By Reginald Clause, Iowa State University Extension, rclause@iastate.edu.

Revised June 2011 by Malinda Geisler, content specialist, AgMRC, Iowa State University. 


Overview
According to the National Cattlemen's Beef Association, the market share of natural/organic beef was 4.2 percent during the first quarter of 2011. The price of natural/organic beef averaged $5.48 in the first quarter of 2011, with consumers paying a premium of $1.70 per pound.

As demand for organic products increased, more land in the United States was converted to organic production. As of 2008, the United States had 4.1 million acres used for organic production. Of that amount, 1.6 million acres were planted to organic crops and 1.8 million acres were organic pastureland/rangeland. Texas accounted for 13 percent of U.S. organic pasture, followed by (in order): California, Montana, New Mexico and South Dakota. The total value of organic livestock and poultry sales in 2008 was $316.5 million, and the total value of organic livestock and poultry product sales that year was $906.2 million.  (2008 Organic Production Survey)

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, but by 2005 36,113 beef cows were certified organic. As of December 31, 2008, 43,782 beef cows were certified organic. The top five states producing certified organic beef cows in 2008 and the total number produced that year were (in order):

1. California - 5,081 head
2. Wyoming - 4,615 head
3. Wisconsin - 2,943 head
4. Idaho - 2,447 head
5. South Dakota - 2,391 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 the natural/organic beef share of fresh beef sales has trended upward, from 1.1 percent in 2003 to 4.2 percent in the first quarter of 2011.  

Prices for all beef products offered in retail supermarkets averaged $3.78 per pound during the first quarter of 2011 compared with natural/organic beef products, which averaged $5.48 per pound, indicating that consumers were willing to pay a premium of $1.70 per pound for natural/organic beef. The selection of natural/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.

Organic beef sales in 2009 were $100 million according to the 2010 Organic Industry Survey conducted by the Organic Trade Association. More current statistics were unavailable.

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 exemption is made to the certification rule 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 spring 2011, USDA has accredited 53 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.
 

Sources

2008 Organic Survey, The Census of Agriculture, National Agricultural Statistics Service, USDA, 2010.

Alternative Beef Production Systems - What's in a Name? Livestock, Dairy and Poultry Outlook, Economic Research Service (ERS), USDA, 2010.

The National Organic Program, Ag Marketing Service, USDA.

National/Organic Beef, Beef Retail, National Cattlemen's Beef Association.

Organic Agriculture, ERS, USDA.

Organic Food Sales Continue Increasing, Feedstuffs, 2010.

Organic Production, ERS, USDA.

Profile prepared May 2006 and revised June 2011.