The Organic & Non-GMO Supply Chain

Originally Published: February 16, 2017
Last Updated: February 22, 2021
Per the Organic Trade Association, 36% of organic product sales were in fruits and vegetables during the 2014-2015 period, but emerging organic market sales growth for snacks, breads, meats and other packaged foods show compound growth rates.

February 16, 2017–Global Food Forums, Inc.
The following is an excerpt from the “2016 Clean Label Conference Summary,”
sponsored by Givaudan, RiceBran Technologies, TIC Gums, Blue Pacific Flavors, World Technology Ingredients, Inc. and IOI Loders Croklaan.

Grounding manufacturers’ expectations from the strained organic supply chain was the aim of Scott Shander, MSc, Economist, Mercaris, during this presentation. When considering organic product launches, securing supplies can be challenging, and the nuances need to be understood and appreciated.

In the “2014-2015 State of the Industry Report,” The Organic Trade Association showed $39 billion in organic sales, up from $10 billion in 2003. Data concerning organic acreage in the U.S. shows a massive expansion in organic food, compared with limited available acreage to grow organic.

Currently, 36% of organic sales are in fruit and vegetables; interestingly, the emerging organic market includes compound growth rates in snack foods, bread, meats and other packaged foods. “Looking at these categories, meeting this demand will require disproportionate growth in organic grains and oilseeds relative to other crops,” said Shander.

Organic crop rotation is important to manage soil health, pests and weeds. Organic farming requires a multi-year rotation period for growing corn, then alfalfa, soybeans, etc. A significant ramp-up in organic corn production, for example, will also require a ramp-up of other organic crops—including barley, oats, peas, lentils and hay (of which there is currently not much demand)—presenting a significant problem, if demand for these less common crops does not also increase.

“The industries’ short-term solution to supply shortages in the U.S. has been finding international suppliers. Over the last four years, organic corn and soy imports skyrocketed, but the U.S. needs a solution to develop these grains domestically,” noted Shander.

Conventional farmers can currently earn $129 per acre for corn, with organic corn bringing $552 per acre. “At these numbers, why is not every farmer taking action?” Shander asked rhetorically.

“Many reasons make this tough,” Shander went on to explain. “The average farmer in the U.S. is 58 years old; trying to convince them to completely change their business and hire third-party certifiers to tell them how to run the farm can be very difficult.” Furthermore, organic farming requires a 36-month transition period; a large investment to the land; and benefit will not be seen for several years. Many farmers may not have grown anything other than corn or soy. They have no knowledge of other crops—i.e., their uses and their buyers—and they would need to develop completely new relationships in order to farm successfully. Also, a very limited number of organic processing and storage facilities exist.

Currently, in Illinois alone, 74,300 farmers cover 27 million acres, compared with the entire U.S. organic market with 14,870 farmers covering only 2 million acres nationally. A current corn producer has many options to deliver grain from his farm to storage or processing facilities. However, when trying to market organic corn, a farmer is lucky to find even one processing facility, even far away. And, that processor might not be buying corn that day or prices are not competitive; so the farmer needs to try the next buyer, etc. Processers can take advantage of this situation by providing less market transparency and forcing organic farmers to sell crops as needed.

Many organic food manufacturers have moved to 100% imports, developing international relationships with more supply security. Some manufacturers are securing supplies for an entire year by contracting with growers. However, farmers willing to help big food companies with sustainability initiatives need to produce additional materials, like lentils and smaller grains. And there needs to be a home for these, so companies need to find creative uses for rotation crops.

Shander’s final takeaways were that the organic market will continue to grow; innovative manufacturers will take action; and competition will intensify. A competitive edge will exist for companies who can find uses for rotation crops, like the smaller grains and legumes. Organics can be daunting for procurement teams who will need thoughtful leadership in order to deliver long-term security for these plans.

“Breaking New Ground in Organic & Non-GMO Markets,” Scott Shander, Ph.D., Economist, Mercaris. To access Mercaris reports and analysis on organic and non-GMO markets

This presentation was given at the 2016 Clean Label Conference. To download presentations from this event, go to

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