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Growing Organic Market Is Seen

Most farmers predict that prices will rise as sales surge, but some fear increased competition as newcomers try to grab a share.

September 20, 2004|From Associated Press

From alfalfa to oats to wine grapes, prices for organic produce and products have held steady for more than half of the nation's organic farmers, a new survey shows. More than a quarter said they were seeing prices inch up.

But about 27% also predicted falling prices, as more farmers, including big businesses, try to grab a share of the market, according to the survey by the Santa Cruz-based Organic Farming Research Foundation.

More than 1,000 growers -- roughly 16% of the country's certified organic farmers -- were queried on a variety of subjects related to the fast-growing, $9-billion marketplace, including genetically modified organisms.

The survey gives "an incredibly detailed snapshot of a tough, hard, but generally profitable way to farm," said Bob Scowcroft, the foundation's executive director.

Organic was not the buzzword it is now when Dennis Dierks and his wife Sandy started working their 3 1/2 acres 30 years ago. Dierks, owner of Paradise Valley Produce in Bolinas, Calif., has seen organic awareness spreading immensely in the ensuing years.

As organic sales surge an estimated 20% annually, the Dierks prefer to stay small, selling the bulk of their cool-weather vegetables like kale, chard and lettuce locally. Some of it is sold through a subscription service and to restaurants, but most sells at neighborhood farmers markets, where the Dierks interact face-to-face with consumers. More than three-fourths of their sales come from repeat customers, "people trying your stuff and becoming regulars because they like it so much," Sandy Dierks said.

Like the Dierks, many of those surveyed say they rely on a direct connection with consumers to stay in business, with 79% of them selling products within 100 miles of their farms and a majority of them using word of mouth as their main marketing tool. Unlike conventional agriculture, the organic marketplace boasts that flexibility because it attracts customers who are willing to pay more for products they trust from a grower they know.

"It's a different kind of consumer," said Erica Walz, who analyzes data for the Organic Farming Research Foundation.

Other growers are dealing with increased competition by becoming bigger and more innovative. About 58% said they wanted to expand the amount and type of organic products they offer, while 50% said they were planning to increase acreage.

Vanessa Bogenholm, who owns VB Farms in Watsonville, Calif., went from 29 to 50 acres about a year ago. Like 51% of those surveyed, she was once a conventional farmer who went organic about eight years ago because she wanted to produce pesticide-free products.

Bogenholm grows mostly strawberries and raspberries, as well as the occasional vegetable, and grosses between $1 million and $1.5 million a year through diversified products. She supplies yogurt companies like Dannon, picks berries specifically for high-end restaurants and hotels, and grows specialty produce, such as a cauliflower the size of a fist that chefs can plop on a fancy plate.

"It's a lot more labor," Bogenholm said. "It's a lot more packaging. But it's something that brings in money. I can't compete with a guy who can produce 500 acres of cauliflower when I can do 8. So somehow my cauliflower has got to be special or different."

Bogenholm said she was going head-to-head not with small farmers at the local farmers market but with conventional growers who devote a small portion of their lands to organic. "That's the guy that causes me problems," she said.

Besides competition and flat prices, growers also pointed to the threat of pollution from genetically modified organisms as a looming concern. About 46% said they believed the risk of contamination from such products to be moderate to high, with 48% singling out contaminated seed stock as the greatest threat and 42% worried about pollen drift.

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