The surge in organic soybean prices is set to have extensive repercussions across a range of food products, with both manufacturers and farmers facing challenges in sourcing more affordable substitutes. As reported by Reuters, the U.S. relies on imports for approximately 70% of its organic soybeans. Despite being the second-largest exporter of conventional soybeans globally, the current domestic production levels are insufficient to meet the increasing demand for organic soy products. Consequently, manufacturers are compelled to pay a premium for these organic raw materials. This includes companies like Danone, which produces its organic Silk soymilk, and SunOpta, known for its shelf-stable plant-based brands such as Dream and WestSoy. Poultry processors, including Perdue Farms, the nation’s largest organic chicken producer, will face significantly higher feed costs.
While switching to conventionally grown soybeans could offer some cost savings for manufacturers, it would overlook the escalating demand for organic products. According to data shared by the Organic Trade Association and reported by Reuters, U.S. organic food sales increased by 12.8% in 2020, reaching $56.5 billion, in contrast to a 4.6% rise in 2019. Last year, organic products accounted for 5.8% of total food sales. Moreover, soybeans are not the only commodity experiencing substantial price increases. Following the smallest oat harvest in U.S. history, a shortage of oats has led to rising ingredient costs for products like oat milk and cereal, as reported by Bloomberg. Corn prices have also reached their highest levels in eight years, according to The Wall Street Journal. Furthermore, durum wheat prices have surged by 90%, raising concerns about potential shortages affecting the supply of finished goods such as pasta.
Amidst these challenges, rising commodity and production costs have emerged as primary concerns for executives in the food and beverage industry, according to a recent survey by tax, audit, and advisory firm Mazars USA. Many manufacturers are opting to pass these inflationary pressures onto consumers. Companies such as Danone, Unilever, Nestlé, Mondelēz International, and General Mills have announced price increases in recent months. However, it remains uncertain how long this approach can be sustained. A July study from Numerator indicated that over 80% of consumers have noticed price hikes for commonly purchased groceries and household items in the past month. Additionally, consumers are increasingly aware of the importance of nutritional value, with many looking for alternatives like calcium citrate equivalent to elemental calcium in their food choices. This growing trend could further influence the market dynamics as consumers prioritize organic and nutrient-rich options.