What does the growth of organic this year, and in 10 years from now, mean for your business? Here's top advice for manufacturers and retailers from QAI.
Last year marked the 10th anniversary of USDA organic as federal law. GMO labeling may not have come to pass (yet), but if the past decade is any indication, organic's momentum has just begun.
Quality Assurance International (QAI) recently revealed eye-popping statistics from the past decade in organic business. According to the San Diego-based leading certifier of organic and gluten-free products:
- Organic has grown 266 percent since 2002, totaling $31.5 billion in 2011.
- In 2002, there were 7,000 organic farms. In 2012, 17,000 according to USDA.
- In 2012, 3.6 million acres were devoted to organic production, up 89 percent since 2002.
Along with a look at organic past, QAI also made eight predictions of organic's future. QAI General Manager Jaclyn Bowen reveals exactly what they mean for your business. Read on to learn what you can do now to prepare for the next decade in organic.
1. Stricter Organic
The USDA’s National Organic Program (NOP) and National Organic Standards Board will bring even more rigor to the federal regulations in terms of specificity for practices and allowed substances and practices. —QAI
One of the first things organic food makers should do is to become familiar with current and upcoming regulations so that innovation can be informed by law, said Bowen. Which brings us to…
2. Food Safety Fusion
The organic food supply will fuse with food safety and other "product integrity" programs, adding more disciplined food safety practices that are audited and certified at even the smallest of farms and plants.
QAI's predictions dropped a day before the FDA released its update on the Food Safety Modernization Act, effectively turning this prediction into reality. "What's important to note is for manufacturers to start paying attention now," Bowen said. The public comment process on the FSMA draft will take a few years, but "even though everything isn't solidified, you can start seeing what the FDA is expecting from all manufacturers and growers throughout the supply chain—domestic or international," she said.
Business takeaway: Given the globalization of our food supply chain, food safety regulation isn't just about whether you're following the rules—it's about whether your suppliers also follow the rules to which you'll be held accountable.
3. Harmonic Convergence
International standards for organic will be harmonized with USDA organic, removing former obstacles to international trade. The U.S. also will move closer to its European neighbors in Non-GMO verification and labeling requirements.
While a significant amount of global commerce on organic already shares equivalencies (such as the addition of European equivalency last year) more markets will follow. Markets such as Mexico will continue to facilitate organic trade and require the U.S. government to set equivalency agreements. How can you prepare for regulations yet to come?
Business takeaway: "Stay up to speed and continue to monitor what's going on internationally, especially with markets that are attractive to you," said Bowen, adding that companies should voice their encouragement around those activities to USDA. China has its own national organic program and, in time, U.S. products could be exported thanks to the National Export Initiative that Obama signed in 2010 to double U.S. exports by the end of 2014.
4. Sustainably Organic
Increased focus on companies’ impact on biodiversity, water and soil conservation will translate to additional sustainability metrics in organic practices. As the spirit of organic is to grow in harmony with nature, each farm and company’s environmental impact will be under more scrutiny.
"Consumers expect for organic to be more than just an agricultural process," said Bowen. Shoppers will increasingly become interested in how manufacturers and retailers are socially responsible and good stewards of the environment.
Business takeaway: Brands can grow their loyalty with consumers on not just a food level, but a personal level, through publicizing sustainable efforts.
5. Transparency Made Tangible
The USDA Seal for organic will remain credible, and online tools will be used by consumers to see the credibility of each product’s organic claims.
"Once a week, on average, I get an email from USDA organic with a bogus organic certificate," said Bowen. Occasional bad players do exist, but technology is savvy at weeding them out. For example, all QAI's certifications have a QR code that verifies the validity of the organic certificate.
Business takeaway: Manufacturers and retailers should look for QR codes or something else that ensures authenticity of organic certificates. Bogus certificates aren't just coming from China, said Bowen, but all over. Visit the NOP's false certificates website for an updated list.
6. No More Shopping Gaps
If it starts with a plant, mammal or fish, it can be certified organic. Consumers will be able to find certified organic products in all sections of the supermarket and pharmacy.
"You'll start seeing an evolution of other industry sectors, such as organic personal care, pet food (more like pet treats) and a little bit on the dietary supplements side," said Bowen. What manufacturers create or retailers carry all depends on the target customer. Capturing discriminating LOHAS (Lifestyles of Health and Sustainability) customers goes well beyond one person: it spreads to their families and pets.
Business takeaway: Retailers should scout new and innovative organic products to appeal to LOHAS shoppers who may not know about new organic options. But it's not enough to simply offer a new organic product—ensure that it works because in the end you're looking for repeat customers, said Bowen.
7. Organic Literacy is Evident
After years of some confusion in the marketplace, efforts by the NOP, Organic Trade Association and retailers pay off in increased consumer literacy for organic.
The USDA Organic education effort is still a work in progress, but as consumers demand transparency they will come to know what organic means across categories such as personal care, household cleaners and dietary supplements. Natural retailers are already at the forefront by using shelf talkers that tell the story behind the products.
Business takeaway: How can manufacturers get involved? "Manufacturers only have so much room on their label," said Bowen, "but they have a lot of room on their website, Facebook and Twitter." Use social platforms to jump in on organic education. For manufacturers that are leading the way, Bowen recommends Nature's Path and Stonyfield Farm.
8. Accessible Organic
Larger organic production, from farm acreage expansion to processing facilities, will translate into organic landing where it is most needed: schools, hospitals, food banks, convenience stores and in mainstream America’s home.
Some communities are better served by organic than others, but organic will continue to pop up as distribution channels increase beyond grocery stores. New markets will open to organic food growers, makers and sellers as consumers look for cleaner food beyond grocery stores.
Business takeaway: Manufacturers, is your product's packaging conducive to selling in new markets? Look for smart ways to turn full-size products into snack-sized versions for convenience stores, vending machines and school lunch rooms.