Lettuce Grower to Acquire Stake in Organic Concern

One of the country’s largest lettuce growers has agreed to buy a stake in one of the top suppliers of organic greens to tap into the growing demand for organic produce at mainstream supermarkets.

Salinas, Calif.-based Tanimura & Antle, which ships 1 million tons of conventionally grown lettuce each year, said late last week that it would acquire a one-third stake in Natural Selection Foods, which sells organic bagged salads and vegetables to supermarkets under the Earthbound Farm label. Terms of the deal were not disclosed.

The proposed acquisition would enable Tanimura & Antle, which sells bulk lettuce and private-label bagged salads, to enter the fast-growing and higher-profit-margin organics business under a more established label. Sales of Earthbound products are expected to reach $60 million this year, up from $42 million last year.

Earthbound, based in San Juan Bautista, Calif., farms 5,800 acres in California and Arizona. Tanimura & Antle has 30,000 acres in the same areas.

“If sales are going to move from conventional to organic, we would be remiss if we weren’t a part of that,” said Tanimura & Antle President Rick Antle.

The company said it will convert 5% of its acreage to organic farming methods over the next three years and devote additional acreage as the business grows.

Most of the land would be planted with lettuce for bagged salads, but the company also plans to sell other organic fruits and vegetables under the Earthbound label as it rotates crops on the land. Tanimura & Antle is negotiating with growers to sell other commodities under the Earthbound label.

The two top producers of bagged salads--Dole Food Inc., based in Westlake Village, and Salinas-based Fresh Express Inc.--don’t sell organic products. Another top seller, Irwindale-based Ready-Pac Inc., entered the organics business last year with three bagged salads.

The organic market has become increasingly attractive for large growers as sales of the more expensive produce have surged 20% in the last couple of years, according to the Organic Farming Research Foundation. However, the niche represents less than 5% of all fresh produce sales, according to industry estimates.

More large shippers are expected to invest in organic growers after the federal government issues its organic farming standards late this year or early next year, analysts said.

“That will remove what has been a fairly significant level of uncertainty in the market,” said Mark Lipson, the Organic Farming Research Foundation’s policy director. And as more growers enter the organic market, the produce should become easier to find and less costly for consumers, Lipson said.