Profit reaped in organics: report

While statistics show good returns, some growers wonder if premiums will continue

Wally Hamm says he can’t understand why farmers aren’t converting to organics in droves, given today’s farm economics.

The general manager of Pro-Cert Organic Systems recently produced a widely distributed document called The Organic Advantage, which detailed the financial benefits of organic farming in 2014.

The report shows that organic prices for most crops grown in Western Canada are expected to be two to three times more than conventional prices this year.

It will result in similar or slightly higher gross returns per acre for organic farms after taking into account lower organic yields.

However, net returns for organic farms should be 75 percent higher than conventional operations be-cause of vastly lower variable costs.

Hamm’s numbers show the variable costs on a typical organic farm would be $70 per acre compared to $158 on a conventional operation.

“An organic producer can spend half as much per acre and earn almost twice as much on a net basis before fixed costs than his conventional neighbour,” he said.

Hamm said there has been a muted response to his 16-page document.

He was expecting his phone to be ringing off the hook, and while there has been some increased interest from farmers wanting to become certified, it has been far from the response he was anticipating.

“Why are those statistics not taking root?” he said.

Blair Rutter, executive director of Western Canadian Wheat Growers Association, said many growers are content with the returns they’ve been generating in conventional farming and are not thrilled by the idea of converting their land to organic production.

“It takes a bit of a commitment, and if what you’re doing is working for you, some farmers see little reason to change,” he said.

Rutter said conventional growers also worry about the weed pressure if they convert to organics.

While the economics look promising this year, farmers wonder what they will look like once they have completed the three-year transition.

“The premiums may be there today, but will they be there tomorrow?” he said.

WCWGA director Cherilyn Nagel said Hamm’s sales pitch isn’t resonating with her despite the appealing economics.

“I’m a really strong supporter of science,” she said.

She doesn’t want to forego the use of crop protection products that have become such an integral part of her farm near Mossbank, Sask.

“There is such benefits using fungicide on chickpeas. The plant is healthy, it’s vibrant,” said Nagel.

She also embraces genetic modification and doesn’t want to close the door on future benefits that the technology can deliver.

“The idea that I would shun the science in return for a certification that is based on an economic benefit just doesn’t work for us,” she said.

Hamm said growers should consider making the transition to organic agriculture because that’s where food demand is gravitating.

North American supply falls far short of the demand, which means premiums will be around for a long time.

“We feel that the premiums that are there right now for organic (crops) maybe even aren’t high enough.”

Hamm said he read a newspaper article recently forecasting negative gross margins for most crops grown in Manitoba. He said those crops are expected to generate positive gross margins under organic production.

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