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Are Health Nuts Wrong About Organic Food?

6 September 2012 in Trading Ideas

We’ve all met them – those hardcore converts to organic food who continually tout their healthier eating as worth both the extra money spent and extra time locating pesticide-free plums.

A new study by Stanford researchers has now thrown some (mountain spring) water on the topic.

Media reports over the weekend reported that scientists running the study have concluded that fruits and vegetables labeled organic had the same nutritional value as conventional foods. Nor were they any less likely to be contaminated by dangerous bacteria like E. coli, according to an article in the New York Times.

And while conventional fruits and vegetables did have more pesticide residue, the levels were almost always under the allowed safety limits set by the Environmental Protection Agency, according to the Times.

This is no ethereal matter, as the organic produce market has become big business. Organic produce sales in the US grew 12% to $12.4 billion in 2011 from a year earlier. The growth also has contributed to the benefit for certain investors in health food stocks — the Healthy and Tasty motif, a portfolio of stocks focusing broadly on the health food sector, has climbed 10.8% in the past six months compared with a rise of 7% in the S&P 500 (as of Thursday).

To little surprise, organic trade groups charged that the Stanford study minimized appreciable differences between organic and traditionally grown produce – differences that the trade groups say are important reasons cited for buying organic. As the Times reported, the study did show that organic produce was less likely to retain traces of pesticides, and that organic chicken and pork were less likely to be contaminated by antibiotic-resistant bacteria.

Meanwhile, Omnivore’s Dilemma author Michael Pollan suggests the Stanford study may be missing the point: The upside of organic farming isn’t nutritional, he says, but rather that it’s more environmentally sustainable. “That’s the stronger and easier case to make,” Pollan told KQED in San Francisco.

For those investing in health food stocks, however, it may be a matter of whether what seems like a major hole poked into the nutritional argument for organic foods will significantly hamper growth.

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