In previous articles and blogs, we have discussed the growth of the organic food market. In certain parts of the country, this segment of agriculture has expanded rapidly. A recent article in Amber Waves, Organic Farmers Faces Issues and Opportunities, provides more details of the size and scope of this industry.
As can be expected, organic farming varies significantly across the different types of crops. For example, nearly 9% of all U.S. berries are produced organically, while only 0.2% of all corn is. Interestingly, the demand for certain organic products is so great that we’re now importing some of these goods to meet the needs. This is in addition to the imports of organic crops not typically grown here like tea, cocoa, and coffee.
Unfortunately, the organic industry still faces many challenges. One of the biggest at the present is the public confusion from other food labels such as “locally grown”. The two methods should complement, not compete, with each other. The locally grown label simply tells people where the product is grown, not how as in the case of organic farming.
I believe that the continued demand for organic products and the price premiums they command will ultimately lead to a price premium for land that has met the certification criteria. The market has been so small in the past that at the present almost no one (including most appraisers) knows what that premium to a non-certified farm might be. That said, I’m convinced that within 5 – 10 years there will be enough sale data to prove what we inherently know – a specialized asset will ultimately command a premium price in the market place.
