By MATTHEW D. ERNST
ST. LOUIS, Mo. — Row crop producers looking for ways to boost future profits can get an inside look at opportunities for organic grains and oilseeds at the Organic & Non-GMO Forum, to be held in St. Louis Oct. 29-30.
There are opportunities to expand organic feed and food-grade crop production, according to Peter Golbitz, president of Agromeris, who will give a presentation about organic imports and prices at the Forum. “By 2016, we were bringing in about 14 million bushels of organic soybeans and 22 million bushels of corn. That was equivalent to about 600,000 acres of production,” Golbitz said. “That’s a huge opportunity when there’s only about 250,000 acres currently of organic soybeans and corn,” he said. The organic poultry industry is driving feed demand for organic corn and soybeans, he said.
But there are barriers for conventional growers considering organics. A team of Kansas State economists this year published a study estimating financial performance of transitioning a conventional 3,000-acre farm in central Illinois. “The 3-year transition period and the additional challenges associated with the transition to organic may cause hesitation as producers consider the switch to organic production,” wrote Emily Carls, Terry Griffin and Gregory Ibendahl, who completed the study at Kansas State University.
Growers attending the St. Louis conference could learn how to navigate the organic transition period. "Conventional farmers will gain a better understanding of the process and requirements for transitioning, as well as learn about programs in place to assist them in doing so, said Joy O'Shaughnessy, managing director at HighQuest Group, which organizes the Organic & Non-GMO Forum.
Presentations at the forum will include the process of getting certified, the regulations involved, financing options, pricing of organic crops, what support is available, and viewpoints from those who have transitioned crop acreage. “We are looking at this subject from all sides to better inform both the producer and those along the supply chain,” said O'Shaughnessy.
Costs and Benefits
Certifying part of a farm’s acreage could be a financial risk management strategy in today’s low price environment. The KState study found potential long-term financial benefits for a model that transitioned 700 of the 3,000 Illinois acres to certified organic corn production. Lower organic premiums were needed to match conventional returns for corn over the long term, assuming conventional corn at $3.26 per bushel. The study was presented in January at the Southern Agricultural Economics Association meetings.
Producers willing to invest in certification could capture the kinds of price premiums that justify investing in organic certification, according to Peter Golbitz. “From a price perspective, the (organic) premiums are good and they have held up. They are consistently 2 to 2.5 times the Board. They’re not connected to the Board, although if the Board price goes down significantly, there’s usually some tug on the price of organic,” said Golbitz.
Recent developments have also tempered the financial risks during the transitional period, when the crop must be grown using certified organic practices but cannot be sold as such. Producers can get “at least a non-GMO premium,” during those years, said Golbitz. “But there are companies out there buying transitional and paying a premium for transitional.” That premium may be, “smack in the middle between conventional and the organic price,” according to Golbitz.
Companies purchasing organic grain are very interested in developing relationships with new U.S. growers, Golbitz said. “Ultimately the buyer is not looking for just grain. They’re looking for the relationship with the producer,” said Golbitz. “If I’m a buyer and I know I’ve got increasing demand for organic soybeans and corn, and I want to buy as much domestic as possible, it’s important for me to have positive, profitable relationships with the farmers I’m buying directly from.”
Golbitz said U.S. buyers generally prefer U.S.-grown organic grains, even when compared to lower-priced imported organic feed grains. His perspective is that creates opportunity for more conventional farmers to consider adding some organic acreage, which could help reduce risk. The USDA now offers crop insurance for certified organic production at organic contract prices, he said.
“We know the commodity prices have tanked in the past 60 days,” said Golbitz. “And organic prices have continued to go up during that period. Some of that is due to the fact that we’re running out of ’17 crop, and people are waiting for ’18 crop.” Adding organic acreage could be, “a great opportunity for (conventional) producers to kind of shield themselves from the craziness that’s currently gone on,” in commodity markets, said Golbitz.
More information about the fourth Organic & Non-GMO Forum is available on the event website, www.ongforum.com