Surging demand from consumers and processors has created a golden era for organic farmers across the nation.
Fred Brossy and his wife, Judy, have farmed 300 acres organically near Shoshone, Idaho, for 20 years and have seen that demand multiply.
“We have more calls for organic beans than we could possibly meet,” he said.
The price premium for organic depends on the crop, he said. While the price he’s getting for his wheat is double that of conventional wheat, his potatoes and hay bring a smaller premium.
The cash price of organic hard red winter wheat this week is about $19 per bushel, compared with about $6 a bushel for conventional hard red wheat at Portland, according to USDA.
Organic producer Nate Jones in King Hill, Idaho, farms 680 acres of crops, pasture, cattle and a truck garden. He converted to organic production in 1987 and became certified in 1990.
“These are some of the best of times in farming for me,” he said. “Buyers are calling wanting to know what you’re growing and asking, ‘What’s it going to cost me?’”
Organic market grows
Organic foods have grown from novel to niche during the 13 years the USDA has officially certified organic production. As more consumers include organic fruits, vegetables and processed foods on their shopping lists, production has struggled to keep up with demand.
While organic foods represent nearly 5 percent of the total U.S. food market, less than 1 percent of the 914 million acres of U.S. farmland is certified for organic production.
Organic imports also continue to grow.
While some imported foods such as coffee and tropical fruits are not grown in the U.S. — with the exception of Hawaii — the import of grain for food and feed is a different story. The U.S. is the world’s largest producer of soybeans and corn, yet $219 million of organic soybeans and corn were imported in 2014, according to the Organic Trade Association.
U.S. organic sales, including non-food products, hit $39.1 billion in 2014, an 11.3 percent increase over the previous year, while sales of comparable conventional products grew by 3 percent, according to OTA. Imports of 21 organic food products tracked by USDA totaled $1.3 billion.
By comparison, overall U.S. agricultural sales were $394 billion in 2012, according to the USDA Census of Agriculture.
A shortfall in U.S. organic production has suppliers to domestic markets unable to fill all their orders and going farther afield to secure supplies. It’s also forcing processors to hold off on new product development, said Nate Lewis, OTA senior crop and livestock specialist.
In addition to shortfalls in organic produce and other crops, organic milk is in short supply. More private labels are emerging as retailers offer organic milk under their own brands, and the organic milk cooperatives are recruiting new members to fill their tanker trucks, Lewis said.
A gallon of organic whole milk in April averaged $4.28, compared with conventional whole milk, which averaged $3.62, according to USDA.
The organic dairy sector posted $5.46 billion in sales in 2014, an 11 percent jump from 2013. But the availability and price of organic feed is limiting milk production, with the price of feed increasing faster than processors can raise the price of organic milk, he said.
The shortage is getting to be a crisis in the grain sector, both in animal feed and ingredients for ready-to-eat foods, he said.
The phone is “ringing off the hook” at Hummingbird Wholesale, an organic wholesaler and distributor in Eugene, Ore., general manager Justin Freeman said.
The company primarily supplies such items as nuts, seeds, dried fruit, beans, grains and flour in bulk to independent and co-op grocery stores. It also sells to processors and restaurants. But now it’s getting calls from more processors and restaurants and institutional buyers such as universities and hospitals.
“Everyone who eats is looking for organics these days. We’re having to tell a lot of folks there’s just not enough to go around,” he said.
Farmers are also calling, interested in organic opportunities with the company, he said.
John O’Connor, owner of Farm Management Services in Buhl, Idaho, which manages 160 organic acres and owns 20, is getting calls, too.
He’s had at least six unsolicited calls from buyers looking for dry beans and small grains from as far away as the East Coast. He’s also seen premiums for organic crops increase even as prices for their conventional counterparts have decreased.
Increasing demand is plain to see in the growing organic options at grocery stores. At the Fred Meyer store in Twin Falls, Idaho, organic offerings have increased at least 300 percent in the last five years, he said.
Southern Idaho is booming with an influx of food processors and expansions, and some of those processors have expressed their need for more organic production.
California-based Amy’s Kitchen, which already buys organic vegetables from Idaho growers, set up shop in Pocatello and is looking for even more organic production to feed its growing business. The company manufactures organic and non-genetically modified convenience and frozen foods.
