by Tamara Scully
The demand for organic corn, soy, and wheat for both feed and food markets is increasing. According to United States Department of Agriculture Economic Research Service’s data, organic corn acreage has increased 24 percent since 2011. Soy has shown a modest three percent increase during this same time. While organic wheat acreage decreased by three percent, overall wheat acreage in the United States also declined during that timeframe.
For commodity grain farmers seeking a profitable niche, organic corn and soybean crops command higher prices over their conventional counterparts. Even with an increase in production costs when growing certified organic field crops, as well as a potentially smaller per acre yield, the price premium received on both the feed and food markets remains high, keeping them profitable. While the premium for organic wheat was not as high, it has increased since 2013, offering renewed potential.
Perdue Agribusiness is one company interested in recruiting certified organic grain farmers. Mike Spangler, Director of Specialty Crops, Perdue Agribusiness, spoke at the recent Penn State Extension Grain Marketing Workshop.
Perdue pays a premium for domestic organic grains, “just to have it. These birds have just eight weeks to grow,” so having certified feed available on-hand is crucial in supplying certified organic poultry to the market.
“The demand and the supply in the U.S. are far apart from each other,” he said of certified organic grains.
Domestically grown organic grain costs more. But the value is captured by not having to ship it from distant locales, Sprangler said. Imports are often rejected during government inspection for weed seeds. While weeds are a problem domestically as well, rejected imports are shipped right back overseas, so foreign supplies have to be cleaned three or four times prior to shipping.
The organic poultry market is growing, Spangler said, with over 300 percent growth in the broiler industry for Perdue over the past three years, since the company purchased Coleman Organic, the largest organic poultry company in the country.
To meet the demands in this market, Perdue needs organic corn, wheat and soybeans. The soybeans are turned into meal, all of which is mechanically expressed, as solvents are not allowed under the National Organic Program (NOP).
Perdue consumes an amount equal to one-half of the annual yield of certified organic field crops – soy, corn and wheat – produced in the U.S. United States production per year is: 130,000 acres of organic soy currently in production at a 30 bushels/acre yield; 230,000 acres of corn with a 120 bushel/acre yield; and 315,000 acres of wheat, with a 40 bushel/acre yield, according to Spangler.
Perdue’s need for organic soy amounts to more than 100 percent of the annual domestic yield. The company is struggling with how to get organic grain to the mills and not run out.
Perdue’s organic feed mill capacity is primarily located in the East, yet most of the organic grain grown in the United States is from the Midwest. Because the United States cannot meet the demand for organic grains, they are forced to purchase from overseas, particularly Argentina and India, as well as Canada and Turkey.
With a 60-90 day delay in getting crops from Argentina to Perdue’s feed mills, due to “many different moving parts,” such as USDA inspections of the freight, as well as freight costs, “we like to have that local origination. The chickens don’t wait.”
They test ever load for GMO presence, and reject anything above the 1.5 percent Non-GMO Project limits on all 10 corn traits, such as Roundup Ready or Liberty Link, associated with genetic modifications, Spangler said. Co-mingled storage and handling facilities, as well as drift from nearby conventional fields, also cause issues. While GMO contamination or pesticide drift is a major concern in the Midwest, East coast growers don’t have as much of an issue.
Market for organic grain
“We’ve been chasing the market,” Spangler said. “We can usually find you a market,” whether the crop is used as feed, or sold to elsewhere. The multiplier on organic corn is typically two-three times that of conventional, he said, although when corn was at $7/bushel, then the organic margin was lower.
Perdue not only utilizes organic grain for livestock feed, it also sells grain to others. Food grade grains generate an even higher premium than feed grade. Perdue sells to layer and dairy markets, as well as outside customers. Spangler does not think that the premium for organic grains will disappear anytime in the near future, with demand from many market sectors.
Perdue provides a one-week minimum notice to farmers prior to taking possession, and pays next day or within 10 days, depending on arrangements with the farm. They can test loads prior to bringing them in for GMO concerns.
On-farm handling of organic corn requires cleaning of harvesting equipment used on conventional products, to prevent contamination. Also, organic corn must be stored separately than conventional corn.
Andrew Smyre, Agronomist with Perdue Agribusiness, advised that there are approved organic pesticides for corn borer, addressing some audience concerns about the damage from this pest. Weeds are on of the main issues in organic field crop production. Rolling and crimping of a rye cover crop is one promising technique to reduce weed pressure, he said.
“Profitability is much higher,” with the organic corn, Smyre said. “Fertility isn’t the issue. Organic systems rely on cover crops, It’s how you manage that system,” that’s important for organic success.
Smyre recommends that farmers consider micro-managing some acres for organic production, as profit margins are high. Seed cost has come down recently, and is available at about the same price as conventional corn seed. Hybrid organic corn seed is available.
Perdue is working on a plan to assist conventional farmers with transitioning some acreage to organic corn production, Spangler said. One issue is the lack of a non-GMO premium in the market. During the required 36 month period from last application of prohibited substances to first certified organic planting, there is no current incentive to offer farmers. Raising the yield on already certified organic corn acres would be key to increasing the supply in the short term. Perdue is committed to “learn what it takes,” to do so, and to assist farmers with new techniques for increased organic success.
Spangler predicts that the demand for organic corn, soybeans, and wheat, to supply feed to the burgeoning organic meat production market, as well as for direct human consumption, will continue to grow, and hopes that grain farmers will give consideration to certifying some acreage for organic production, capturing an increased profit margin.
“I hope we get more organic acreage,” he said.