Tuesday, November 10, 2015

U.S. organic crop acreage remains low, despite high profit potentials

From 2002—when the National Organic Program (NOP) was implemented—to 2011, organic crops increased from about 1.3 million acres to almost 3.1 million acres, William McBride and Catherine Greene report for Amber Waves. From 2011 to 2014, corn acreage was up 24 percent, soybean acreage up 3 percent and wheat acreage down 3 percent, according to the U.S. Department of Agriculture.

"Despite the strong interest in organic food in the U.S., overall adoption of organic corn, soybeans, and wheat remains low, standing at less than 1 percent of the total acreage of each crop," McBride and Greene write. While data suggests "that organic crop production can bring significant returns," organic crop yields remain significantly lower than conventional production. Data shows that organic corn yields are 41 bushels per acre less than conventional yields, organic wheat yields are 9 bushels per acre less and organic soybean yields are 12 bushels per acre less. (USDA graphic)

"Total operating costs and operating plus capital costs per acre for organic corn were about $80 and $50 per acre lower, respectively, than for conventional corn," McBride and Greene write. "Conventional corn growers had significantly higher seed, fertilizer and chemical costs than organic growers but lower costs for fuel, repairs, capital and labor, as organic systems substituted manure and field operations for fertilizers and chemicals. Organic producers had higher fuel and capital costs because they used more field operations, particularly for tillage. Labor costs for organic production were also significantly higher."

Organic crops cost more to produce but bring in more money, McBride and Greene write. Organic crops have "an average additional economic costs of $83 to $98 per acre for corn, $55 to $62 per acre for wheat and $106 to $125 per acre for soybeans are incurred from organic production. Estimates of the average difference in net returns per acre for organic versus conventional production were positive and highest for corn ($51 to $66 per acre), followed by soybeans ($22 to $41 per acre), but negative for wheat (-$9 to -$2 per acre)." (USDA graphic)

Consumer prices are also different between conventional and organic crops, McBride and Greene write. "Organic corn prices ranged between about $5 to $10 per bushel higher than conventional corn prices during 2011-14, while the economic cost difference was $1.92 to $2.27 higher, indicating significant profit potential from organic corn. Likewise, organic soybean prices averaged about $10 to $15 per bushel higher than conventional soybeans during the same period, creating price premiums high enough to easily cover the additional economic costs of $6.62 to $7.81 per bushel of organic soybean production."

USDA recently awarded a $1.8 million grant to the University of Tennessee—the University of Kentucky will subcontract about $500,000—"to conduct research that may fill the gap and help organic dairies strengthen their profitability," Aimee Nelson reports for UK College of Agriculture News. Research is "specifically targeted to identify forage combinations in pastures to benefit Southern organic dairy farmers."

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