supply

Organic Products Face Price Pressure with Supply and Demand Constraints

DanOrganic

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Demand for organic products had been outpacing supply, but increased production is now catching up. In a presentation to the California State Board of Food and Agriculture, David Magana from Rabo AgriFinance highlighted organic supply and demand trends.

“Then we had attractive organic price premiums. And then over the past few years, we’ve seen that the supply of organics has been growing faster than the demand. Or in other words, if you look at the segment of consumers that are hardcore organic consumers, it’s probably between 10% and 15%. And on the other extreme of the spectrum, you have 5% to 10% of consumers that don’t believe in organics. And in the middle, you have the great majority that they will buy organics if the price is right. So now we’re in a way where the 15% of organic demand has been met. And then the increasing supplies of organic is facing a more price sensitive. So that’s why we’ve seen some pressures on organic price premiums, depending on the commodity that you’re discussing. But that’s a general trend that demand for 15% has been met. And now new supplies are going to be facing that different demand segment.”


Brian German
Ag News Director / AgNet West