Yesterday's most popular article on The Wall Street Journal's online edition (www.wsj.com) was not Intel's (Nasdaq: INTC) 39% drop in earnings, nor was it homebuilder Lennar's (NYSE: LEN) continuing woes as it copes with the soft real estate market. You would think that the Dow notching another record close would be the top story, but surprisingly, that honor goes to a column on the increasing popularity of organic foods. (Subscription needed to read complete articles.)
As Americans become more health conscious, organic food purveyors -- once the denizen of the counterculture -- are becoming more mainstream. The Journal mentioned how Dean Foods (NYSE: DF) and Wal-Mart (NYSE: WMT) are part of the burgeoning organic food industry, which is currently posting 20% annual growth on top of annual sales of more than $14 billion. How could they forget the big boy on the block, Whole Foods (Nasdaq: WFMI)? It's estimated that 70% of Americans buy some organic products mainly for perceived health benefits and to avoid pesticide residue.
To be labeled "organic," crops have to be grown without chemical pesticides and can not be genetically engineered. Meat, poultry, and milk must come from animals fed organic diets. Antibiotics and growth hormones are also not allowed.
However, according to industry watchdog Environmental Working Group, many foods already have low levels of pesticide residue -- some examples are broccoli, asparagus, avocados, and onions. Conversely, apples, peaches, strawberries, bell peppers, spinach, lettuce, and carrots have higher levels of pesticide residue. It is important to note that even these levels are well within government guidelines.
Paying extra for organic foods is probably worth it if you eat a lot of produce that has higher levels of pesticides. There have been few studies that examine the effects of low levels of various pesticide residues. Meat and dairy products produced without antibiotics or growth hormones may also be worth the extra costs. You can find milk that is not organic but still from dairies where they eschew growth hormones, plus it is often cheaper than "organic" milk. Dean Foods, in fact, produces both types of dairy products.
On the other hand, foods you don't consume often or ones where the peel is tossed (think bananas or oranges) are probably not worth the extra cost. That's because the incremental health benefits are not necessarily worth the incremental costs.
Sticking with the heath-conscious theme, the article warned to carefully examine the contents of processed foods labeled organic because they may be as unhealthy as their conventional counterparts due to higher fat concentrations and less stringent requirements for the percentage of organic ingredients.
So what's my bottom line? If you are really serious about organic food, grow your own. It takes a little work, but there's a lot more reward.
For more on the organic food business, check out:
Intel and Wal-Mart are
Motley Fool Inside Value
recommendations. Whole Foods is a
Motley Fool Stock Advisor
selection.
Fool contributor Buz Livingston, CFP, appreciates your feedback and is proud of his degree in agriculture from the University of Georgia.
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