Brownfield, MO
11-19-07
High conventional prices limit organic switching
by Peter Shinn
The 7th Annual Iowa State University (ISU) Organic Conference is going on
today in Ames. About 320 folks are in attendance, many of them ag producers
looking into what it takes to go organic.
Associate agronomy professor Dr. Kathleen Delate organized the conference
for ISU. She told Brownfield organic corn and soybeans are currently fetching
$10 and $17 dollars a bushel, respectively. And she said there's no problem with
organic penetration of the U.S. food system.
"Actually, that's been a breeze," Delate said. "There is much more demand for
organic products than there is supply, and that's another push, is working with
the Iowa Organic Association here to get more people to transition to fill that
demand so we won't have to go to places like China to meet our demand for
organic soybeans, for example."
The problem, as Delate suggested, is getting enough certified organic acres into
production to meet demand. One might legitimately wonder why. After all,
demand for organic foods has skyrocketed in recent years. And university
studies, including a multi-year effort by Delate herself, show organic production is
generally more profitable than conventional production. But there hasn't been a
wholesale switch from conventional to organic. And according to Delate, one
stumbling block has little to do with economics.
"There are a lot of psychological barriers," Delate said.
Specifically, Delate cited concerns about the challenges of weed control without
biotechnology or modern chemistry. She noted that kind of weed control
necessitates substantial additional labor on the part of farmers.
"You can't just spray the herbicide and go play golf," said Delate. "You're going to
have be out there routinely monitoring your weeds."
Delate also noted that the current high prices for conventional corn and beans,
driven in part by biofuels, are currently limiting interest in switching to organic
crop production. But Delate pointed out high prices for conventional commodities
are highly cyclical, while premium prices for organic crops are consistent.
"I think the issue here is a lot of folks that might have considered transitioning are
looking at the prices for corn because of the ethanol boom," Delate speculated.
"How long that boom's going to last, how real it is or how much it's being propped
by subsidies is another whole debate," she added. "The organic premiums are
real, they've been holding strong for the 10 years I've been doing organic
research, and I think they'll continue to grow."
It does seem clear that economic factors aren't the only ones limiting adoption of
organic agriculture. Jerry Rosman is executive director of the Iowa Organic
Association. He told Brownfield one challenge is finding experienced organic ag
producers to help train new ones. And Rosman said another key issue is finding
ways to transfer conventional acres from retiring farmers to young producers who
want to go organic.
"We need to find a core group of older farmers that are wanting to make some
sort of a transition and are willing to take a commitment on," Rosman said.
Rosman also said he's seen a high degree of interest in organic agriculture
among young and beginning farmers and ranchers. According to Rosman, those
young and beginning farmers and ranchers are particularly well-suited to organic
agriculture.
"In the 70s, a young farmer starting, he raised hogs - that was the mortgage
lifter," said Rosman. "And here again, in this present round, for the young man to
find something that's labor-intensive with a premium return to it, it's organics," he
added. "I view that as the mortgage lifter for the next generation."
Both Delate and Rosman emphasized that consumer demand has is providing
the pull, or depending on one's perspective, the push, toward increasing organic
production. But both also conceded that consumer demand only goes so far.
Delate said USDA currently pegs certified organic acres in Iowa at just 65,000, a
tiny fraction of the more than 23 million acres harvested for corn and soybeans
alone in Iowa this year. And Rosman confirmed the number of Iowa acres
dedicated to organic production has plateaued over the last couple of years at
between 75,000 and 100,000. That's somewhat more than USDA sees, Delate
said, due in part to the failure of some organic ag producers to file the necessary
paperwork.
That's why both Delate and Rosman are both convinced there's an important role
for federal farm policy to play in promoting organic ag production. And the 2007
farm bill may well be the most organic-friendly ever. Dr. Neil Hamilton, a farm
policy analyst with Drake University, told conference-goers here there are 20
proposed farm bill amendments that could dramatically boost the U.S. organic
industry. And Rosman pointed out organic-friendly legislation plays well to
lawmakers outside the Corn Belt.
"In my talking with the legislators it seems like the urban legislator understands
this also, which again comes back from the consumer side," Rosman said. "And
any successful market out here is driven by the consumer side."
Rosman pegs the total value of U.S. organic production at about $20 billion
annually, which he estimates at about 2.5% total U.S. food production. That,
according to Delate, comes on just 4.1 million acres or so of certified organic
production nationwide. But Rosman noted the organic ag sector is growing at
around 20% per year. And he expects that trend to continue into the foreseeable
future.