serving the ethnic markets of the northeast april 6, 2001 “one way to stand out in a crowd” joe...

Serving the Ethnic Markets of the Northeast

April 6, 2001

“One Way to Stand Out in A Crowd”

Joe M. Regenstein8 Stocking Hall, Cornell University

Ithaca, NY 14853-7201

607-255-2109; FAX: 607-257-2871; jmr9@cornell.edu

(Please use email if possible)

Why Serving the Ethnic Markets Might Be Important to You?

Broadens your market opportunities

Particularly in New York State

We are the DIVERSITY STATE

Reach new audiences

Supermarkets prefer products that have the widest audience potential and are unique

Allows you to address niche markets that larger operations may not be able to do

America: The Salad Bowl

A change in the basic American paradigm

We are NOT all alike

Being different is okay

We each have something to contribute to American culture

It is okay to maintain your cultural heritage

And food is an essential part of each of our cultures

New York Demographics

One of the most diverse ethnic populations in the US

Will be over 50% “non-European” origins within the foreseeable future

Major cultures:

African American

Hispanic

Asian

The Borough of Queens

Probably the largest collection of diverse ethnic neighborhoods in America

Over 130 home languages spoken

A challenge to all aspects of the system but a golden opportunity to develop new opportunities

Need to consider both “culture” and “language” in reaching these audiences

Reaching Urban Populations

On-farm sales

Direct to local ethnic store in urban area

Farmers Markets

CSA

Regular Commercial Channels

Broker versus distributor

General Considerations of the Diverse Marketplace

One has consumers who purchase food based on:

Religious requirements: Jewish: kosher, Muslim:halal

Religious practices: Buddhist, Seventh Day Adventist

Religious custom: Almost all religious groups

Ethnic custom: All cultural groups

Philosophical belief system: Vegetarian, vegan, organic

Seventh Day Adventists

Most are vegetarian but it is not required

Hold with most of the “Biblical” laws in a modified form

The latter are a “Test of Fellowship”

Thus, a limited market for “kosher” meats

Key Ethnic Statistics

28.4 Million Hispanics in the US

66% Mexican

14% Central/South America

11% Puerto Rican

4% Cuban

7% Other

11.4% of the US population in 2000

37.5% of the population growth from 1995-2000

Products are emerging for this market

Goya has traditionally served this market

Beware: Each of these cultures have their own food preferences

Mexican food is NOT the standard for all of these countries

Mainstream companies are developing bilingual products, e.g., General Mills and P&G

Use language of labels to reach markets

Examples of two bilingual mainstream products

Ethnic Statistics -- Part II

9.7 Million Asians in the US

57% live in CA, NY, and HA

94% live in metropolitan areas

3.9% of the population in 2000

15.2% of the population growth from 1995-2000

A more detailed look at Asian Immigration Statistics

Ethnic Statistics -- Part III

34.2 Million African-Americans

55% live in the South

64% live in Central Cities

12.2% of the population in 2000

16.7% of the population growth from 1995-2000

Ethnic Statistics -- Part IV

By 2010 to 2015 or so, the following states will have a majority of Hispanics, Asians, and African-Americans:

NY

CA -- I s already there (2000 census)

FL

TX

Target Marketing

The US Market for Organic Produce

Figures are very conflicting:

1997: $680 million

1981: $21 million

Predicted increase: 2.5% per year

Other figures:

Organic foods amount to 7.8 Billion dollars

Is 2% of total food sales

Consumer Purchases

Fifty percent of all shoppers said they purchased natural or organic foods at least once a month

82% bought vegetables

35% bought fruit

What does “natural” mean?

Is no definition in the US

Farmers

0.2% of US cropland is certified organic

1.5% in Europe

12,000 US farmers claim to be organic but only about 7,000 are certified

Some farmers will have up to 70% of their costs for getting into the organic program up to a maximum of $500 covered (Is $500 enough?)

Farms with annual sales of less than $5,000 don’t need to be certified -- but will consumers trust them?

Natural versus Organic

Natural has never been defined in the US

Organic is defined by various certifying agencies

NOFA

Some states have definitions, e.g., California

Feds proud that their standards are tougher (554 pages worth)

Are Organic Products Pesticide Free?

No!

They may definitely contain organic pesticides

Must be <5% of EPA tolerance level

In fact the USDA in January announced a program to permit some pesticides to carry the National Organic Program symbol on their label

Are organic pesticides safer?

Will Americans put their money where there mouth is?

How much extra are Americans willing to spend for organic food?

Is it enough to cover the costs?

As we expand, the people who move to organic will be more and more price conscious; they won’t be the dedicated hard core folks

How much decrease in quality are they willing to accept in order to have organic products?

A Single StandardAre all people who want organic of a single mind set?

Should they have to be?

Should the government be defining that single standard?

Should the government’s standard be stronger than those of the states and current certifying bodies?

We wouldn’t accept this in the “Religious” area -- but we are accepting in the “Philosophical” area!!!

The National Organic Standards Board

A government advisory body that recommends organic standards

Includes a wide variety of folks, including those from the large “commercial” organic industry -- which many traditional organic growers consider an “oxymoron”

Will big “Ag” takeover organic?

Web site: www.ams.usda.gov/nop/

Organic Livestock

100% Organic Feed (except for some vitamins)

Whole herd in 90 day as a one time exemption

Grown organically from birth, poultry from second day

Vaccines are allowed

Access to the outdoors is required

Animals treated with a prohibited substance must be removed from the operation

The USDA Process

At the same time the USDA bureaucracy developed a structure for enforcing the regulations

Third party verification that must be independent of the growers that are being certified

What Does that Mean?

Many of the current “organic” organizations are not independent enough according to USDA -- favors “corporate” certifiers

What does this do for the cost of inspection?

And how are the verifiers checked?

By the USDA in a fee-for-service inspections!

Another Sticky PointOrganic farming has always depended

on “manures” as part of their process

But manure is a potential carrier of pathogens

So one is required to compost manure

But not just compost it any old way -- must meet some very stringent and very specific regulations equivalent to Biosolids (Sludge)

Other Details

No synthetic pesticides or fertilizers

No antibiotics and synthetic growth hormones

Farms exempt from organic certification cannot sell to processors

On farm production can give products that are “organic” without certification

Organic seed unless not available

Drift from regular agriculture is organic farmer’s problem

The Labeling Regulations

Less than 70%

Can identify the organic components in the ingredient statement

Initially if it had 50% organic content it could be labeled as made with organic ingredients -- but this is now moved up to 70%

Can list up to three organic ingredients on the front label

Labeling Regulations -- Part II

Must have over 95% organic content to be called “organic”

So some non-organic material is permitted in many “organic” products

100% Organic must be 100% organic

The Seal can only be used for products with 95% and greater organics

The Organic Label:Is it a Government Seal that

Organic is Better?

The End

Contact JMR: jmr9@cornell.edu