Even though organic crop production keeps ramping up, buyers aren’t talking saturation.
Craig Tomera, agronomist-buyer for Northland Organic, a St. Paul-based firm that buys organic grains throughout the Upper Midwest and sells those products worldwide, said, “there always seems to be more people wanting to get into the organic market, both domestically and internationally. We’re still finding room for growth.”
Interviewed at the recent St. Cloud Organic Farming Conference, he said his firm sources organic production from growers in Minnesota, North Dakota, South Dakota, Wisconsin, Michigan, Iowa, Missouri and Illinois.
Pricing of organic grains moves around somewhat like conventional grains. However food-grade soybeans, and often even wheat, typically run about double Chicago Board of Trade pricing.
“That’s not a predictable year-after-year guide but it gives growers a benchmark for doing their financial projections,” Tomera said.
Relating to 2008 CBOT price spikes for corn and soybeans, and price crashes this winter, Tomera said the organic markets react much more slowly. “The organic products are based more on quality and supply rather than ‘quick-trade’ speculators which suddenly impact BOT prices.”
He said there’s also a growing market for conventional, non-genetically modified organism grain products especially for the feed industry. “But the non-GMO programs that we work with are for food-grade soybeans with higher protein, larger size that get into the food market for tofu, soy milk or other non-GMO products.”
Northland Organic had some challenges on grain quality last fall due to the difficult harvest season. “That cold, somewhat cloudy summer and terrifically wet October had us concerned. But thanks to a warm and sun-filled November, organic crops did mature and quality is mostly acceptable,” Tomera said.
Soybeans are the largest volume crop for Northland which also works in organic wheats, and a food ingredient market in cooking oils from organic and non-GMO soybeans, canola, sunflower.
Tomera said the non-GMO market for soybeans increased significantly last year and he sees more increase for 2010. His firm writes pre-plant contracts on both soybeans and wheat, and also does spot buying each fall after harvest.
“We think it important that organic growers consider some contracting. It gives them a buyer, and a price they can use for budgeting purposes. But we understand why some like to operate from the open market, too. It permits the opportunity of a stronger market, plus of course the risk of a weaker market,” Tomera said.
Organic growers need the proverbial “paper trail” to guarantee to buyers the total validity of the product. “That means seed source, fields where the crop was planted, inputs on that particular piece of ground, clean-outs of equipment if going from field to field, and identity system of that crop going into storage. These same requirements are also part of getting certified as an organic grower,” Tomera said.
Northland picks up bin samples at harvest which are then delivered to their customers to make certain it meets their needs. Mid-November through April is when the bulk of Northland purchases moves from farm to handler.
Japan continues as the single biggest market for Northland Organic products but the European Union, Taiwan and other southeast Asia countries keep ramping up demand. Also growing is the market here in the United States.
Organic crops command higher prices but costs are higher, too.
In 2008, organic farmers enrolled in the Minnesota Farm Business Management Program received a premium of nearly $11 per bushel over conventional soybean prices. In the third quarter of 2009, the average price for Midwest food-grade organic soybeans was $19.52. November’s average price was $20.41.
Organic yields are usually lower, and not every bushel qualifies for premiums. In Minnesota, organic soybean yields in 2008 averaged 18 bushels per acre compared to 40 bushels for conventional beans according to the University of Minnesota’s FinBin, a database of farm financials. For 2008, FinBin data show organic soybeans returned about $80 per acre more than conventional soybeans.
Minnesota has several organic outlets including SunOpta, Northland Organic, Richland Organics, SK Food International, Natural Way Mill, Identity Ag Processing and the North Dakota Mill.
For more information, contact craig@northlandorganic.com or log on to www.northlandorganic.com.
