Consumers want organic, so why are farmers wary?

Canada’s organic industry has a popularity problem. Each year, Canadians buy more organic beef, more organic breakfast cereal and more organic soymilk than the previous year. The public’s hunger for organic food seems insatiable and consumer demand is expected to expand exponentially, but can supply meet the demand?

Paying $8 for a small box of breakfast cereal might seem outrageous. But an increasing number of Canadians are willing to pay 10, 20 or 40 percent more for certain grocery store items, if the food is produced organically

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The Canadian Organic Value Chain Roundtable, a coalition of government and industry representatives from the organic sector, published a document last fall on organic grains and oilseeds. It said 58 percent of Canadians buy organic products every week, and sales of organic food and beverages grew from $2 billion in 2008 to nearly $3 billion in 2012.

Consumers cite many reasons for buying organics, most of them involving the perception that organic food is more nutritious, better for the environment, or is in some other way healthier than conventionally raised food.

Value Chain Roundtable leaders say organic food and beverage sales could increase to five percent of the Canadian market by 2018 from 1.7 percent in 2013.

The prediction may be accurate because organic food had a 4.3 percent share of the U.S. market in 2012, according to the 2014 World of Organic Agriculture report, an annual publication featuring organic trends and statistics.

Tripling sales in Canada over five years, albeit from a low level, doesn’t seem like it could trigger a crisis.

However, there is an underlying weakness in Canada’s organic sector. Canada’s organic industry may not be able to keep up with consumer demand because only a fraction of conventional producers are converting to organic, despite record prices for organic grains and oilseeds.

Canada could be in an absurd situation if demand for organic food grows as expected and if industry leaders can’t persuade conventional growers to give up pesticides, fertilizer and biotechnology.

A country that is one of the largest exporters of grains and oilseeds in the world could become a net importer of organic grains and oilseeds.

It’s hard to pin down the exact number of farmers who produce organic grains and oilseeds, but there is little doubt the number has declined in parts of Canada over the last five to seven years.

For example, the Prairies lost hundreds of organic field crop producers from 2009-12.

“We don’t keep good statistics but we think it’s between 20 and 40 percent of organic producers left in the three years of the recession,” said Laura Telford, business development specialist for organic marketing with Manitoba Agriculture.

Telford said the exodus was the most dramatic in Saskatchewan, which at one time had more than 1,200 organic farms.

“These days I’d be surprised if it was much over 950,” said Telford, a member of the organic roundtable.

Doug Pchajek, manager of the Sask­atchewan agriculture ministry’s crops and irrigation branch, said the province had 55 percent of Canada’s certified organic land in 2009.

“The organic sector estimates that there was a 15 to 20 percent reduction in certified organic acres between 2008 and 2013,” he said in an email.

Farmers quit the sector when organic grain prices crashed during the global economic collapse of 2008-11. Conventional grains and oilseeds hit unheard of highs during the same period. Wheat briefly topped $20 per bushel in 2008 and soybeans traded at higher than $17.50 per bu. in 2012.

Biofuel production, minimal stocks and increased demand from emerging markets kept prices high for several years. Prices have dropped in the last 24 months, but organic grain spiked in North America when production couldn’t satisfy demand:

  • Organic milling wheat sold for $20 per bu. in January 2014, and organic feed wheat hit $16 per bu. in Alberta, while regular feed wheat sold for $4 per bu. last January.
  • Organic flax topped $35 per bu. in 2014, while ordinary flax traded for $13 to $14 per bu.

Organic prices in the U.S.

The U.S. Department of Agriculture publishes a bi-weekly report on organic grain prices. Average prices as of Jan. 7, 2015 ($US/bu.):

  • Feed grade corn $11.62
  • Feed grade soybeans $23.47
  • Feed grade barley $7.46
  • Feed grade oats $5.89
  • Feed grade wheat $21.00

Source USDA

It’s difficult to sympathize with farmers who receive $21 a bu. for organic wheat, but price spikes have consequences. It creates a chaotic market for buyers, and milling grain and organic livestock feed becomes unaffordable. This, in turn, threatens organic sales.

“As we came out of a recession, nobody was prepared for this huge rebound in organic (demand),” Telford said.

“So we get stuck in the bind that we are currently in.”

To get out of this quagmire of negligible acreage expansion and rabid demand for organic grains, Telford and others have developed a sales pitch to attract conventional producers.

The pitch can be summed up in a word: profitability.

“There’s a group of us who have always thought that we needed to have the business case for organic in our back pocket,” Telford said.

