Three Trends Driving the Growth of Organic Agriculture
Showing Strong Market Fundamentals
by Craig Wichner, CEO, Farmland LP
It was a breakout year for organic agriculture in 2022. Consumer demand for organic food continued its steady rise, with strong prices for producers, rising land values and excellent returns for investors. Beyond these results, three significant trends were sharply apparent last year that will continue to affect not only organic farming but the entire agriculture sector – rising consumer demand for healthy food, the fragility of the conventional farming system and investor interest in sustainable farmland practices.
The organic market is enjoying strong momentum. Demand is growing because consumers increasingly recognize the benefits of pesticide-free healthy organic food. They also see that conventional chemical-based farming and food production are increasingly industrialized and commoditized, harming the environment and producing unhealthy, pesticide-laden food. Today, organic food is a $56 billion market and represents 6% of all U.S. food sales. Demand is growing at 13% annually and is constrained by a lack of supply, since organic cropland is only 1.2% of all farmable acreage in the U.S. and is growing by just 7% yearly. The result is a 50-200 percent price premium for organic produce.
Those strong fundamentals were reflected in our business, too. Farmland LP marked its 14th year in operation in 2022, and we have demonstrated over that time that organic farming is profitable at scale. Today, we manage more than 16,000 acres, valued at $250 million, and 40 crops are grown on our farms. By converting conventional farmland to organic, we have increased rents from $300/acre to $750/acre. We have also increased revenue per-acre up to ten times by converting from commodity crops to higher value and permanent crops.
Read Craig full article on all 3 Trends here - https://greenmoney.com/three-trends-driving-the-growth-of-organic-agriculture