Testimony of Roger Blobaum, Center for Science in the Public Interest
Environment Matters Committee Maryland House of Delegates
March 6, 1990
My name is Roger Blobaum and I direct a food and agriculture project at the Center for Science in the Public Interest (CSPI) in Washington. CSPI is a nonprofit public interest organization that has 200,000 members nationwide and advocates improved health and nutrition policies. The main activity of our food and agriculture project is working for adoption of federal and state policies that encourage production of both locally-grown and certified organic food.
Almost all the progress in this area so far has been at the state level. Organic certification programs are now in place in 22 states. Several others, including the neighboring states of Virginia and Pennsylvania, have program proposals under active consideration.
We support Delegate Hattery’s bill to direct the Maryland Department of Agriculture to establish a certification and labeling program for the production and marketing of organic food. The department has worked closely with Maryland organic growers, consumer representatives, and others for several months. I have participated in two meetings at the department and am aware of the positive attitude and working relationship established. I would urge you to endorse this strong beginning and direct the department to begin the formal rulemaking process needed to establish an organic certification program here in Maryland.
I appreciate this opportunity to submit information showing that consumer interest in organic food is expanding, that the market for organic production shows strong growth, that economic surveys suggest these trends will continue, and that these market-related developments offer an unusual economic opportunity for Maryland growers.
Organic growers in Maryland now sell directly to individuals and to customers at farmers markets. Many also sell to food cooperatives, health food stores, and restaurants. The buyers in these transactions know the growers and have some knowledge of their operation and, as a result, accept the grower’s representation that the food is organically grown.
That kind of arrangement is inadequate in situations where the sale is made to a distributor or wholesaler or chain store buyer who does not know the grower and needs third-party certification showing the food is grown organically. Certification also makes it possible to provide the label that assures the consumer, who also has no knowledge of the grower’s operation, that the food is grown organically. That is why a certification and labeling program is important to Maryland growers who want to gain access to wholesale, processing, and chain store buyers who contract for certified organic production and buy in volume. It would enable them to compete as well for large-volume out-of-state markets on the East Coast and elsewhere.
Expanding consumer interest in certified organic food is supported by industry surveys. The 1989 trends report of the Food Marketing Institute, the supermarket trade association, found 82 percent of the respondents view pesticide residues in food as a serious hazard. The Fresh Trends 1990 consumer survey conducted by The Packer, the trade publication of the produce industry, found that 26 percent of the consumers surveyed reported they had changed their food buying habits because of chemical residues. A majority said they preferred organically-grown food even if it cost more. And 11 percent said they had sought out and purchased organically-grown food in 1989. This survey by The Packer is significant because it shows what consumers concerned about pesticide residues are actually willinc to do about it.
High prices and limited access to organically-grown food were cited in these and other surveys as serious consumer problems. It seems fair to conclude from the evidence available that consumer interest is high enough to support the niche market for organic food that now exists. It also appears likely that this market will develop into something much more substantial in the future.
There is little good data available to support the statement that the market for organic production is showing strong growth. The organic industry has been working on a farm gate study that would show the farm value of organic production nationwide. This has been extremely difficult, however, because so much of it is marketed directly to individuals or in negotiated arrangements with small volume buyers. We know much more about sales trends in health food stores but, in most cases, organic produce represents a small part of their total sales volume. A survey reported recently by Natural Foods Merchandiser shows sales of fresh organic produce in natural food stores increased from $21 million in 1979 to $78 million in 1988.
The most comprehensive study available, completed recently by Marketdata Enterprises and reported recently in the Wall Street Journal, shows organic food sales jumped 40 percent in 1989 to a level of $1.25 billion and are expected to increase by another 34 percent this year.
There also is some data to show market volume and potential in individual states. One recent study shows sales by an estimated 1,500 organic growers in California now exceed $100 million at the farm gate. The study that may be most relevant for Maryland is one that found the wholesale value of organic product in New Jersey was between $1 million and $3 million in 1988. This study of retailers, wholesalers, and processors concluded that sales volume would triple if sufficient supply-becomes available. The survey identified insufficient local supply and lack of a third-party organic certification program a the main market expansion obstacles.
Some indication of increasing consumer demand is evident from market development here in Maryland. Organic Farms, an organic food distributor serving East Coast retail outlets from warehouses in Greenbelt and elsewhere, has grown into a $20 million a year business in less than 10 years. One of its Maryland customers is Valu Food, a small Baltimore-based chain that now carries organic produce in all 12 of its stores in Maryland and Pennsylvania. Large chains in Maryland, like Giant and Safeway, have tried organic produce with disappointing results while other smaller chains, like Valu Food and Super Fresh, report good sales.
Much better results are reported by several new chains, mainly in the West and Southwest that feature organic food. Bread & Circus, a highly successful chain in the Boston area, is opening its seventh store in Providence, Rhode Island, this month. Albert’s Organics, a Los Angeles firm that has become one of the nation’s largest organic food operations, reports steady sales increases and has just opened its first East Coast outlet.
It is difficult, as this statement indicates, to do a thorough job of documenting the progress of this rapidly-emerging food industry sector. It seems clear, however, that the trends are well established and that the organic food industry offers an unusual new marketing opportunity to growers in Maryland and elsewhere.
Maryland organic growers need organic certification and labeling as a marketing tool that will help them gain access to large-volume markets that now exist in Maryland and elsewhere and new ones that will become available. Maryland growers who farm organically, as well as those who are interested in adopting organic methods, need the program proposed in House Bill 941. There is ample evidence of consumer demand for organically-grown food, especially organic food that is produced locally and certified. Enacting this bill is an essential step toward meeting this new consumer need and providing, at the same time, new economic opportunity for Maryland’s organic growers.