Serving the Ethnic Markets of the Northeast April 6, 2001 “One Way to Stand Out in A Crowd” Joe M. Regenstein 8 Stocking Hall, Cornell University Ithaca, NY ; FAX: ; (Please use 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 % of the population growth from

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 % of the population growth from

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 % of the population growth from

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 Standard Are 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:

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 Point Organic 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?

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