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September 29, 2017 CapitalPress.com 5 U.S. organic sales jump 23 percent in 2016 By CAROL RYAN DUMAS Capital Press U.S. farmers and ranchers sold $7.6 billion in certifi ed organic agricultural products in 2016, an increase of 23 per- cent from $6.2 billion a year earlier. Those sales came from an additional 1,399 certifi ed farms, up 11 percent, and 657,547 more acres, up 15 percent, USDA National Ag- ricultural Statistics Service reported Wednesday. Ten states accounted for 77 percent of the sales, and California continued to lead the way. The Golden State account- ed for 38 percent of total U.S. sales at $2.9 billion. With the largest share of certifi ed farms and organic acreage, California added 76 farms to its organic ranks and nearly 300,000 acres in 2016. Washington lost its No. 2 ranking to Pennsylvania but increased sales by $10 million Certified organic farms, land and value of sales Rank/state Item Farms California 2015 2016 2,637 2,713 Idaho 2015 2016 168 166 Oregon 2015 2016 409 461 Washington 2015 2016 598 677 Acres (x 1,000) 4,361.8 5,019.5 790.4 167.2 178.6 175.7 194.8 71.8 78.7 3. ..... Wash. Sales ($ mllions) 6,163.5 7,553.9 85 98 269.5 350.9 626.4 636.2 4. ........ Ore. 2,435.6 2,889.2 Source: USDA NASS with 79 additional farms and about 7,000 additional acres. Oregon held its No. 4 spot, increasing sales by more than $81 million on 52 additional farms and 19,000 additional acres. Nationwide, crops ac- counted for 56 percent of or- ganic sales at $4.2 billion, and livestock, poultry and their products accounted for 44 percent at $3.4 billion. Milk, however, led prod- uct sales at $1.4 billion, an increase of 18 percent. Eggs followed at $816 million, up 11 percent. Sales of broiler chickens were up a whopping Capital Press graphic 78 percent to $750 million. Other heavy hitters were apples, up 8 percent to $327 million, and lettuce – which increased 6 percent to $277 million. Other top organic crops were strawberries, grapes, tomatoes, corn, potatoes, hay, spinach and mushrooms, NASS reported. The agency also noted the 2016 survey was expanded to include grape data by variety and to separate information on fresh and processed fruits and berries. The National Trade Orga- nization said in an email that while it welcomes USDA’s commitment to providing important information on or- ganic agriculture through its farmer-based census, certifi - er-based estimates show even higher numbers. Numbers from accredited certifying agents in December showed 14,861 organic farms and 5.3 million organic acres, compared with the 14,217 farms and 5.0 million acres in the Sept. 20 report. “Precise and current in- formation on organic farm sales and acreage is vital for all organic stakeholders. The organic industry cannot con- $2,889 2,436 1. ...... .Calif. U.S. 2015 2016 12,818 14,217 1,070 Sales ($ millions) 660 2...... .Penn. 332 636 626 351 269 297 5. ..... Texas 210 255 222 216 221 6......... Wis. 7. ........ N.Y. 201 187 8. ...... Mich. 9. ...... Colo. 181 155 10. ...... N.C. 145 82 tinue to thrive and maintain stable markets without good data collection,” OTA stated. The organization also pointed out that while over- all growth in sales of organ- ic agricultural production is positive news, the latest re- Top 10 states in organic sales, 2016 2016 2015 Source: USDA NASS Carol Ryan Dumas and Alan Kenaga/ Capital Press port highlights that growth in livestock feed grains doesn’t parallel the dramatic growth in livestock products — not- ing an ever-widening gap between the supply of domes- tic organic feed grains and demand. Amazon-Whole Foods combination may spark organic price war, economist says By DAN WHEAT Capital Press PULLMAN, Wash. — Amazon maybe heading for a food price war with its ac- quisition of Whole Foods, and initial cuts have targeted the organic produce sector that’s becoming more important to the Washington tree fruit in- dustry, an industry expert says. Seattle-based online giant Amazon closed a $13.7 bil- lion deal Aug. 28 to buy Aus- tin, Texas-based Whole Foods Market Inc. and the same day cut prices of bananas 38 per- cent, organic baby kale 12 per- cent and tilapia 33 percent. In a news release, Amazon said its vision is to make “Whole Foods Market’s high-quality, natural and organic food af- fordable for everyone.” “The big problem for com- petitors