KANSAS CITY As the organic market matures and grapples with inflationary headwinds, significant sectors, including bread, breakfast cereal and baby food, continue to show growth, according to the Organic Trade Association. Increasing organic wheat supply, finding a diverse set of ingredient suppliers and funding from the US Department of Agriculture are boosting the category as well.

US organic product sales reached $69.7 billion in 2023, up 3.4% from the previous year, according to the Organic Trade Association, Washington. Food sales made up $63.8 billion of that total.

In the grocery category, sales increased 4.1% to $15.4 billion. Within grocery, in-store bakery and fresh bread were up nearly 3% to $3.1 billion, dry breakfast goods were up about 8% to $1.8 billion, and baby food and formula were up nearly 11% to $1.5 billion.

Organic wheat supply in the United States rebounded solidly in 2023-24. Commodity analysts at Argus Media Group, Houston, in May estimated US organic wheat production at 24.41 million bus for the 2023-24 marketing year, which was up 22% from 19.96 million bus in the previous marketing year. Argus projected organic wheat production will increase to 25.32 million bus in 2024-25.

So far, in the US, this year has seen organic wheat markets rebound after several years of drought, insect pressure and higher-priced conventional markets, leading to a reduction in organic acres as growers considered their seeding options, said Sam Beveridge, director of emerging nutrition risk and grower relations at Ardent Mills, Denver. Recently, adequate moisture levels across hard red winter regions and spring wheat regions in the northern tier states and Canadian prairies have helped to drive supply to meet the current demand.

As a result, we have seen prices move lower on anticipated supply, which allows growers to expand and have different sellable crops, some of which they have not seen for the past couple years. Still, current carryout stocks remain tight through new crop, which is reflective in the price inverse.

Consumer dietary shifts and a growing consciousness about health are helping propel organic demand, he said. Data from Ardent Mills show 77% of consumers believe grain-based organic foods are healthier and better for them, and 72% said they believe grain-based organic foods are better for the environment.

Despite the promising outlook, various factors may affect organic supply, including economic conditions and weather patterns, Beveridge said. Rising inflation may impact growers entry into the organic sector, which requires years of adherence to organic practices for certification.

Additionally, weather fluctuations, such as the shift from El Nio to La Nia, will impact various growing regions differently. For example, organic wheat fields in the Pacific Northwest may benefit from improved moisture conditions, but organic wheat fields in the central US have seen almost too much moisture, causing concern for sprouting among wheat crops.

Ardent Mills has expanded in the organic category. The company in 2019 acquired a grain elevator in Klamath Falls, Ore., that enhanced its ability to source from organic wheat growers in the Pacific Northwest, according to the company. In 2021, the acquisition of Hinrichs Trading Co., a company involved in chickpea sourcing, cleaning and packaging, included the acquisition of a grain elevator in Shelby, Mont., which allowed Ardent Mills to source organic wheat from Montana and Canadian prairies.

Ardent Mills organic portfolio also includes ancient grains such as quinoa, amaranth, millet, sorghum, teff and buckwheat available in several formats such as flour, said Michael Rhodes, senior research and development dough systems specialist.

These increasingly popular gluten-free, non-GMO wheat alternatives have been found to work well in multi-grain mixes to create unique textures and flavor profiles in bread, he said. Additionally, we also offer organic heirloom wheat grains like spelt.

Bay State Milling Co., Quincy, Mass., has supplied organic wheat flour for decades, said Connor Bullum, organic commodity merchandiser.

BSM has invested in the organic supply chain by producing organic flour at four separate mills and has recently converted the Platteville, Colo., location to 100% organic wheat flour production, and we continue to originate over more than half of our total organic wheat needs directly from farmers, he said.

Besides wheat flour, Bay State Milling offers flour from grains such as rice, sorghum, millet and oats, Bullum said.

We see customers using these flours in gluten-free breads, as these are inherently gluten-free offerings, but also as inclusions and toppings to wheat-based bread, he said.

ResearchAndMarkets.com, Dublin, forecasts the global organic baby food market will increase to $8.10 billion in 2028 from $4.55 billion in 2023 through a compound annual growth rate of 12%.

Sales are up 61% over last year at Once Upon a Farm, Berkeley, Calif., said Emily Luna, baby and toddler manager for the company. She added sales within the baby business are four times higher than they were in 2022.

Luna said the increase has come through new product lines, including frozen toddler pasta meals and baby and toddler pantry snacks, consumers shifting toward organic, increased brand awareness and expanded distribution into retail in fresh, frozen and dry categories.

The baby and toddler portfolio at Once Upon a Farm includes fresh, organic, cold-pressed refrigerated pouches, shelf-stable pantry snacks and frozen plant-rich meals.

We have a very talented procurement team that manages a lot of complexity, said Jane Kuhn, sustainability manager at Once Upon a Farm.

The company develops multiple suppliers representing different geographies for each ingredient.

This helps us maintain a steady supply through different seasons and positions us to be more resilient amidst supply chain shocks due to weather events, Kuhn said.

The USDA in May announced new programs, partnerships, grant awards and an additional $10 million in funding to expand the markets for organic products and help producers transition to organic production. The USDAs Agricultural Marketing Service awarded about $24.8 million for 23 grant projects through the Organic Market Development Grant program.

Offsetting the costs for organic transition helps more farmers realize higher margins sooner while giving consumers more access to high-demand organic products, Agriculture Secretary Tom Vilsack said.

The Organic Trade Association and The Organic Center received $2.2 million in Organic Market Development Grant matching funds from the USDA.

We thank USDA for making this project possible with this important funding, said Tom Chapman, co-chief executive officer of the OTA.

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Growth in the organic aisle - BakingBusiness.com