Organic Food Economics

[S.Annadana]

Remember when Wal-Mart made a big splash by announcing its entrance into the organic food space? Not long after, it got a lot of attention for admitting, basically, that its efforts weren't going well. How did Wal-Mart miscalculate? Isn't everyone from all walks of life getting organic fever?

Maybe not. A Kansas State researcher has done some work on the economics of organic foods, and this part caught my eye:

What's more, Wileman said, is that research done at K-State shows that beef producers are competing for a mere 2 percent of a consumer's income. He said another thing to keep in mind is research showing that most growth in organic and natural food items has come from the same shoppers buying more products, not from an increase in the numbers of like-minded consumers.

Buyers of organic food have always bought a mix of conventional and organically grown items. This suggests that organic foods haven't crossed the chasm, but rather that narrow population just keeps substituting a greater percentage of their conventional food with organic. Even at organic food's rate of growth -- which is apparently quite high -- traction among the Wal-Mart set could be next to nil.