Organic poultry and eggs capture High Price Premiums and Growing Share of Specialty Markets
University of Georgia Department of Agricultural and Applied Economics
Eggs and poultry are now among the fastest growing food products in the U.S. organic sector. Organic eggs are widely available in both conventional and natural food supermarkets, and organic chicken is appearing in grocery stores as well. In niche markets, such as farmers’ markets, gourmet food shops, and restaurants, customers are offered farm-fresh organic eggs and locally processed organic chicken and poultry products.
USDA’s National Organic Program regulates organic products (see box National Organic Standards). USDA allowed the use of an organic label for meat and poultry in 1999, well after other organic food labels were established, and these products are starting to catch up with the rest of the sector. Total U.S. sales of organic foods were estimated at almost $14 billion in 2005, about 2.5 percent of total U.S. retail food sales. U.S. organic sales have had annual growth rates of about 20 percent since the mid-1990s and are forecast to rise to $24.4 billion by 2010 (NBJ, 2006). Along with growing sales, organic products have shifted from being a lifestyle choice for a small share of consumers to being consumed at least occasionally by two-thirds of Americans (Hartman Group, 2004; Whole Foods Market, 2005).
Organic poultry and egg sales currently account for a small share of the overall U.S. egg and poultry market. Both markets, however, like much of the organic sector, are growing rapidly, organic poultry in particular. Both sectors are still in their infancy, and many changes are likely as they develop.
This report uses new data from USDA’s Agricultural Marketing Service (AMS) to show that price premiums for organic poultry and eggs at the intermediary level 2 were considerable from 2004 through mid-2006. At least in the near term, price premiums will remain high as production struggles to keep pace with fast-growing consumer demand. High costs and shortages of organic feed grains, along with a lack of processing capacity, are limiting the short-term expansion of the organic poultry and egg sector. At the same time, a growing number of consumers cite concerns regarding health issues, the environment, and animal welfare as factors influencing their decisions to purchase organic poultry and eggs, and these individuals are willing to pay the price premiums demanded in the marketplace.