Organic price premiums dip as demand grows, choices multiply

DETROIT — U.S. shoppers are still paying more for organic food, but the price premium is falling as options multiply.

Last year, organic food and beverages cost an average of 24 cents more per unit than conventional food, or about 7.5 percent more, according to Nielsen. That was down from a premium of 27 cents, or 9 percent, in 2014.

There’s a lot of variation within those numbers. The average price for a gallon of organic milk — $4.76 — is 88 percent higher than the $2.53 shoppers pay for a gallon of regular milk. Organic eggs have an 86 percent premium. At $4.89 per loaf, organic bread is double the cost of regular bread.

Parents buying organic baby food, on the other hand, pay just 3 percent more than they would for conventional baby food. In mid-January, a bunch of organic kale was 5 percent more than regular kale, according to the U.S. Department of Agriculture. Some organic products — like artichokes, soy milk and Granny Smith apples — may even cost less than their conventional counterparts.

There are many shifting factors behind the prices for organic foods. Premiums for milk and eggs tend to be much higher, for example, because the government has very specific rules for what “organic” means. For example, cows producing organic milk must be allowed to graze for at least one-third of their food intake, says Jeremy Moghtader, the manager of the campus farm at the University of Michigan.

The rules “have real benefits to the animal, the consumer and environment, but they do increase the price of production,” Moghtader said.

One reason organic premiums are falling is the increase in products on the shelves. Organics used to be confined to health food stores and high-end groceries like Whole Foods, but mainstream stores are increasingly offering them.

Kroger, one of the nation’s largest grocery chains, says it stocks 9,000 organic items in its stores and notched $1 billion in organic produce sales in 2017.