Organic and Beyond: Consumer Demand Growing for Differentiated Farm Products

Article excerpt

Around the country, a growing number of consumers are choosing fresh local produce, pasture-raised meats and artisan breads and cheeses. Like organic foods, the attributes of these products are not necessarily apparent--labels may be needed to differentiate them. Consumer demand for quality food appears to be experiencing a paradigm shift. Consumers want to know where their food comes from and how it is produced.

A survey mailed to more than 1,000 randomly selected consumers in five coastal California counties revealed that 59 percent wanted to know more about their food. Specifically, they wanted to know about food safety, nutritional content, how food animals are treated, environmental impacts, working conditions, wages and how far the food travels (Curlee, 2006).

Consumers are increasingly saying they choose foods for social, environmental and long-term health reasons. An underlying dissatisfaction with conventional fare may explain the strong growth rate of the organic sector over the past 15 years. Recent studies have shown a greater interest in locally produced foods than in organic products (Ostrom, 2006). In one study, consumers preferred food grown locally using some pesticides to foods grown organically (Pirog, 2004).

Responding to consumer demand, the Whole Foods grocery store chain announced in 2006 that it would greatly expand its local organic offerings. A Time magazine article suggests that "the new activist slogan on campus is 'Eat Local' (Roosevelt, 2005), and reported that 200 universities around the country were purchasing food from regional farmers, according to the Community Food Security Coalition.

Price still a barrier

Price remains the most prominent barrier to increased consumption of organic products (Hartman Group, 2004). For most consumers, the relative price differential between a conventional and an organic item determines their purchasing behavior (Yiridoe et al., 2006). For die-hard organic customers, price is relatively less important, as they will purchase organic products without much regard for price. However, as large discount retailers like Wal-Mart begin carrying inexpensive organic items, a new, larger group of organic consumers can be expected.

Industry leaders believe that expanding market preferences and concerns can support multiple certification options (Exo, 2006). If consumers are mainly looking for fresh produce grown without pesticides, a certification system could be developed for this attribute. If the overriding concern for milk consumers is hormone usage, another certification could be developed to address this issue.

Pressure from consumers and other groups for bovine growth hormone-free milk has encouraged several large dairy cooperatives to ban the usage of this chemical and label their milk accordingly.

Can changing consumer preferences help family farmers?

Can demand for higher quality foods help family farmers stay in business? Since institutional food service operations can use fairly large quantities, supplying high-quality food to this channel holds some hope for mid-scale producers. Focused efforts to bring buyers and sellers together will be needed to coordinate these types of transactions.

Alternative certification programs such as Food Alliance certified or FamilyFarmed, both of which have Web-based background information and third-party certification, help guide businesses and consumers to producers who are catering to this market.

Demand exceeding supply

Demand for high-quality, differentiated farm products appears to be outpacing supply (Kirchenmann, 2006; Yee, 2006). While there is currently a window of opportunity, the timeframe may be limited. Large companies such as Wal-Mart, Costco and Whole Foods already contract directly with farmers, using their house brands to market these products. …