Organic May Not be Profitable for All

"True lovers of organic food have always been willing to pay more for it: They spend $3.99 on a half-gallon of organic milk when a whole gallon of conventional milk costs $1 less. That devotion might soon be tested.

The forces that have driven grocery prices up sharply over the past year - growing demand for food in China and a global biofuels boom - have had an impact on the organic food market as well. Meanwhile, U.S. farmers haven't kept pace with demand for organic food, sales of which shot up 21 percent in 2006, and that has also sent prices soaring.

And supplies of organic soybeans and grains are squeezed - not only are they needed for human consumption, they serve as feed for the animals that will be sent to market as certified organic beef, chicken, eggs and pork.

"The organic community has suffered, and enjoyed, a wonderful explosion in demand of 20 percent per year for basic raw materials, but when you look at supply in the U.S., we're lucky if it's growing at 1 percent per year," said Lynn Clarkson, the president of Clarkson Grain Co., a grain-handling business based in Cerro Gordo, Ill."

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