World and USA organic overview US consumer trends PNW organic crop statistics Factors impacting future growth

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2 World and USA organic overview US consumer trends PNW organic crop statistics Factors impacting future growth

3 Global Organic Food Retail Sales Natural Business Journal s Organic Food Report 2006 S$ 34.5 billion in 2005 (~ 2% of total food sales) $100 billion by 2015 (~ 15% of total food sales) (projected) 25% annual growth rate in Europe Sustained growth rates of 20%+ over the last decade in US Organic is moving mainstream Fastest growing segment of supermarket business Increases in multi-ingredient and convenience products Viable alternative to bio-tech foods and food safety concerns Competition Large conventional supermarkets entering the organic market Private label, buy local, natural Source: IFOAM, Statistics and Emerging Trends 2007

4 North America 5.44 M ac Europe M ac Asia 7.17 M ac Latin America M ac Africa 2.22 M ac Oceania M ac Total acres = 79.8 M; Producers = 1.2 M; Aquaculture = 1 M acres Total world organic market value in 2007 = $ US 46 B

5 !""# $ % %& ''( Note: Alaska & Hawaii not shown; organic pasture/range in Alaska accounts for 60 percent of the U.S. total. Source: USDA, Economic Research Service, based on information from USDA-accredited State and private organic certifiers.

6 $ Bil!#) % *+''

7 ),- )$,$$ $. ''+ Source: Nutrition Business Journal. From USDA-ERS EIB-55

8 Source: Nielsen Homescan, From: USDA-ERS Report EIB-55 (2009)

9 Source: Nielsen Homescan, From: USDA-ERS Report EIB-55 (2009)

10 Note: Estimated premiums reflect the percent above average half-gallon conventional milk prices within each fat content category for private-label (store brand) and branded categories. Source: Nielsen Homescan, From: USDA-ERS Report EIB-55 (2009)

11 Certified organic acres as a percent of total US acres. Source: USDA-ERS Report EIB-55 (2009)

12 Organic food sales reached $23 billion (up from $13.8 billion in 2005). Organic represents over 3.5% of all food and beverage sales in US. (up from 0.8% in 1997) 15.8 % annual growth rate over Consumer s demand for health, nutrition and food safety driving growth. Supply constraints restricting sales and new product development in some food categories. Economic downturn has resulted in slower growth in most categories. Fastest growing segments are breads & grain products (35%) & drinks (31%) Natural and organic food coops reporting continued growth. Source: Organic Trade Assn, 2009 Organic Industry Survey

13 % '' Sales growth slows 20% of families increase in home cooking helping to hold grocery sales 67% families reduce restaurant spending 31% families increased organic purchases versus 1 year ago Parents deciding to reduce spending in other areas fitness 43%, coffees 53%, clothing 55%, personal care services 53%. Source: 2009 US Families Organic Attitude & Beliefs Study, Organic Trade Assn

14 % 73% of US consumers have purchased organic in last six months. Usage not driven by demographics. Initial triggers for buying organic children, health condition, social network influence, concern about food production systems. Super center/discount and club stores increasing source of organic foods. Purchase Occasion Year 2000 Year 2008 Daily 8% 7% Weekly 9% 12% Monthly 5% 8% Occasionally 34% 42% Never 45% 31% Source: The Hartman Group reports; Healthy Living 2000 & Organic 2008

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16 ) /-#) *+''0 Source: 2004 Nutrition Business Journal

17 US total sales $3,688 mil US organic sales $206 mil % organic penetration 5.6% Ranked 7 th largest category for penetration of total US food market Forecast CAGR* = 13% IQF, 12% canned, 9% dried * Compound Annual Growth Rate Source: 2006 Nutrition Business Journal

18 $ -& 1''2 Estimated farm gate sales in 2007 = $213.2 million Source: Washington Organic Farm Statistics Kirby & Granatstein, (2009)

19 $ 1''(''+2 ''+2 $ Million Washington Farm Statistics 2008, Kirby & Granatstein (2009)

20 Estimated farm gate sales in 2007 = >$89 million Oregon Farm Statistics 2008, Kirby & Granatstein (2009)

21 $ $% 1'' ''+2 Oregon Farm Statistics 2008, Kirby & Granatstein (2009)

22 3 & '' Oregon Forage 77 % Vegetables 5 % Fruit & nuts 2 % Grains & beans 8 % Washington Forage 31 % Vegetables 21 % Fruit & nuts 21 % Grains & beans 9 % Source: Granatstein, Kirby (2009)

23 ,,- '' Washington Organic 6% Sweet corn 8% Peas 13% Potatoes 1% Onions 4% Carrots 9% Green beans 43% Oregon Organic 4% Sweet corn 4% Peas 5% Potatoes 3% Onions 4% Total certified acres for all crops = 96,139 Total certified acres for all crops = 115,502 Source: Organic Farm Statistics 2008 Washington & Oregon, Kirby & Granatstein, WSU-CSANR.

24 4.$$5 ))67 Consumers trends food/health relationship, values The economy with US economic downturn sales have slowed in most sectors Regulation the USDA rule, changes and additions Improved reciprocity / equivalency agreements between international organic certifiers and governments,- USDA-NOP, IFOAM, JAS, COS Greater consumer awareness of organic, availability; 41% manufacturers lack dependable supply in 2008 (Organic Trade Assn) Food scares pesticides, mad cow disease GMOs contamination, release of non-approved varieties, foreign buyers cautious Availability of organic land transition, competition for acres Price and availability farm gate and consumer level, fruit and milk prices fall Corporate involvement, supermarkets Sustainable labels, private label, buy local Increased government support research, farmer incentives.

25 5, & Organic Transition Support within EQUIP - $20,000 annual limit. Certification cost share program. Expand data collection. Technical assistance conservation practices, cost share for export markets, loans to new and disadvantaged farmers, support for regulatory programs, organic crop insurance. Research two major areas; conservation and environmental outcomes new and improved seed. )) From: USDA-ERS Report EIB-55 (2009)

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