Although organic agriculture has seen an increase in popularity among consumers over the past few years, the Organic Valley Family of Farms and other organic food companies now seem to be taking a hit.

Organic farmers are blaming the decrease of demand on three different factors. The recession, for one, has played a part in trimming demand for premium-priced food. Organic Valley Family of Farms had to cut its dairy farmers' output by 7 percent to avoid dropping farmers or reducing payments they receive.

Another threat to the organic industry is competition from cheaper "natural" food items on the market. Natural products, ones that have no added color or artificial flavors, not only cost consumers less than government-certified organic food, but also threaten to equate with organic in the minds of consumers. For the first time since 2004, sales of "natural" foods and beverages are expected to grow at a faster rate than sales of organic foods.

Organic farmers are also battling a blow to sales since the Food Standards Agency in Britain released a study claiming that [link to article] organic products are no more nutritious than conventionally produced food. Although the study did not look at pesticide use, organic advocates still worry about the effect the study has on consumer buying habits.

To reach more consumers, the industry is cutting costs, coming out with new offerings, sending out coupons and selling smaller-sized packages.

Although sales appear to have slowed in the organic industry, they haven’t come to a complete halt. Organic food and beverage sales grew by 17 percent in 2007, 12 percent in 2008 and will grow 7 percent this year, according to a forecast by Nutrition Business Journal.

Source: The Christian Science Monitor. "Organic's Crunch: Once High-Flying Firms Face Three Big Threats to Growth," http://features.csmonitor.com/economyrebuild/2009/09/15/organic%E2%80%99s-crunch-once-high-flying-firms-face-three-big-threats-to-growth/; 15 Sept. 2009.