U.S. sales of organic grain-based food approached $1 billion in 2016, according to Nielsen Scantrack retail sales for the 52-week period ended in November, said David Sheluga, consumer insights director for Ardent Mills, Denver, Colorado, U.S.
“Probably the biggest issues that have been keeping sales of organic grain-based foods from an even higher growth rate is uncertainty around the scale of supply and quality,” said Zack Sanders, director of marketing for Ardent Mills. “At Ardent Mills, we recognized that this was a barrier for many food manufacturers and food service operators, and now with additional milling network and our farmer relationships, we have removed those barriers.”
A survey from the U.S. Department of Agriculture (USDA) released last September showed 12,818 certified organic farms in the U.S. sold a total of $6.2 billion in organic products in 2015, up 13% from $5.5 billion in 2014. The industry shows potential for production growth as existing organic producers are transitioning another 151,000 acres nationally to organic product, the USDA said.
Ardent Mills is on track to meet the 2019 organic goal, said Shrene White, director of risk, specialty grains. The program, which began with an organic wheat farming program in Colorado, has grown to include seven U.S. states (Colorado, Idaho, Kansas, Michigan, Nebraska, Texas and Wyoming) and a Canadian province (Saskatchewan). The number of the company’s organic-certified mills has grown from two to seven across the U.S., Canada and Puerto Rico.
“With our growing organic milling network, our customers can take advantage of more local sourcing options that can lower shipping cost, and they can support multiple production locations with one trusted supplier,” White said. “A number of our pack centers are also organic certified so that we are now providing organic store brand flours in addition to our Simply Milled branded line of organic retail flour.”
Bay State Milling, Quincy, Massachusetts, U.S., has expanded organic wheat storage capacity and entered into long-term grower agreements, said Edward Fish, senior manager corporate strategy.
“Our latest acquisition, CleanDirt Farm, a millet processor in Sterling, Colorado, U.S., supports a large contingency of local organic growers who value millet as a sustainable rotation crop,” he said.
Bay State Milling should break ground in May on an expansion of its specialty milling and blending facility in Bolingbrook, Illinois, U.S., said Donna Reiser, marketing communications manager.
“Bay State Milling encourages sustainable global organic trade through its membership in the Organic Trade Association,” Fish said. “We support local organic food systems such as The Bread Lab at Washington State University. A collaborative effort with the Sustainable Food Lab (a global network of organizations accelerating progress toward a more sustainable food system) is in the early stage.”
Neuve Grains and OGB are both blends of organic grains, seeds and wheat designed for American and European-style multigrain bagels, bread, rolls and pizza crusts. The O-3 blend features amaranth, buckwheat and sesame. The Hanover rye is made with organic rye flour.
“In addition to grain blends, Brolite now has organic and made-with-organic mold inhibitors, shortening blends, dough conditioners and tortilla bases,” MacDonald said.
Lesaffre Yeast Corp. and Red Star Yeast Co. offer a growing range of certified organic yeast and baking ingredients, including Red Star organic block yeast and Saf-Pro 40 Organic, a deactivated yeast that provides flavor and relaxing activity in doughs.
AB Mauri launched an organic line of dough-strengthening and extended shelf life systems in October 2015. The original portfolio focused on organic, enzyme-based oxidant, extended shelf life and conditioning systems, said Paul Bright, innovation manager for AB Mauri North America, St. Louis, Missouri, U.S.
“Since the introduction of our organic-certified dough conditioning and bread softening lineup 18 months ago, we have continued to add to our offerings,” Bright said.
AB Mauri has added two organic white distilled vinegars in both 120- and 300-grain options. The company in 2016 introduced a line of Non-GMO Project verified dry yeast products from its Veracruz, Mexico, facility.
“The organic trend is definitely there, and our customers are increasingly making these products available to consumers demanding an organic bakery option,” Bright said. “There is a strong correlation between the growth in organic and the demand by consumers for greater transparency in product labeling and their desire to know more about the foods they are eating.”
Cargill, Minneapolis, Minnesota, U.S., recently added soybean oil and high-oleic sunflower oil to its organic portfolio, said Julie Robey, strategic marketing leader, global edible oils solutions for Cargill. De-oiled canola lecithin may be used in organic products.
“When companies decide to switch to organic products, they need to make sure they have a secure supply pipeline of organic ingredients to deliver on their brand promise,” she said. “Cargill can help customers achieve peace of mind through assured supply, a history of quality and food safety, formulation and supply chain expertise, as well as cost management.”
||| SIDEBAR: Insight on organic grains |||
The company also hosts an on-line auction to facilitate organic and non-GMO trade
The first survey took place in 2012. Then Mercaris officially launched as a company about three years ago, seeking to fill a market need for data such as acreage and pricing on organic grains, said Alex Heilman, director of sales.
