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  • From: "Tradingpost" <tradingpost@lobo.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] Organic price tags may be hard to swallow
  • Date: Fri, 20 Mar 2009 13:55:37 -0700



Organic price tags may be hard to swallow
March 18, 2009 at 8:30 AM EDT
http://www.theglobeandmail.com/servlet/story/RTGAM.20090318.worganics18/BNSt
ory/lifeMain


What's the difference - besides two dollars and 20 cents? The egg on the
right is certified organic. And while it might taste better, these days the
price tag of organics is hard to swallow for some consumers. Just as the
movement hits its stride, producers are preparing to weather a storm. Carly
Weeks reports

The organic, free-range, hormone-free chicken is a staple of the yuppie
cookbook. But the price is becoming increasingly hard to swallow as the
reality of tough economic times sets in.

People have been buying and selling organic food for decades. But until
recently, most of that activity was done on a local scale for a limited
number of customers. In the past decade, organic food has exploded in
popularity, evolving into an industry that resembles the traditional
grocery model, complete with frozen-food aisles, weekly flyers and rows of
cashiers.

The current crisis marks the first time organic retailers will have to face
a sharp economic downturn since the industry's boom began. "Organic food
has a huge problem," said Marcia Mogelonsky, senior research analyst with
Mintel International Group Ltd., a global consumer-research firm. "It's
always been premium-priced."

While many Canadians were willing to shell out for organic nachos and
macaroni and cheese when times were good, suddenly the cheaper
grocery-store brands aren't looking so bad. "It's going to affect us, most
definitely," said Linda Wonsel, owner of Natural Earth Organics in Windsor,
Ont.

Certain organic items are expected to weather the storm better than others.
For instance, consumers will likely remain loyal to products whose
non-organic counterparts are widely associated with, or suspected to be
tied to, potential health problems. That includes hormone-free organic milk
and organic baby food, particularly in light of fears over melamine
contamination of goods coming from China.

Households with small children that ate organic before the recession will
likely continue to do so, according to Ms. Mogelonsky. "You don't want to
feed your kid milk you don't think is safe," she said. "You will buy
organic milk even though it's $5 a gallon."

And although consumption of organic meat is expected to drop due to its
relatively high price, shoppers who ate organic meat before the economic
downturn likely won't switch to traditional meat.

That said, they'll likely eat less of it, according to experts.

Dedicated organic customers will, for the most part, also stick to other
staples, including free-range eggs, and organic fruits and vegetables.

But as more consumers look to cut costs, it's also likely that pricey
non-necessities will be the first organics to go. The growth of the organic
industry has sparked the introduction of all kinds of packaged foods -
processed cookies, potato chips, ready-to-eat meals and frozen food.
Cost-conscious consumers may no longer be willing to pay a premium for
organic snack foods, according to Laura Telford, executive director of
Canadian Organic Growers, a national industry association.

"The prepared stuff is going to go first," Ms. Telford said. "[Organic
retailers are] not going to go into bankruptcy or anything ... but it is
going to be a lean year, more than likely."

Signs of that trend are already apparent in countries that have been in the
grip of an economic meltdown longer than Canada. Last month, U.S.-based
Whole Foods Market reported that its first-quarter profit dropped 29 per
cent to $27.8-million (U.S.), compared with $39.1-million in the same
period the previous year. Legal costs accounted for part of the drop, but
cost-saving consumers have also hurt the organics giant. In the past year,
the company's shares have dropped about 75 per cent in value.

In Britain, meanwhile, nearly half of consumers who currently buy organic
plan to cut down or completely give up spending on organic food in the next
year, according to a survey conducted in November by Mintel.

Such reports have people like Heather Wylie a bit worried. Ms. Wylie and
her husband recently started Mama Earth Organics, a Toronto-based business
that delivers baskets of organic food to customers. But lately, they've
been noticing that a growing number of customers have been calling to
cancel their weekly orders, a troubling trend Ms. Wylie fears will worsen
as long as the gloomy economic forecast continues.

"I've definitely noticed the reasons people are cancelling are more often
than not due to financial constraints," she said.

In addition to the sometimes-prohibitive costs of buying organic, the
movement has also suffered a blow recently over concerns about the
environmental impact of shipping organic goods around the world. The
industry's large and rapid growth means that large retailers, such as
Wal-Mart and Loblaw, sell an array of organic products that are sometimes
shipped from as far away as China. As a result, some environmentally
conscious consumers have turned to locally produced goods. Although those
items may not be organic, many consumers like the idea that buying local
not only eliminates the harmful impact of shipping, but also supports area
farmers.

Ms. Wylie said she's been prepared for a drop in business after reading
reports about the decline experienced by the organic market in the United
States and Britain. So, even though things seem bad here, she's optimistic
that the economic woes won't have a permanent effect on business.

"I think we're sort of planning for it," she said. "We're expecting a
20-per-cent decrease, so we're not that worried about it. We can't predict
what's going to happen."










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