FreshPlaza, Netherlands
12-10-07
US: Demand and prices for organic goods not slowing
All the attention on ethanol and $3.50 corn prices probably has slowed the move
of acres into organic production, but it has not slowed the demand for organic
goods or the prices paid to organic producers in the state.
"We're seeing record highs being paid for organic corn", says Kathleen Delate,
who heads the organic program at Iowa State University. She says the price
ratios between conventional corn or soybean prices and organic corn or soybean
prices have stayed steady.
That translates into prices in the vicinity of $10 a bushel for organic corn and
$17/bu. for organic soybeans. That's right, $10 corn and $17 beans. What's
more, Delate says, yields for organic corn and beans are getting better. Test
plots recorded 209-bu. organic corn and 65-bu. organic beans in Iowa in 2007.
All of that means farmers who are producing those organic crops, as well as
organic fruits and vegetables, are doing well right now. But, the rising costs for
land and other inputs, as well as the profits to be made producing non-organic
crops, has kept organic acreage from rising much in the past two years.
After growing at a furious pace for the first few years of the decade, organic
soybean acreage in Iowa has been flat for several years. Organic corn acreage is
rising now, but it has a long way to go before it catches up to soybeans.
Jerry Rosmann, interim executive director of the Iowa Organic Association, says
there is a unique bubble in the organic market. The consumer demand for
organic meat is growing quickly, Rosmann says, in part because it takes very
little time to certify a livestock herd as organic.
The Organic Trade Association (OTA) has said total organic food demand is
rising at about 20 percent a year. Organic meat and poultry production rose 55
percent and dairy 23 percent in the past year. The problem is it takes at least
three years without chemicals to certify cropland as organic, and most of that
organic meat must be fed organically grown crops. That means there is a strong
market for farmers growing organic corn or beans.
It also means for farmers who have land in forages or pasture or in CRP land,
there is a strong incentive to get a quick organic certification to meet that organic
crop market. Since organic production requires less land but more management
and labor than some other crops, Rosmann says it has the potential to be a way
for young farmers to get into agriculture.
"Organic agriculture is really what hogs were to farmers of the '70s", he says.
Organic ag in farm bill
While procedural battles over measures such as immigration have ground debate
over the farm bill to at least a temporary halt, many farmers have not noticed this
year's Senate farm bill proposal includes many items that could benefit organic
producers.
"There's good news for organic agriculture in the 2007 farm bill", says Neil
Hamilton, who heads the Drake University Agricultural Law Center in Des
Moines. What's more, Hamilton told farmers gathered for the recent Iowa Organic
Conference while "some fear we may not get a new farm bill, I don't think that the
farm bill is a hoax. We're going to get one."
Sen. Charles Grassley, R-Iowa, told repor-ters during a recent teleconference he
also thinks a bill will be passed. But, Grassley said a one- or two-year renewal of
the 2002 farm bill is possible if the Senate im-passe is not settled. The impasse
is largely over a series of amendments proposed by Republicans over items
ranging from immigration reform to estate taxes.
Senate Majority Leader Harry Reid, D-Nev., says such measures should not be
debated with the farm bill, and he wants the debate limited to farm and farm billrelated items. Organic producers should hope the new bill is passed, Hamilton
says.
The organic provisions in the legislation do not appear to be controversial, he
notes, meaning they probably wouldn't be removed during debate on the floor of
the Senate or during deliberations of a House-Senate conference committee.
Here is a rundown of some of the measures included in the bill, which either
pertain directly to organic production or which could affect organic producers:
- Cost-share money for organic certification was first included in the 2002 bill, but
is in line to be expanded in the Senate bill. The present language calls for $22
million in cost-share money to be spent over five years.
- Research into organic production would get $16 million a year for competitive
grants under the new proposal, up from $3 million a year under the old farm bill.
- Some money would be used through the EQIP program for conversions of nonorganic land to organic production.
- Crop insurance, which generally has a 5 percent surcharge on organic acres,
would see some changes.
- Market-data information gathering would be done on segregated organic items.
- The Conservation Security Program (CSP) would be funded and made a
nationwide program rather than a watershed program under the Senate version.
- Funds for the National Organic Program would be increased.
- Some language is included that may allow organic producers to opt out of
mandatory federal commodity checkoff programs.
- Organic producers would be made eligible for the Market Access Program.
- The conservation loan guarantee program would give a higher priority to
beginning farmers, which could benefit young producers going into organic
production.
- Market access programs and local foods programs would get some boosts that
could benefit organic agriculture.
- Classical plant breeding would still get some funding, and interstate sales of
state-inspected meat would be approved.
That interstate meat item could benefit organic and non-organic niche livestock
producers who depend on small processors. It has been supported by state
departments of agriculture.
- A micro-enterprise assistance program is included that could benefit small or
beginning farmers.
- There is competition language in the bill that also could benefit small or
beginning farmers, Hamilton says.
CSP another farm bill fight
The CSP, a brainchild of Senate Agriculture Committee Chairman Tom Harkin,
D-Iowa, during his stint as chairman during the 2002 farm bill debate, has been a
disappointment to many, thanks to funding and implementation problems. But,
Harkin said it will be part of his Senate farm bill. "My goal is to get 80 million more
acres into CSP by the end of this farm bill,” Harkin said. “And, we're going to do
it." Harkin also said the CSP package in the Senate bill will provide for a national
program, not one based on watersheds, as is the case now.
Grassley, R-Iowa, says his only concern with funding for the CSP and other
programs such as the CRP is the rule limiting the amount of land that could be
taken out of production in any one area be continued. "I want to make sure we
don't concentrate it all in one area", he said.
Source: farmandranchguide.com