Bloomberg View: Organic Food
Premium Prices and Uncertain Benefits
Originally posted on Bloomberg View.
Organic food sales have gone through the roof. It’s no wonder. It’s widely believed that organic foods are more nutritious and safer than non-organic — they’re even said to fight cancer — even though the evidence is far from clear. Consumers have been paying a lot to eat organic; food certified as organic sometimes costs twice as much as conventional products. The premium prices may not be buying everything that’s promised.
The Situation
About three-quarters of grocers in the U.S. sell organic food, including specialty markets, like Sprouts, and mass-market retailers, like Wal-Mart and Target. While that’s only 4 percent of total food sales, demand in the U.S. and Europe is growing. The trend is driven both by rising interest in locally grown food — more than 80 percent of farmers markets sell organic food — and fears about food safety. Roughly 48 million Americans every year become sick and 3,000 die from foodborne diseases. To be labeled organic, the U.S. Department of Agriculture says food must be grown without synthetic fertilizers and must be free of genetically modified organisms; meat must be raised without antibiotics and growth hormones and the animals must have access to the outdoors. There are similar standards in the European Union and Japan. In China, demand for organic food is skyrocketing after a series of scandals over tainted food has consumers willing to pay double for organic kale and other items.
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