Monday, January 14, 2019

Organic Food Industry Analysis Essay

The perfect increases manufacture has shown consistent growth over the resist 25 old age, maturation 3,400% (Flynn, 2014). The original industry earned $35 billion in 2014 up from $1 billion in 1990 (Flynn, 2014). Credited with being the primary commercialize ferocity drivers, regimen sentry go and health concerns have been driving the industry since the end of the 2009 recession. This research paper examines the innate products industry and identifies how give and hire affects future prices of thorough products. ORGANIC application outline 3 innate Industry Analysis This paper provides a succinct passel summary of the radical fertilizer forage and product industry.The paper provides background and description of the fundamental fertiliser product market. The paper examines U. S. and globose market trends of the essential regimen and product industry by examining guide and supply for primitive products. This paper identifies identify encase store reta ilers and describes their roles in driving the organic provender industry. Analyzing motley studies from the USDA and its Economic Research Section (ERS) identified the driving market forces behind the popularity of the organic nutritions and products, which atomic number 18 the improvement of health and reduction of pesticides from unmarried diets.The purpose of this paper is to identify market trends and the driving forces behind the global organic nutrient and product market. The driving forces behind the organic intellectual nourishment market atomic number 18 health conscious millennials and new mothers who want to prune chemicals from their diet. Background and Description The term organic has been the topic of controversy for academics and line of credit leaders since the 1940s. The controversy involves several(prenominal) sub-topics such as wish of outside(a) standards for organics, cross contamination of organic products during transport, genetically modified o rganisms (GMO), chemicals and pesticides, and costs to establish organic goods.The definition of organic is made or big without the drug ab utilise of artificial chemicals ( essential, 2015). The premise of organic food is not new however, the cosmea of national standards has objectively standardized what may be considered an organic product. As the global population grows, the prerequisite for food has caused farmers to increase efficacy and tailor crop waste however, the methodology utilized to preserve crops may be more of a detriment to human health resulting in the senior high school submit for uncontaminated food sources and products.ORGANIC INDUSTRY ANALYSIS 4 Demand The organic food market was supply driven for umpteen years however, demand now drives the organic market (Dimitri & Oberholtzer, 2009, p. 10). The demand for organic products is increasing every year as people use marginal analysis to dearify the higher(prenominal) expense for organic products Do th e benefits out weight the costs? Consumer suspect in conventional food producers, who add harmful dyes, trans-fats, and high fructose corn syrups to products, is another variant driving the organics market.Environmentalists are also another market force mechanics contri thating to the demand for organic products because organic farming reduces environmental pollution. The emersion of organic food is directly linked to an amalgam of food safety and health concerns, which directly relate to ingestion of chemicals used to grow, treat, and preserve foods.The organic food industry has shown consistent global growth over the last two decades and is projected to continue to grow until 2018 (Research and markets adds herald United States organic food market report 2013-2018, 2014). The organic food market has grown 3,400 % in the last 25 years (Flynn, 2014).Organics are divided into several categories such as, fruits and vegetables, dairy, meat, and packaged organic products. In 2014 ye arly organic food gross sales, mainly fruits and vegetables, reached $35 billion, $290 billion if packaged products are included, up from $1 billion in 1990s (Flynn, 2014). The United States and Europe have the highest demand for organic products compared to other nations (Lohr, n. d. p. 68). Identifying potence organic product consumers is a challenge, but some market research has shown consumers who choose to purchase organic products are generally well educated, millennials, higher income families, and households with children (Dimitri & Oberholtzer, 2009, ORGANIC INDUSTRY ANALYSIS 5 p. 4-5).The United States consumes approximately 44% of the global organics market followed by Europe at 41% (Aggarwal, 2014 p. 3). The remaining countries that contribute to the consumption and exportation of organic foods may have difficulty in exporting goods delinquent(p) to individual national standards and export acts (Aggarwal, 2014 p. 3). Demand for organic products is not primaeval to one part of the world many countries and cultures realize the importance of down foods free of harmful chemicals. go forth Demand has grown for organic products however, in that respect is a shortfall of organic farming land, which may negatively impress supply. The organic industry is constrained by its supply chain there are only so many farms to produce organic goods and organic goods can only be shipped so far. According to the 2012 U. S. Census of Agriculture, there are now around 17,000 organic farms in the U. S. out of an estimated 2. 1 million total farms acreage used for organic agriculture accounts for just 0. 6 percent of all U. S. farmland, while organic food sales make up over 4 percent of the total annual food sales.