is Amazon doesn’t ap- pear to be worried about debt. It’s stock is $1,000 a share and keeps rising and as long as it does they can borrow from all sorts of markets,” said Des- mond O’Rourke, retired Wash- ington State University agri- cultural economist and world apple analyst in Pullman. What items Whole Foods carries is being decided cen- trally instead of locally and brand representatives no lon- ger may pro- mote products or check dis- plays in-store, the Wall Street Journal has re- ported. B r o o k e Desmond Buchanan, a O’Rourke Whole Foods spokeswoman, had no com- ment on whether there will be price wars. She said Whole Foods will continue to discov- er and sell local products while selecting the best national products possible. “This improves the custom- er experience and also ensures local supplier are represented in categories where they will be successful and positioned for growth,” Buchanan said. With 460 Whole Foods stores, Amazon is estimated to be the fi fth-largest grocery retailer in the country behind Walmart, Kroger, Costco and Albertsons, according to Cow- en fi nancial analysts. “What worries the retail food industry is that Whole Foods will indiscriminately cut prices and companies like Walmart and Kroger will have to borrow the money or gener- ate it from their own sales to cut prices,” O’Rourke said. They’re not growing as fast and can’t borrow as much, Capital Press File Amazon’s ownership of Whole Foods spawns many questions on pricing among organic tree fruit growers in the Northwest. he said. Retailers will pressure sup- pliers such as tree fruit compa- nies for lower prices but sup- pliers can only go so low given production costs, especially with organics, he said. “I think retailers are very concerned. They are poised to compete at the retail level. Markets will settle where mar- kets settle,” said Tom Riggan, general manager of Chelan Fresh Marketing in Chelan. “The question is wheth- er Whole Foods is willing to lower its overall margin. Any retailer will put pressure on suppliers to be as low as they can, but they have to keep sup- ply and quality so it’s a fi ne balance,” Riggan said. Bob Mast, president of Columbia Marketing Inter- national in Wenatchee, said Whole Foods has a “deep- thinking group” that under- stands consumers. “When Amazon speaks the world listens right now. They are a powerhouse. The day they made the purchase stocks of big retailers took a big dip,” Mast said. Whole Foods is “aggres- sively” pricing fresh crop organic Gala apples at $1.49 per pound and other apples at $1.99 versus $2.49 to $2.79 every day pricing at this time last year, he said. Whole Foods is “aggres- sively challenging” suppliers on price and appears to be passing the savings on to con- sumers, he said. “We’re obviously con- cerned because on organics you have to have a premium over conventional because of cost of production,” Mast said. Organic fruit costs more to grow and yields are lower, he said. Fruit is smaller and each drop in size equates to a 10 percent loss in volume of packed fruit, he said. Organic fruit is also more perishable and doesn’t store as well as conventional fruit so its sales season is shorter, O’Rourke said. Yet large Washington tree fruit companies — including Zirkle-Rainier, Domex Su- perfresh Growers and Stemilt Growers — are moving heav- ily into organics, O’Rourke said. This fall’s Washington ap- ple crop is forecast at 130.9 million, 40-pound boxes, and 13 million of that, close to 10 percent, is organic, Mast said. That’s up 20.8 percent from last year, he said. Stemilt announced Sept. 21 that 30 percent of its ap- ples this year will be organic and that it will continue the three-year process of convert- ing more acreage from con- ventional to organic. Despite higher costs and risks, companies are moving to organics because they and managed varieties are the two largest areas of growth with consumers, Mast said. Kroger and Walmart are positioned well to compete and tree fruit companies are concerned a spread of lower pricing on organics could hurt their viability, he said. O’Rourke said it may take two to fi ve years to play out and that the situation may not be as threatening as other re- tailers perceive. “I think Amazon is taking a huge gamble moving into the retail food business be- cause it’s not familiar with it and it’s completely dispersed from the business model