“We essentially created the largest organic and non-GMO grain survey across North America,” he said.
Mercaris, based in Silver Spring, Maryland,U.S., through its data plans provides information on organic and non-bioengineered/non-GMO corn, organic and non-bioengineered/non-GMO soybean, and organic wheat. The company in the future hopes to add soybean meal and oils, said Heilman, who previously worked in commodity sales and merchandising for Miller Milling Co., Minneapolis, Minnesota, U.S.
Kellee James, chief executive officer (CEO), founded Mercaris after spending five years at start-up company Chicago Climate Exchange (CCX), an electronic trading platform and registry for spot, futures and options on carbon, sulfur, clean energy and other environmental derivatives. Chris Duesing, co-founder and chief technology officer for Mercaris, has 15 years of experience in software development and most recently was the director of application development for the CCX.
Mercaris publishes monthly market updates, quarterly imports reports, an annual acreage report and annual commodity reports. Pricing, at a minimum, comes out once a week, Heilman said.
“That is the bulk and backbone of what we do,” he said of pricing.
Mercaris runs national average prices and also breaks out prices regionally, between food and feed and between spot and forward. Mercaris divides regions into three in the U.S. (central, east and west) and two in Canada (east and west).
A Mercaris Auction Platform, an electronic venue, facilitates the buying and selling of identity-preserved agricultural commodities. Mercaris on April 13 said more than 280,000 bushels of organic grain had been traded year to date on the on-line platform, which was more volume than traded in all of 2016. The auction covers organic, transitional and non-bioengineered/non-GMO corn, soybeans, wheat and other small grains.
For its clients, Mercaris offers several different data plans, Heilman said. A less expensive one is geared toward farmers. A more inclusive data plan is geared toward large grain companies, large dairies, consumer product goods companies and venture capitalists.
A geospatial mapping tool helps support the milling industry specifically. It may show potential areas of opportunity, where voids in the market may be and where competitors are.
To obtain data, Mercaris surveys the first handlers of grain, primarily elevators. About 60 first handlers participate in the survey now.
“Those participants are everyone from small, regional, one-location elevator (operations) all the way up through some large multinational companies that maybe have 25-plus locations,” Heilman said.
Non-disclosure agreements are signed. Grain handlers share volume pricing and other data. Mercaris aggregates the data to publish reports.
Mercaris also tracks imports of organic wheat, corn and soybeans. Imports account for more than 50% of domestic consumption in each of those three organic crops, Heilman said. Organic durum wheat imports in 2016 reached 976,000 bushels at an average price of $13.76 per bushel on a delivered cost basis, according to the USDA’s Foreign Agricultural Service (FAS). Organic soybean imports in 2016 reached 13.8 million bushels worth $270 million, and organic yellow dent corn imports reached 21.7 million bushels worth $160.4 million.
Mercaris reported domestic organic acreage in 2016 of 482,207 for wheat, 292,919 for corn and 150,789 for soybeans.
Exports of organic wheat, corn and soybeans grown in the U.S. hardly exist because of demand from domestic buyers.
“Organic demand completely outpaces organic supply domestically,” Heilman said “This market does need to grow pretty drastically.”
Tracking organic pricing and supply has become less difficult over the past few years.
“When we first started doing this, the organic markets essentially were really shrouded in secrecy,” Heilman said. “There wasn’t necessarily a drive for more market transparency. There were a few larger players who had kind of cornered the market, so to speak, and so more insight was not necessarily a good thing.
“However, the industry has changed pretty significantly in the last couple of years. There are also a lot more smaller players that are stepping in who really do rely on a little more market transparency in order to grow their business and also grow their access to acres.”
||| SIDEBAR: Upward trajectory for organic |||
The percentages keep coming up in favor of the organic food industry, which could see sales growth through 2025.
A Nielsen survey released in March showed organic food items were found in 82.3% of American households in 2016 as the national average climbed 3.4% from 2015 to 2016. Total U.S. organic food sales in 2015 were $39.7 billion, up 11% from 2014, according to the Organic Trade Association’s 2016 U.S. Organic Industry Survey.
The organic food industry in Western Europe and the United States has experienced high-single-digit to low-double-digit sales growth for a prolonged period of time, Rabobank said in October 2016. Organic food sales in Western Europe are forecast to have a compound annual growth rate of 6.7% until 2025 while the CAGR in the United States is forecast at 7.6%, said John David Roeg, senior consumer foods analyst for Rabobank.
“Food producers should increase their focus on organic, through new products and brands, or through the reformulation of existing products to help grow their top lines,” Roeg said. “This will also help them to position themselves as responsible businesses.”
Short-term growth in the U.S. is somewhat higher, but a prolonged, much higher growth rate is unlikely because a supply chain is not sufficiently established, Rabobank said.