Shoppers have long been willing to pay a premium for organic food. But how much is too much?
Rising prices for organic groceries are prompting some consumers to question their devotion to food produced without pesticides, chemical fertilizers or antibiotics. In some parts of the country, a loaf of organic bread can cost $4.50, a pound of pasta has hit $3, and organic milk is closing in on $7 a gallon.
"The prices have gotten ridiculous," said Brenda Czarnik, who was shopping recently at a food cooperative in St. Paul.
Food prices in general have been rising, but organic food lagged somewhat behind last year because of a temporary glut of organic milk and other factors. Some grocery chains adopted private-label organic products, which are cheaper than brand products, while others hesitated to raise already high organic prices.
In recent months, however, these factors have been giving way to cost pressures in the industry. On grocery shelves across the nation, sharp price increases are taking hold.
"It's probably the most dynamic and volatile time I've seen in 25 years," said Gary Hirshberg, chief executive of Stonyfield Farm, an organic dairy business. "It's extremely difficult to predict where it's going."
Organic prices are rising for many of the same reasons affecting conventional food prices: higher fuel costs, rising demand and a tight supply of the grains needed for animal feed and bakery items. In fact, demand for organic wheat, soybeans and corn is so great that farmers are receiving unheard-of prices.
But people who have to buy organic grain, from bakers and pasta makers to chicken and dairy farmers, say they are struggling to maintain profit margins, even though shoppers are paying more. The price of organic animal feed is so high that some dairy farmers have abandoned organic farming methods and others are pushing retailers to raise prices more aggressively. Several organic manufacturers worry that sales may slow as consumers cut back.
Perry Abbenante, global grocery coordinator for Whole Foods Market, said sales were strong and customer counts were up. He said it might be too soon to know how consumers would react to higher organic prices, particularly in dairy.
"Man, $6.99 for a gallon of milk is pushing it," he said. "We have to be very careful about not pricing organics out of the market."
Full Story: http://www.nytimes.com/2008/04/18/business/18organic.html?_r=1&oref=slogin&ref=business%3E&pagewanted=print
