Organic Food is Marketing Hype

Organic food is marketing hype. There I said it. It may not be in the western world as the regulators are quite strict with the classification of organic foods. But in Asia, it sure is. I have witnessed that farmers, especially in South East Asia, are riding the wave of organic food hype for the wrong reason. I have worked for chemical distributor company in Southeast Asia selling pesticides and fertilizers for these farmers. And I have witnessed their practice to be non-organic at all, yet their packaging is labelled as organic. They claimed organic products will sell faster with higher price than conventional price. People crave for organic foods. So aren't these farmers misleading their customers?

Organic food from production point of view is very inefficient. You wasted much more water and land space to produce organic food as compared to conventional food products. From taste point of view, very hard to discern the difference. Although psychologically, human will feel that the more expensive the food is, the tastier it is. Up to the point, it is healthier and contains more nutrition than conventional food. But is it? Studies have shown, that the health benefits of organic food is arguable. You can watch the debate of organic food hype here and pick your stand.

But the bottom line is: how can we make money out of this organic food hype? Wholefoods market is the largest organic food supermarket in the United States (US Ticker: WFM). It forms a head and shoulder pattern and is ready to break to the downside. We could place a directional short bet on WFM by buying May 85 puts for $2.85. If WFM goes to $70 by May expiration, we could profit for approximately $12. Not bad for 1 to 4, risk to reward ratio, in 2 months trade.