August 4, 2016

SUPPLY ISSUES: Future Growth of Organics Could Be Limited by Geography

At the very first Organic Produce Summit—held in Monterey in July—the future of fresh produce in this category was celebrated as demand exceeds supply and premium pricing is very much alive and well.  Yet an underlying concern was expressed as producers are not quite sure if supply can keep up with that demand.

That was one of the major themes discussed during a breakout session devoted to the supply side of the equation.  Three panelists—Driscoll’s Executive Vice President Soren Bjorn, Taylor Farm’s Vice President of Operations Jerrett Stoffel and Purity Organic Fruits and Juices Founder Greg Holzman—discussed the challenges in finding suitable organic land with the audience and Moderator Nate Lewis of the Organic Trade Association.  Lewis led off the discussion bluntly asking the group what the biggest challenge is with organic produce.  Not surprisingly, they each responded with a version of lack of land is what is keeping them up at night.

“Available ground is the biggest challenge,” said Stoffel, noting that all the low hanging fruit, which translates to conventional ground that is relatively easy to transition to organic production, has already been picked.  He said Taylor Farms continue to look for new ground but it is difficult to find, and much more expensive to convert.  He said there is a cost equation where it just doesn’t pencil out to convert some ground.

Holzman said he travels extensively and continually tries to convince growers all over the world to switch to organic production.  Upon further questioning, he revealed that because his firm only has an organic option that it offers to its customers, it really can’t help growers market their transitional product.

Bjorn said that is not the case with Driscoll’s.  Because of some very conservative residue standards by some export buyers, he said transitional fruit is a good match for Driscoll’s export sales, which does help the company “sell” the concept of organic production to its growers.  However, the Driscoll’s executive did remind the crowd that the leading berry marketer grows none of its own fruit.  It relies on growers all over the world for its output and each of those growers must make their own business decision about the efficacy of organic production.

Lewis of OTA noted that the trade association is working with the federal government on standards that will allow for the marketing of transitional fruit as growers move their production from conventional to organic.  However, he indicated that this is an idea with its own challenges as the organization does not want to cannibalize organic sales nor create an “organic light” category.

In tackling supply issues down the road, Bjorn believes genetics, technology and geography must play vital roles in that equation for berries.  He said genetic research resulting in new varieties could allow production on marginal land.  He added that genetics can also help increase yields.  He noted that when a grower does not fumigate the ground on which he plants strawberries, there is basically an automatic reduction in yields. Of course, organic production precludes the ability to fumigate.  Knowing that fumigation is not a sustainable technology, Bjorn said all of Driscoll’s varietal trialing—organic and conventional—has been conducted on non-fumigated ground for many years.  Moving forward, he expects varieties to be developed that mitigate this automatic yield reduction.  He also noted that advancements in the use of bio-pesticides will help organic berries deal with pest pressures.

Advancements in technology could help the grower community move the crop out of the soil and into potted production, which may allow a version of factory farming and greatly increase the supply of available land.  The company is also continually exploring new regions of the world where strawberry production, including organic production, may take root.

Stoffel agreed saying that Taylor Farms is making advancements in both automated harvesting and irrigation technology to help the company expand on the supply side.  The firm has been successful in automating the harvesting of romaine and is currently working on a long term project with cabbage and celery.

Stoffel, however, did report that some crops, most notably organic spinach, are having a very difficult time because of disease problems for which there is no solution for organic production.  At this point in time, he said “organic spinach is probably not a sustainable crop.”

The suppliers also talked about climate change and discussed its impact on both conventional and organic production.  Lewis said warming temperatures have allowed the state of Washington to have a crop landscape that rivals California.  While a warming trend in more northern locations may open up land for fruit and vegetable production of all kinds, other areas are getting too warm to grow some traditional crops.  Even in Oxnard, Bjorn said there are fields that no longer get much ocean cooling and so they are no longer suitable for strawberry production.  He repeated that it appears that in the future more and more strawberry production will have to move indoors to keep up with demand.  Of course, that creates a whole new set of issues.  Instead of a farmer needing a six-month loan for about $25,000 to grow an acre of berries, he needs a $300,000 to $400,000 15-year mortgage to construct an indoor growing facility.

Stoffel said moving to areas that are now warmer may offer some opportunities, but generally those crop windows are shorter and require a lot more planning.

The three panelists took a much different view of the direction each of their individual companies will be taking in the near and distant future.  Bjorn said Driscoll’s is concentrating on its four berry crops—strawberries, blueberries, raspberries and blackberries—with no plans to diversify.  Holzman said Purity Organic is always looking to add to its stable of operations and added that the firm’s papaya production is on the rise.  Stoffel indicated that Taylor Farms will basically grow anything it can sell.  “We are driven by consumer tastes,” he said, in response to a question about what is the next hot trend.  The questioner mentioned kohlrabi and Stoffel said Taylor Farms will grow it if the demand is there.

One final area that was discussed is just where the next generation of farmers will come from.  Bjorn said Driscoll’s is very proactive in developing the next generation of growers especially in Mexico.  He said there is no shortage of individuals wanting to enter the business, the problem is lack of capital.  Driscoll’s has a program to help these young farmers get started.  “We can help.  We consider it our job to develop the next generation of farmers.”

Stoffel said that younger people might be interested in farming but they are not interested in the long hours and hard work that their parents endured.  He noted that technology, such as drones, might entice some of these potential farmers to join the profession.  “Toys help,” he said, referring to what might motivate a millennial to farm.

The Organic Produce Summit drew 800 attendees to listen to several different seminars and walk a trade show populated by 75 produce companies with organic produce offerings.  More than 100 buying operations, representing 50,000 grocery stores in the United States and Canada, were in attendance.