Since the Great Recession, health technologist Fannie Boykins has cut back on her spending. But she continues to buy her groceries from an organic supermarket in Flatbush, Brooklyn, even paying for a taxi service to take her bags home.
“I haven’t bought clothes in two years,” she said. “But I consider organic a priority.”
A growing number of shoppers like Boykins could incite a recovery for a long-declining sector: food manufacturing. The closing of Hostess Foods last year was the latest in a string of job losses stretching back over a decade. The food manufacturing industry has shed 50,000 jobs since 2003, according to the Bureau of Labor Statistics.
But organic food could potentially turn around this long-stagnating sector. Sales of organic food, including processed food, have grown robustly since the Department of Agriculture first introduced organic certification in 2002. Organic sales even grew during the recession, albeit slowly, while conventional food sales stagnated.
“In 2008 and 2009, organic food still had growth where conventional didn’t,” said Barbara Haumann, a spokesperson for the Organic Trade Association (OTA), an industry group. In the past year organic food sales grew 10 percent, she said, and will increase an estimated 13 percent in 2013.
Food processors who expanded into organics before the recession are now reaping the benefits.
Foulds Pasta, a national manufacturer that started making organic pasta five years ago, now devotes about 30 percent of its production to organic, said Jim Barker, the company’s vice president of sales. Barker expects the share of organic to rise to 40 percent within a few years.
Other industry leaders are even more optimistic.
“At some point in the future, every product in the grocery story is going to have an organic equivalent,” said Hal Segal. Segal is the founder of Organamania, an online directory of organic products that started one-and-a-half years ago and now boasts more than 28,000 listings.
Greenpeople.com, another organic directory, has increased its listings 25 percent since 2008.
“The major increase was two, three years ago,” said president Olga Grinber. “We got four times more submissions than before.”
Despite consumer demand, organics now make up just over 4 percent of all food sales. One reason food producers might be slow coming into organics is the high initial investment. A processor must often build an entirely separate facility, separate from conventional food, for organics. And the organic certification process takes three years — a long wait to start making profits.
And while producers can sell organic foods for more, they also pay more to make them. Barker said Foulds pays more than double for organic durum what flour — the main ingredient in pasta — than for non-organic flour. And many organic products have not yet reached the same economy of scale as their conventional counterparts.
“Most of the organic ingredients come in 50-pound sacks, whereas when we make regular pasta we bring tankers in and we’re filling silos,” Barker said. “It’s a little bit of a slower process, and you do reflect that in your price.”
Shortages of organic ingredients can also drive up the cost of making processed foods, said Haumann. The OTA surveys organic food manufacturers every year to ask if they would produce more given more ingredients. “It always comes out yes,” she said.
But that could change in light of the organic equivalence agreement signed last year between the European Union and the United States. The agreement allows organic standards to be interchangeable between the two blocs, opening another source of ingredients for U.S. manufacturers.
“It is seen as very favorable in helping to grow production and satisfy demand,” Haumann said.
The recovering economy will spur sales even higher, said Segal. He believes the debate over California’s Proposition 37, which would have required genetically modified foods to be labeled, has encouraged consumers to purchase organic foods, which by definition cannot contain GMOs.
Segal has three words of advice for food manufacturers considering an organic line: “Do it now,” he says.
For Foulds, success in the organic market has encouraged the company to innovate even further. They now have a line of gluten-free pasta, black bean pasta and pasta made from vegetables, said Barker.
And it’s not just food producers who will feel the benefits from the organic boom. A study from the Fiscal Policy Institute suggests that jobs in food manufacturing pay more than manufacturing jobs overall. And the number of non-manufacturing jobs that food manufacturing indirectly creates (known as the economic multiplier) is the highest of all major industries.