(Young, 2014) The organic farm shortage is an important variable to the organic industry because consumers who tend to purchase organic products generally want to computer backup local farmers in a grass roots type of question excluding climate spec ific food such as, bananas, coffee, limes, and pineapples (Greene, 2013). Contributing to the supply shortage in the United States are strict national standards set in place by the USDA and strict requirements for probable farmers looking to passing into the organic industry.Also contributing to the shortage in organic food and ORGANIC INDUSTRY ANALYSIS 6 products are large box retail stores, such as Whole viands Markets, Wal-Mart, Tesco, and Target. Wal-Mart is the United States largest grocer and is competing for organic goods to remain competitive against its competitors, such as Target, which has made agreements with organic producers to supply products for its stores (Hopkinson, 2014). Partnering with organic companies, large retail box stores have created their own brands of organic products to reduce costs associated with providing customers a wide range of product choice. value Changes Due to Supply and DemandHistorically, organic food is more expensive than conventional food (Dimitri & Oberholtzer, 2009, p. 5). Organic food prices come with a premium out-of-pocket to costs involved in growing and proceeds crops. Prices are set through the suppliers because the organic standards restrict the certification of potential farmers. The certification process slows down potential farmers entering the industry, which reduces the number of producers lendable to farm the produce and make products. The reduction in organic products acquirable reduces supply and increases demand.Market shelf placements of organic foods are fetching premiums and farmers are realizing the advantages of entering the market. As demand rises for organic products, the current producers are not able to sustain sufficient crop yield compared to industry growth. In any competitive market, when demand rises so does opportunity.Due to the premium prices associated with producing products in the organic industry, many farmers may potentially conform to industry standards and transf igure their farms. The potential for commercial organic farms may also increase due to the incontestable growth of the industry. As more competition enters the organic industry, prices get out drop.Large retail box stores, such as Whole Food Markets, Wal-Mart, Tesco, and Target may also have a significant fix on the price of organic ORGANIC INDUSTRY ANALYSIS 7 foods and products. Wal-Marts expansion into the organic market has the capability to reduce organic food prices alone due to the numbers of stores across the nation. In conclusion, the undeniable growth in the organic industry is a product of consumer mistrust of conventional growers, mainly due to toxic chemicals used in the production of food.The growth of the organic food industry is directly related to food safety and health conscious consumers who do not mind outlay more money to consume uncontaminated products. Consumer demand has been the driving force of much of the organic industry since the end of the recession in 2009.The high consumer demand for organic food is part of an initiative from well-educated people, millennials, higher income families, and households with children, resulting in a 3,400% in the last 25 years creating a $35 billion industry (Flynn, 2014). With the high demand for organic goods, suppliers are unable to maintain sustainable level operations due to lack of organic farmland.Many of the problems associated with the organic food industry are concentrate on on strict certifications that are necessary to maintain product single the stringent certifications are creating supply shortages. The strict organic standards hinder potential farmers from entering into the organic industry. For example, farmers must be pesticide free for at least(prenominal) three years before being certified to produce organic food. Large retail box stores are recognizing the growth of the organic food industry and are currently adding more products annually, but even so, demand exceeds supplie s.As the organic food industry continues to grow, prices for organic goods should reduce due to the increased competition in the market. ORGANIC INDUSTRY ANALYSIS 8.References Aggarwal, P. (2014). Supply chain management of locally grown organic food A leap toward sustainable development. Retrieved from http//www. cognizant. com/InsightsWhitepapers/Supply-Chain-Management-of-Locally- grown-Organic-Food-A-Leap-Toward-Sustainable-Development-codex928. pd Dimitri, C. , & Oberholtzer, L. (2009).Marketing U. S. organic foods recent trends from farms to consumers. USDA, Economic Research Service, (58). Retrieved from http//www. ers. usda.gov/media/185272/eib58_1_. pdf Flynn, D. (2014). Report Organic industry achieved 25 years of fast growth through fear and deception, Food Safety News. Retrieved from, http//www. foodsafetynews. com/2014/04/report-fast-growing-organics-industry-is- intentionally-deceptive/. VL0ILWd0xjo Greene, C. (2013). developing patterns in the U. S. organic indust ry. Retrieved from http//search. proquest. com/docview/1518534011? accountid=35796 Hopkinson, J. (2014). Will Wal-Mart gobble up organic food supply? Retrieved from http//www. politico. com/story/2014/04/walmart-organic-food-105631. html Lohr, L. (n.d. ). Factors affecting international demand and trade in organic food products. USDA, Economic Research Service. Retrieved from http//www. ers. usda. gov/media/293617/wrs011j_1_. pdf ORGANIC INDUSTRY ANALYSIS 9 Organic. (2015).In Merriam-Webster. com. Retrieved from http//www. merriam-webster. com/dictionary/organic Research and markets adds report United States organic food market report 2013-2018. (2014). Manufacturing Close Up, Retrieved from http//search. proquest. com/docview/1498350288? accountid=35796 Young, T. (2014). Organic check-off. Retrieved from https//ota. com/organic-check.

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