Feeding the Organic Supply Chain
Organic food is a hot market in the U.S. The Organic Trade Association says that sales over the last five years have grown 35 percent. But there’s a problem in the supply chain – not enough organic grain.
Many producers in the farm belt aren’t willing to take on organic production despite a hefty price premium. That has left organic food companies scrambling to find enough raw ingredients for the products that hit grocery store shelves. Just as corn and soybeans dominate conventional processed food and meat, these same grains are often key ingredients for organic foods.
“In the last three or four or five years with tremendous change in the corn markets we have seen the supply has not kept up with the livestock marketplaces,” said George Siemon, CEO Organic Valley, one of the country’s largest organic food companies.
Siemon says he needs more grain farmers to grow organically – that is without pesticides or genetically modified organisms. Organic Valley even offers a 3-year contract that comes with free technical support for farmers to get started. The company’s co-op wants to buy organic grain to feed its livestock so the meat can be labeled organic and sold at a higher price than the conventional product.
The partnership between organic food company and organic producer is vital for Organic Valley. And it has worked for Tom Frantzen, who farms in New Hampton, Iowa.
“Organic Valley has been really important to our operation," Frantzen said. "You’ve got to have a differentiated market, or else it never works.”
Frantzen’s farm hasn’t always been organic and he says the transition from conventional farming was difficult. He sells some of his grain to Organic Valley, but most of it stays on the farm.
It takes three years of producing without pesticides before an operation can become certified organic by the U.S. Department of Agriculture. It’s a huge commitment that doesn’t happen overnight. Now they feed their 65 cattle and 500 hogs the corn, soybeans and hay they grow on the farm and sell the meat to Organic Valley.
"If our strategy here was a short-term buck it wouldn’t have worked. I doubt if we would still be organic, either," Frantzen said. "I think the issue in regards to organic production, we need people who have really thought through what they want out of life and what’s important to them and how to make that sustain itself long-term into the future.”
Ultimately, farmers have to do what’s best for their farms.
"Farmers run a business,” said Kurt Lawton, editor for the Corn and Soybean Digest. “Just like any business on Main Street they have to look at what’s most profitable given their labor, equipment, storage facilities, as well as their landlords.”
Many farmers see going organic as a huge risk, especially during the recent boom in prices for conventional products. Frantzen said organic farming is profitable and his crop yields from his farm’s more than 300 acres are comparable to conventional neighbors. Kathleen Delate, an organic researcher at Iowa State, can back that up.
At Iowa State’s Neely-Kinyon Ranch near Greenfield in southwest Iowa, Delate has test plots of conventional and organic corn and soybeans side by side.
"They’re completely randomized; we set it up like that on purpose so that when anybody comes in they can’t tell which ones organic and which ones conventional," Delate said. "It’s shown to be true… I always have to pull out the map, too.”
Delate uses her research to help farmers make the change from conventional to organic. But the biggest obstacle, she says, is not in the field – it’s in the marketing.
“It’s just very, very convenient the way the conventional system is set up right now for farmers to follow that system – that is you just take your crops right down the road to your elevator," Delate said. "Whereas organic crops you have to have an organic buyer.”
The buyer uncertainty is enough to keep many farmers from wanting to make the change. The latest data from the Iowa Department of Agriculture show the state has about 127,000 certified organic acres. That’s barely a sliver of the roughly 30 million acres of productive Iowa farmland.