Feasibility of entering the organic food industry

Organic Agriculture, Gardening and Retail

Organic Gardening

Global Emerging Industry

The purpose of this work is to explore the feasibility of entering into the industry of either retail of organic food or perhaps the possible agricultural realm of the organic food industry. This work will examine all aspects of the organic food industry in brief as well as exploring the marketing possibilities as well as the financial report of a sampling of those doing business within this industry.

Organic food products are growing in terms of customer demand and that is good news for those in the business and indeed for those who desire to see this industry expand which will offer more choices in health wise consumption to consumers as well as providing employment for those who may be otherwise considered non-employable due to educational limitations and finally this industry may very well provide at least some of the answers as to sustainability within communities in terms of alleviating hunger.

There exist within this industry sector and its corresponding market several options for the individual interested in this type of product base. One may decide to run a wholesale operation buying directly from farmers and then reselling to retail consumers or one may choose to be the owner or operator of an organic farm growing the produce for market. Regardless of the role chosen in this industry the rewards hold great promise in terms of financial satisfaction but more importantly in terms of having assisted the world at large in achieving sustainability at a time when resources are pinched as well as in terms of safety due to food contamination throughout the entire scope of the food industry as it is known today. Organic gardening is a method of growing produce or raising lifestyle that is non-inclusive of pesticides, steroid use but is focused toward 'natural' methods, or indeed nature chosen methods in raising healthy, nutritious and safe produce for human consumption.

Organic foods are emerging and setting new standards in food quality in relation to the "freshness," "texture," "flavor" and "variety," according to Organic Faming Principles, 2004.

The management of organic crops is through use of 'proactive practices to prevent problems. In organic gardening the focus is stated to be the striving to:

Replenish and maintain the fertility of the soil

Eliminate the toxic and persistent use of chemical pesticides/fertilizers.

Restore, maintain and enhance ecological harmony

Build and support biologically diverse agriculture.

Responsibly and practical use of the earth's natural resources is the core of organic farming, helping the earth to help the full spectrum of creation in terms of health and the belief that what helps one aspect of life assists another as well such as clean air, water, and healthy food to eat.

I. The Background and History of Organic Farming / Gardening:

Organic farming or gardening is a process by which farmers or individuals grown produce or raise livestock without utilizing the generally accepted methods of fertilization, pest control and disease control but instead institute more holistic environment and earth-friendly practices in the solutions needed for the aforementioned challenges in produce and livestock farming. Some of the methods that have been historically used in this type of farming are that of crop rotation, cover crops, release beneficial insects and the addition of compost to the soil.

Crop rotation is the process of alternating crops in the field from one year to the next. Different crops require different minerals and leaving one crop in a field year after year will deplete the mineral content in the field leaving the field non-productive and making it necessary to leave the field lying fallow, or that is unplanted for a few seasons for rejuvenation in the soil to occur.

Cover crops is a process wherein specific type of plants with certain root systems are planted in the soil to keep it aerated as well as becoming a source of fertilizer for the soil when plowed under during the preparing of the field for seed or at season's end when plowing is done to prepare for the next season. Crop covers also help to retain the moisture within the soil encouraging the lifecycles of organisms and insects within the soil which in turn keep the problem causing bacteria, fungi and other disease type problems from overtaking the soil.

In order for organic livestock to be raised the requirements of clean air and water, outdoor access, proper housing as well as feed that is completely organic in content assisting in reducing the animal's stressors and keeping the animal healthy which serves to produce healthier meat for human consumption. There are no growth hormones or genetically engineered type products used, no animal by-products in the livestock feed, access to pasture is readily available and the process of slaughter must be humane. Finally the manure is managed for the prevention of contamination of crops, soil, water and other factors within the farming environment.

II. Overview of the Financial Aspect of Organic Produce & Livestock Farming:

The financial and market reports for this industry look very positive as well as promising. Whole Foods Market Investor Relations reported that total sales increased last year by 23% totaling a record $3.9 billion. Net income in the business rose to $137 million, or by 32% for the year. Store sales which were comparable increased by 14.9% which set a new record and strength across the board was observed from the top down and back up in all stores that were over the age of 8 years old. EPS grew to $2.09 which is the growth rate of 26% ahead of the initial prediction of $1.87 to $1.95 for the year. Of the 137 stores that Whole Food Markets is owner of 84% of the stores set weekly records on sales during fiscal 2004. World Foods Market also states claims that their stock prices experienced an increase of 50% during the fiscal year starting at $53.41 on 9-26-03 to the amount of $84.73 on 9-24-04. World Food Market's corporate rating was upgraded from investment grade to speculative grade.

