By Reginald Clause, Iowa State University Extension, rclause@iastate.edu.
Profile revised May 2008 by Diane Huntrods, AgMRC, Iowa State University.
Overview
Organic meats are the fastest growing sector of the organic food industry, increasing 55 percent in 2005 and nearly 30 percent in 2006, according to the Organic Trade Association. In fact, the demand for organic meats is so strong that the United States has become a net importer. Mintel says sales of organic meats jumped 141 percent between 2004 and 2006. Actual sales of organic meats increased from $121 million to $291 million during those years.
As demand for organic products increased, more land in the United States was converted to organic production. As of 2005, the United States had 2.3 million acres of certified organic pasture and rangeland. Despite the time, costs and effort required to meet stringent organic requirements, farmers and ranchers added two million acres of certified organic land for pasture between 1995 and 2005.
The number of beef cows certified organic grew 428 percent between 1997 and 2002, from 4,429 head to 23,384 head. Growth in certified organic beef cows slowed between 2002 and 2005. By 2005 36,113 beef cows were certified organic, only 0.1 percent of all U.S. beef cows. The top five states producing certified organic beef cows in 2005 and the total number produced that year were (in order):
(1) Alaska - 7,500 head
(2) Missouri - 5,540 head
(3) Idaho - 3,245 head
(4) Wisconsin - 3,204 head
(5) Texas - 2,661 head
Marketing
The National Cattlemen’s Beef Association monitors beef sales through scanner data at the retail level. This scanner data, purchased through FreshLook Marketing, indicated that natural and organic beef sales comprise 2.5 percent of all fresh beef sales in retail supermarkets. The natural and organic beef share of sales is trending upward, from a low of 1.1 percent in 2003 to its current high of 2.5 percent in 2007. FreshLook data estimates that natural and organic beef sales in retail supermarkets during 2007 were $388 million compared to $290 million in 2006, indicating a 34 percent increase in natural and organic beef sales.
Prices for all beef products offered in retail supermarkets averaged $3.67 per pound compared with natural and organic beef products that averaged $5.50 per pound, indicating that consumers were willing to pay a premium of $1.83 per pound for natural and organic beef. The selection of natural and organic cuts available at retail, which tend to be the higher priced rib and loin cuts, may partially explain the higher average price for these niche products.
Local distribution of organically produced beef ranges from consumers purchasing directly from a farm location, through farmers' markets or via the Internet. However, if producers wish to sell on the Internet and across state lines, they must have the meat processed at a USDA-inspected facilities.
Certified Organic Standards
USDA standards for organic food were implemented in 2002. The department defines certified organic as "agricultural products that have been grown and processed according to specific standards of various state and private certification organizations." Certifying agents review farm applications and qualified inspectors conduct annual on-site inspections. Farm records track all management practices and materials used in organic production. A certified operation must have a written Organic Farm Plan made available to the public upon request. An exception to the certification rule is made for operations with gross agricultural incomes of $5,000 or less.
Processing operations that grow and process organic foods must also be certified by USDA-accredited certifying agents. As of 2007, USDA has accredited 55 domestic certifying agents.
Although they are often co-marketed, there is a difference between organic and natural foods. Organic foods must meet strict USDA requirements to be certified. Natural foods tend to be less processed and frequently are free of preservatives, hormones and artificial ingredients.
Production
Most organic beef producers have a diversified operation that includes another kind of meat production, and some are members of coops that market their products. Organic beef producers may use either an organic grain-fed or an organic grass-fed system. The former system uses grain, hay and supplement, while the latter primarily uses pasture, hay and supplement. A grass-fed organic beef system has lower costs than the grain-fed organic beef system, partly due to the lower feed bill. However, the grain-fed organic system can be more profitable than the grass-fed organic system because it tends to produce heavier beef and thus sell more pounds of meat. In general, organically produced beef tends to be more expensive to raise compared to conventional cattle operations mainly due to increased feed costs.
Organic beef is raised in a production system that promotes and enhances biodiversity and biological cycles. It is based on minimal use of off-farm inputs. Cattle are raised without the use of antibiotics and growth hormone stimulants. In general, organic foods are minimally processed with artificial ingredients or preservatives.
Many producers feel it is a good way to lower input costs, capture high-value markets with premium prices and boost farm income, and decrease reliance on nonrenewable resources. Availability of organic feedstuffs and pasture have also fueled the increase of organic beef production.
Imports
An issue currently facing the certified organic beef industry is imported organic beef brought in to counter shortages in domestic production. According to Mintel, Canada, Australia and South America are all exporters of organic meat products to the United States.
Profile prepared May 2006 and revised May 2008.