Organic foods: Why they’re so expensive, and who owns your favorite brands

May 20, 2015, 9:36 AM UTC
A customer checks out of a Whole Foods Market in Washington,
UNITED STATES - AUGUST 17: A customer checks out of a Whole Foods Market in Washington, D.C., Aug. 17, 2007. Wild Oats Markets Inc. rose the most in more than five years after a judge ruled that Whole Foods Market Inc.'s $565 million purchase of the natural-foods grocer doesn't violate antitrust laws and can proceed. (Photo by Andrew Councill/Bloomberg via Getty Images)
Photograph by Andrew Councill — Bloomberg/Getty Images

Consumer demands for organic foods in the U.S. continue to explode. Sales of organic food and non-food products totaled $39.1 billion in 2014, up 11.3 percent from the previous year—with sales of organic food alone accounting for $35.9 billion, according to the Organic Trade Association.

What many consumers may not know is that Whole Foods is not the only force in organics. As consumer demand has grown, big box retailers and grocery chains have stepped in. Last year, Wal-Mart, the country’s largest grocery store, contracted with Wild Oats Marketplace, an organic food maker—and once owned by Whole Foods– to put more organics on its shelves.

Kroger, the country’s fourth largest retailer, has had its own label of organic products since 2012, called Simple Truth Organic. Meanwhile, Costco offers organic food under its own Kirkland label, with sales of organics doubling in the last two years to nearly $3 billion. Hain Celestial owns four organic food companies including Earth’s Best, which makes organic foods for children and toddlers. General Mills, owns two producers including Celestial Farms, which makes organic foods such as snack bars, cereals, pasta and baking products. Just this past September, General Mills bought Annie’s Mills, a maker of organic mac and cheese for $820 million.

“Bigger firms want to be in this market because it’s growing so much,” said Michelle Greenwald, a professor at Columbia Business School.

Greenwald added that many of the larger firms do so even if it means hedging their bets against their more traditional food products. “They don’t want to walk away from their core but they can’t miss out on being in the organic market,” she said.

But controversy has dogged the organic food industry. Just what does it mean to be organic and are they really better for you than conventional foods? Why do they cost more?

How food becomes organic

While the term organic is hardly new, the labeling and certifying process by the U.S. Department of Agriculture only began in 2002.

To be organic, fruits, vegetables, nuts and grains must be grown on land that is free of pesticides and banned fertilizers for three years or more. Farmers can’t use sewage sludge to fertilize their fields and are also banned from using irradiation to kill bacteria. And they cannot use genetically modified organisms or GMOs.

For meats and poultry, animals must have access to the outdoors and they must not be treated with antibiotics or growth hormones. Producers are not allowed to treat meat with ionizing radiation. Poultry must be given a diet of 100 percent organic feed. And for eggs to be organic, hens can’t be fed anything but organic foods and can’t be given antibiotics.

Quality Assurance International is an independent group authorized by the USDA to certify foods as organic. QAI’s general manager Jaclyn Bowen said her organization makes yearly inspections along with unannounced visits in a soup to nuts approach. For a product to be certified organic, it must have the official USDA label on it, Bowen said.

Experts say the competition is growing in the organic market and will only get fiercer as more consumers buy the products. “Organic is still rooted in smaller farms but the competition is great because there’s so much demand,” said Errol Schweizer, global executive grocery coordinator for Whole Foods.

Typically organic foods are more expensive than traditional foods, sometimes 25 percent more. There are many reasons for the price differential. It costs farmers more to produce organic foods partly because of the time and effort involved to avoid using pesticides along with the costs of organic feed.

And even though organic farmers are helped financially by the government, it’s not enough in comparison to traditional farming methods, said organic food and drink maker Clif Bar & Company’s Matthew Dillon. “Organic farming doesn’t have the same level of support,” Dillon argued. “It also doesn’t have the luxury of using chemical solutions. For these reasons, organic foods are more expensive.”
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But prices for organic foods are coming down. Imported organic products have helped lower prices. The bigger players may also help to reduce costs. Wal-Mart said its deal with Wild Oats Marketplace is to help lower prices for organics.

With more and more organic products flying off the shelves, most consumers believe they are getting a healthier product, regardless of price. But is that true? That depends on who you believe.

Nova Scotia Organics’ Nancy Smithers said that research compiled from 50 studies comparing traditionally produced food to organic showed that organics have a higher nutritional value 40 percent of the time where nonorganic foods have a higher nutritional value only 15 percent of the time. And, a study released last year by Great Britain’s Newcastle University said that organic crops are up to 60 percent higher in a number of key antioxidants than conventionally-grown ones.

But not all agree.

“Organic junk food is still junk food. And conventional fresh, health food is still healthy,” said Rene Ficek, a registered dietician and lead nutrition expert at Seattle Sutton’s Healthy Eating, an Illinois based firm that sells dietary meal programs.

Even the famed Mayo Clinic on its web site says that organic products may not be as nutritious as believed.
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Mark Koba is a freelance journalist living in New Jersey.

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