Old El Paso and Cheerios owner General Mills plans to double the acreage it sources its organic ingredients from by 2019.
General Mills expects sales from natural and organic products to reach $1 billion by 2019, and wants to bring 250,000 acres under its control by then. The listed company has already increased its organic acreage by 120 percent since 2009 as market demand for organic packaged food increases.
Chief executive for organic row crop-focused private equity group Sustainable Farm Partners (SFP) Harn Soper told Agri Investor last year his firm was in talks with General Mills over a lending agreement to secure grain sourcing for the company’s organic food products. SFP planned to raise $60 million in debt financing from major food manufacturers among others. The firm could not be reached for comment in time for press.
General Mills’ portfolio of natural and organic brands generated $675 million in net sales in 2015.
The US Department of Agriculture says that despite higher production costs, price premiums for organic corn and soybeans held up profits in the organic sector while genetically modified grain producers struggled.
However, acreage for organic corn, soybeans and wheat represents less than 1 percent of the land used for conventionally grown genetically modified crops in the US. Executives for speciality food venture capital firm S2G Ventures told Agri Investor in October 2015 that a weak supply chain for organic processed and packaged foods in the US are a challenge to the sector.