they run now,” O’Rourke said. Amazon sells products on- line and ships them from large distribution centers where they have tight control of opera- tions, he said. There are more operational variables with greater human factors in re- tail stores that companies like Kroger have had 100 years to master, he said. Idaho starts anticipated large-scale recharge program By JOHN O’CONNELL Capital Press BOISE — Though the irri- gation season has not yet con- cluded, the state has already started recharging 61,100 acre-feet of storage water that groundwater users provided as mitigation to senior Surface Water Coalition irrigators. Idaho Ground Water Ap- propriators Inc. is obligated to give the coalition 50,000 acre- feet of storage annually under terms of a 2015 settlement to the coalition’s long-standing water call. It was fi led based on declining Upper Snake River spring fl ows attributed to junior well irrigation. Idaho cities that draw groundwater from the aquifer were also required to provide 2,600 acre-feet of mitigation water, and industrial proces- sors reached their own agree- ment years ago to give the co- alition 8,500 acre-feet. The Upper Snake Reser- voir system was still 69 per- cent full on Sept. 26, follow- ing an unusually wet water year. Twin Falls Canal Co. General Manager Brian Ol- mstead explained coalition members have no need for mitigation water this sea- son, so they’ve donated it to support the state’s recharge program — which pays ca- nal companies fees to inject surface water into the aquifer through their unlined canals and adjacent spill basins. “I think we could have a really dry winter and still fill those reservoirs,” Olmstead said. The state started recharg- ing the storage water on Aug. 30 and now has recharge un- derway on three off-canal sites in the Upper Valley and one Lower Valley site, said Wes Hipke, recharge coordi- nator with the Idaho Depart- ment of Water Resources. The storage water alone will nearly equal the total volume of recharge the state conducted in the 2015-2016 season, before recharging a whopping 317,000 acre-feet in 2016-2017. Measurements taken late last March from sentinel wells used to track the settlement’s progress showed the aquifer gained 600,000 acre-feet in the span of a year, equal to half the ca- pacity of Palisades Reservoir. Amalgamated expects to equal or best record beet yield By JOHN O’CONNELL Capital Press RUPERT, Idaho — Amal- gamated Sugar Co. offi cials say their early harvest results suggest they’ll equal or exceed last season’s record sugar beet yields, despite facing harsh growing conditions this sea- son. Duane Grant, chairman of the board with Snake River Sugar Co., which owns Amal- gamated, explained the Idaho and Oregon sugar beet crops got off to a slow start due to cool spring weather, which was followed by the arrival of excessive heat in June. The company, nonetheless, projects its growers will at least equal the 41 tons-per-acre of beets they averaged during last year’s harvest — and Grant said it’s possible they could set a record yield for a fourth consecutive year. “They came out of a cooler spring than normal and a hot- ter summer than normal with good yields,” said Grant, of Rupert. “We really attribute that to the steady improvement in the quality of the genetics of the crop we plant today.” Grant noted this was the fi rst season that growers plant- ed a variety developed specif- ically for Idaho’s conditions, and more Idaho-specifi c va- rieties will be released next season. However, Grant anticipates the sugar content in each beet will be down signifi cantly from last season, resulting in less fi nished sugar produc- tion for the company. He said Amalgamated projects its av- erage sugar content will be about 17.5 percent, compared to 18.3 percent last season. “In my own personal har- vest, we’re seeing yields com- parable with last year and up slightly,” Grant said. “My sugar is down half a percent to a full percent.” Grant said growers are an- ticipating a profi table year, nonetheless, based on the strength of the domestic sugar market. American Sugar Alliance economist Jack Roney said several factors have aligned to create a “bullish” U.S. sug- ar market outlook. Primarily, Roney said the U.S. recently reached an agreement with Mexico that effectively ends ongoing dumping of subsi- dized Mexican sugar onto the U.S. market. 39-1/100