Investigating Retail Price Premiums for Organic Foods

ERS research in 2005-06 found that organic premiums ranged from about 15 percent for onions and carrots to about 109 percent for skim milk. A recent ERS study set out to determine what price premiums consumers are paying for organic foods and whether those premiums are declining over time. In estimating the retail price difference between 17 organic products and their nonorganic counterparts from 2004 to 2010, the researchers found that all organic products were more costly than their nonorganic counterparts and that the premium was above 20 percent for all but spinach. Most premiums did not steadily increase or decrease during the 7 years studied, but fluctuated. Of the 17 products examined, only 4—spinach, canned beans, granola, and coffee—saw premiums generally decline. Only strained baby food’s and yogurt’s price premiums generally increased. Product-specific supply and demand factors help explain some of the differences among the estimated organic price premiums for the 17 products.