By MATTHEW D. ERNST

Missouri Correspondent

ST. LOUIS, Mo. — Improving efficiencies in the U.S. supply chain for organic and non-GMO grains and oilseeds could help farmers capture higher margins, said presenters at the Organic & Non-GMO Forum last week in St. Louis.

Organic and non-GMO grain and oilseed demands, from both consumer food and livestock feed manufacturers, are stimulating supply chain investment. “It wouldn’t surprise me to see the number of (U.S. organic) acres double in the next five years,” said Bill Lapp, president, Advanced Economic Solutions, an Omaha, Neb., consultancy.

Lapp, a past chief economist at ConAgra, said simple supply and demand will likely fuel growth in North America’s certified organic field crop acreage. Canada will capture some of those additional organic small grain and oilseed acres. There is solid potential for new organic row crop acres in the United States, where food companies “are most astounded by the resistance of people in traditional conventional agriculture to take advantage of the premiums.”

Grain delivery points and handling systems can be a barrier to increasing the supply. Eric Jackson, chief executive of Pipeline Foods in Minneapolis, said his firm is investing in the supply chain “that supports the transportation and transformation of those grains and oilseeds between the farm and eventually the food.”

There are fewer than 50 facilities in the country that have the size and rail access to be relevant to organic feed grains and oilseeds, according to Jackson. “When you have those few facilities, you have a lot of people running around buying and selling truckloads of stuff. A lot of margins are being extracted without a lot of value being added,” he said.

Investment will help remedy some of those inefficiencies. “Put money into the infrastructure. It’s not the same size as the big conventional marketplace, obviously, but taken in total we think that $300 (million) to $500 million could be invested in this space, easily, over the next three to five years,” said Jackson, regarding the organic and non-GMO crop supply chain.

Pipeline Foods this year purchased Malden Specialty Soy in southeastern Missouri, with a subsequent investment to double the facility’s capacity. The plant will produce hexane-free organic and non-GMO soybean meal and mechanical expeller-pressed oils. Pipeline last week announced it will add a St. Louis office to its existing offices in Minneapolis, New York, Winnipeg and Buenos Aires.

Specialty food processors continue attracting institutional investor interest, according to Robert Hodgen of AMERRA, a New York City investment firm specializing in debt and equity capital investment in agribusiness.

“We see the specialty processing side as an attractive opportunity,” for investment, said Hodgen, a board member of Pipeline Foods, during his presentation.

When it comes to increasing organic field crop acreage, conventional growers have often been deterred by the costs and risks of the three-year transitional period required for organic certification. “At this time, most of the farmers that are in transition (from conventional to organic) are doing it entirely on their own,” said Nate Lewis, a Washington state farmer and Farm Policy director at the Organic Trade Assoc.

The organic industry has long championed policies that help farms transition to organic. More recently, grain and oilseed handlers have started to explore premiums for crops grown on land changing into certified organic. “There is potential for premiums,” from crops ground on land in transition, according to Lewis.

Another barrier for increasing U.S. organic crop acreage: Dubious imports. Incidences of conventional grain arriving in the United States, labeled as organic and sold at cut rates, create chaos in the organic supply chain. The industry and federal regulators will need to deal with bad actors, said Jackson.

“The rules need to be enforced, and absent that, the supply chain won’t work at all,” he said.

The Organic & Non-GMO Forum attracted more than 200 attendees, most representing companies involved in crop processing. The list of grain processors represented from from Archer Daniels Midland to Zeeland Farm Services, a Michigan specialty processor long processing soybeans for export to Asia.

“The last five years, the domestic market has grown for non-GMO beans, a lot from dairy and poultry feed,” said Darwin Rader, Zeeland international sales manager.