gov/media/293617/wrs011j_1_. pdf ORGANIC INDUSTRY ANALYSIS 9 Organic. (2015).In Merriam-Webster. com. Retrieved from http//www. merriam-webster. com/dictionary/organic Research and markets adds report United States organic food market report 2013-2018. (2014). Manufacturing Close Up, Retrieved from http//search. proquest. com/docview/1498350288? accountid=35796 Young, T. (2014). Organic check-off. Retrieved from https//ota. com/organic-check.