“Organic is a top priority for us — about 95 percent or more of our ingredients are organic. To supply our production needs this year, our raw material needs have increased by about 15 to 18 percent,” said John Paneno, Amy’s director of sourcing.
It’s always been a challenge for Amy’s to find the high-quality organic ingredients it requires for its food products, and demand for organic ingredients has gone up across the board, he said.
More food companies are insisting on non-genetically modified ingredients, and organic is non-GMO. Also, consumers are becoming more educated and concerned about their food choices, so consumer demand is increasing, he said.
“Overall, we’re also seeing that the younger generation is more interested in their food choices and is seeking the assurance of organic certification,” he said.
Other processors are also entering the market or are increasing their organic production.
California-based Clif Bar is building a bakery in Twin Falls and has expressed a desire to work with local growers to purchase organic milled grain.
Chobani Greek Yogurt, based in upstate New York, built the largest yogurt plant in the world in Twin Falls in 2012 and is trying to find an avenue for its milk producers to feed their cows organic feed.
Seneca, a long-time Buhl, Idaho, processor, is soliciting growers to raise organic beans and sweet corn, and Mountain States Oilseeds in American Falls is hungry for more organic mustard.
Organic growers recognize the need for more production, but some say they don’t want an explosion that would saturate the market.
Jones said he likes the current scenario of buyers calling him “instead of me calling them asking what they’ll pay.”
OTA’s Lewis said that’s a valid concern and more production could eventually cause prices to decrease, but in no way has demand hit a ceiling. More production would stabilize supply and spur even more demand, he said.
A lot of processors are testing the waters on organic but are holding off going full bore because supplies are tight, he said.
And while prices for some organic crops can be double or even quadruple those of their conventional counterparts, going organic is a “pretty tough proposition for people looking at it from a strictly dollars and cents perspective,” he said.
There’s an awful lot of opportunity for growers in the organic market, but there are also significant barriers, he said.
Organic production has lots of room to grow. But in addition to tight water supplies, high land prices and labor shortages faced by growers as a whole in Western agriculture, getting into organic farming has unique challenges, said Cathy Calfo, executive director of California Certified Organic Farming, one of the many organizations and agencies that are accredited by the USDA to certify organic farms and processors.
The fundamental piece of organic systems is building the soil to support organic production, and USDA’s national organic standards require a three-year transition period from conventional farming. No synthetic chemicals can be used during that time, she said.
That transition period can be costly because farmers face lower yields but are not able to sell the crop as organic to capture the organic price premium, she said.
The most recent farm bill that Congress passed “is not reflective of that challenge. Growing organic production is going to come down to investments in how we address the economic challenge of that three-year period,” she said.
OTA’s Lewis agrees the transition period is the most significant barrier to increasing organic production and said some processors and retailers that rely on organic production are stepping in to offer economic incentives, but other challenges remain.
Crop insurance is another issue. Some crop insurance is available for organic production but it doesn’t cover the full value of the crops. Without that coverage, it’s difficult to get an operating loan, he said.
“The safety net is just not there for organic producers,” he said.
Research to combat weeds and pests in organic systems is also woefully lacking, adding to the risks of organic farming, he said.
Farmers Brossy and Jones said once an organic system is established, yields can match conventional yields on some crops, such as dry beans.
Brossy said organic potatoes and beets won’t yield as much as their conventional counterparts, and Jones said most organic crops get two-thirds to three-fourths the yield of conventional crops. But over time, organic will have lower input costs, the farmers said.
Aside from the economic challenges of increasing production, one intriguing obstacle is the cultural element, Lewis said.
The coffee-shop talk and what a producer’s neighboring conventional farmers might say about going organic “could be the straw that breaks the camel’s back” as a farmer decides whether to convert, he said.
Organic farmers Brossy and Jones acknowledge that organic farming is not for everyone.
For the majority of organic farmers Brossy knows, organic farming is a philosophy. It’s about taking care of the soil and the environment. It’s impossible to do “no” harm in farming, but organic growers strive to minimize the harm, he said.
“There’s no way you’re in it just to make a buck. It’s too much work just to do it for the money,” he said.
Organic systems demand a lot of crop rotation, and if a grower doesn’t adhere to that he’s going to stub his toe quickly. Eventually, he’ll find it too hard to keep the system going and won’t last, he said.
“It’s a different kind of person who does organic farming,” Jones said.
“It takes talent. Many conventional farmers are not cut out for it,” he said.