Iowa Farmer Today
11-28-07
Ethanol competition drives organic prices to records
By Gene Lucht, Iowa Farmer Today
AMES --- 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.