The last few weeks have seen many changes in the organic food market.  With dramatic increases in many foods including rice (+100%), chicken (+42%), wheat (+102%), and butter (+93%), many people are cutting food costs by avoiding organic selections.  As recent reports show organic sales plummeting 20%, other reports show an in increase in purchases of grocery store brands.

Supply and demand is one of the factors pointing towards dropping organic prices, but it is only a short-lived catalyst.  As the demand dwindles, so too will production.  It is the other factors that will sustain the decrease.

One such factor is the effect that oil prices are having on fertilizer costs.  A study on the effects of oil on farming that was featured in Telegraph suggests that this idea may soon become reality.  Peter Melchett, policy director of the Soil Association, said, “This study suggests that as oil inevitably becomes scarcer and costs more, economic forces will increasingly favor organic farming.”

While these two factors affect the source of organic food, it is the retailers themselves who may trigger the fastest and longest-lasting drop in organic food prices.  In response to the decline of sales, a looming price war may push organic food prices down to a level comparable to regular foods.

The niche of people who are passionate about their organic foods will remain strong regardless of the price.  When they were hot just a few months ago, many grocers and health food stores dedicated more space to stay ahead of the demand.  Now that the demand has taken a dive, retailers will be trying to gain a stronger share of the shrinking market.  Even Whole Foods, known for higher quality and prices to match, is reducing prices and trying to change their public image.

It is in this price war that many who have recently abandoned organic foods may return for the same reason that they left: price.  The actual cost difference between organic and normal foods is much lower than the retail price difference because perceptions have allowed the premium rates.  As perceptions change, grocers will have to sell their normally high-profit organic foods at or below the cost of their normal counterparts.

Even today, it is possible with a little effort to buy organic foods directly from the source or through co-ops.  One such co-op that is approaching its one year describes how they do it in this video:

All of these factors combine to paint a practical future for organic food purchases.  Once demand is rekindled, there will be increases again, but it is possible that they will only be price corrections instead of market bumps.  Keep an eye on the prices at your grocery store.  If you have stopped buying organic (or have never tried) because of the prices, you may be in for a pleasant surprise very soon.

Sources: 1, 2, 3, 4, 5

Image Sources: 1, 2

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Read more about green living on this blog, or check out some tips for cost effective organic buying on this article.