Not only are potential profits touted in the industry the USDA ahs just awarded an amount of $4.5 million in grants to individuals and firms for organic agriculture projects. Reported by the U.S. Department of Agriculture is that the USDA is awarding $4, 614,980 in grants that are funding 11 projects in six states in order to strengthen the Integrated Organic Program (IOP) Research, extension and higher education programs are supported by the IOP in order to assist organic farmer in the incorporation of new technological advancements in to their agriculture operation as well as assisting them in development of innovation in their marketing approach. The six states that were included in the award of grant were Arkansas, California, Massachusetts, Minnesota, New York, Vermont, and Washington.

42% of Americans believe that organics are better in terms of quality

"Sales trends agree with the findings of the survey with sales in organic food products hitting the sum of $10 billion with a sales growth rate of 20%" according to Wittenberg, Whole Foods Market VP of Governmental and Public Affairs for the company. Wittenberg relates that 25 years ago when she first began the organics food product business that the original product base was comprised of mostly items in the produce aisle. There is now in existence a larger variety both in terms of choices but also choices within food groups and inclusive of all food product groups. The following is a report of the survey's stated findings:

68%of respondents state they choose organic foods and seek

Fresh organic fruits and vegetables.

20% of respondents seek other organic foods items (bread/bread products)

20% of respondents seek organics in non-dairy beverages

24% of respondents seek packaged organics eggs

19% of respondents seek organic dairy products

22% seek frozen organic foods in soup or pasta form.

8% seek prepared organic foods in frozen foods

14% of respondents seek organic ready-to-go meals.

7% of respondents seek organic baby food products

(Hopfensperger 2004)

42726 Summary and Conclusion:

This work in writing has well established the financial benefits and profits that may be derived by the investor or entrepreneur or even the producer of the organics for the industry's representation in the marketplace but what is more is that the individual that invests in any fashion in this industry is not only winning for themselves but for the entire globe in being part of the force while propels what is lucrative in today's market toward the very thing that saves the human race in the years to come. There is no financial value to place on those calculations. Furthermore, there exist many initiatives of organic farming within inner city areas that are not only teaching individuals to be self-sustaining through their living practices but are feeding these hungry and homeless individuals in the process. Natural, healthy and safe food that tastes better is only one of the rewards in organic agricultural as well, with profits booming, customer demand growing and the government initiatives being infused into the market of the food industry it appears that barring environmental disaster that the day may come when no one is hungry on the earth and every restaurant serves the nutritious, delivered daily by local growers freshness as do the entrepreneurs such as that of Pret A Manger, as well as the local burger joints getting in on the act with their healthier meals and salads. There is every reason to opt for natural organic gardening as compared to that of fertilizer and pesticides carcinogen spreading food growth methods.

Bibliography:

10 Reasons to Buy Local Food (2004) [Online] available at: http://www.mariquita.com/articles/10reasons.local.htm

Whole Food Market Investor Relations [Online] located at: http://www.wholefoodsmarket.com/investor/fiscal04highlights.html

United States Department of Agriculture (2004) (USDA) News Release No. 0423.04[Online] available at: http://www.usda.gov/wps/portal/p/s.70a/7010B?contentidonly=true& contentid=

Whole Foods Market: Our History [Online] available at: http://www.wholefoodsmarket.com/company/history.html

A Blueprint to End Hunger (2003) National Anti-Hunger Association 2003 June 3

http://www.cityharvest.org/about/pdf/Blueprint_End_Hunger.pdf

[Online] available at: http://www.wholefoodsmarket.com/issues/org.principles.html

Ibid.

Whole Food Market Investor Relations [Online] located at: http://www.wholefoodsmarket.com/investor/fiscal04highlights.html

United States Department of Agriculture (2004) (USDA) News Release No. 0423.04[Online] available at: http://www.usda.gov/wps/portal/p/s.70a/7010B?contentidonly=true& contentid=

Whole Foods Market: Our History [Online] available at: http://www.wholefoodsmarket.com/company/history.html

10 Reasons to Buy Local Food (2004) [Online] available at: http://www.mariquita.com/articles/10reasons.local.htm

Hopfensperger, A. (2004) Organic Foods Continue to Grow in Popularity according to Whole Foods Market Survey"