The roundtable laid out the economics of organic grain and oilseed production last fall in a document titled the Organic Advantage: Transition to Higher Profits:

  • Organic input costs are half of conventional inputs.
  • An organic grower keeps $58 of every $100 generated, compared to $31 for a conventional farmer.
  • Using 2014 prices and assuming a farmer is growing wheat, durum, oats, barley and flax in Saskatchewan’s brown soil zone, a conventional farmer would earn returns of $60.05 per acre and an organic farmer would earn $189.49 per acre.

Tom Manley, owner of Homestead Organics, which sells organic grain and provides agronomic services to organic producers in eastern Ontario, said a profitability pitch is the obvious answer.

He said recruiting producers to join the cause based on philosophical, environmental and social arguments won’t work because the industry has most of the farmers who agree with those principles.

“Those who are sensitive to that discussion have already converted. The rest of them, (we) need to a do a business case.”

Roundtable co-chair Gunta Vitins said the business case for organics extends beyond the price of grain and the cost of inputs.

Vitins, who runs a consulting company in Vancouver, said an increasing number of consumers want to buy sustainably produced food. Agriculture has to meet that expectation because ignoring the trend is a business risk.

Telford and other organic leaders will roll out the economic arguments this spring. She is developing a new organization that will try to boost organic production in Manitoba, Saskatchewan and Alberta.

The details aren’t finalized, but Telford and others will appear at conventional grower meetings and lay out the business case for organic conversion.

Paul Gregory, who runs Interlake Forage Seeds in Fisher Branch, Man., isn’t sold on the strategy. He fears the economic pitch could attract conventional growers who know nothing about organic production methods. The priority should be quality organic farmers rather than quantity, he said.

“I think a huge problem in the industry … is that it’s not for the average Joe,” said Gregory, who buys organic forage seed from certified growers.

“There’s opportunity in the industry, but you better have perfect drainage and you better do your homework…. (Some of) these organic guys, and conventional guys, they don’t know their weeds, they don’t know their insects and they don’t know their diseases.”

There are a number of barriers to transition, but three stand out:

Barrier #1:

Farming organically is hard

Convincing farmers to switch to a complex production system won’t be simple in an age of big acreages, in which producers favour hardy crops that require inoculants and glyphosate and little else.

Conventional farming primarily follows a prescription model. Farmers who have an issue with soil fertility, disease or weeds call an input dealer for the appropriate product and the problem usually disappears.

“In organic production, if you have a problem it’s a long, drawn out process,” Manley said.

“While it takes about three years to transition the land to organic, it takes about five to 10 years to transition the farmer to organic because there is a whole new set of management skills and practices and a mindset that has to shift.”

Barrier #2:

Transition, transition, transition

Farmers who decide to switch to organic grain production this spring won’t be organic growers until 2018.

Organic wheat may be $20 per bu. right now, but there’s no certainty that prices will stay high for 36 months.

“What’s stopping people from thinking about organic is that three years of risk,” Telford said.

“They don’t know anything about organic production and they won’t get the organic premium.”

Vitins said the transition period is a risk, but demand for organic food is robust. Supply and demand fundamentals suggest organic grain prices will remain high.

Barrier #3:

Do conventional farmers want to be associated with organic?

Many Canadian farmers maintain a “live and let live” attitude when it comes to agricultural practices. If a neighbour chooses to farm without pesticides, for instance, that is his choice.

Still, the furious debate over genetic modification is not going away, and pesticides remain controversial. Organic advocates frequently make provocative and derogatory comments about conventional agriculture.

Defenders of conventional farming respond with equally hostile language. The nastiness has hardened positions and led to a philosophical chasm between the two systems.

Telford said organic agriculture is often presented as a new paradigm, or a new and better way of thinking. That sort of argument likely offends conventional farmers because it suggests that established practices are a colossal failure.

She said organic advocates should turn down the volume.

“I’m not telling people to stop talking about GMOs and all that stuff, but if the organic sector is going to have any inroads with the producers they hope to attract, it’s not going to be through that rhetoric, it’s going to be through the business case for organic.”

Manley said the enmity between organic and conventional is overstated. The battle may have bred a few hard-liners, but it’s incorrect to say most Canadian producers are hostile to organic.

“Yes. There was a lot of antagonistic argumentation for years. I believe now we’re beyond that.”

Will conventional growers convert?

Manley said the price of grains and oilseeds will ultimately answer that question.

Conventional growers have had little reason to switch to organic since 2008 because most crops have been profitable.

However, some farmers have started kicking the organic tires over the last year as grain prices dropped.

“We’re starting to get more people calling us,” Manley said.

“People are paying attention again.”

Vitins said farmers have to recognize that consumer dynamics have evolved. North Americans expect more transparency, and there is increasing pressure on farmers to adopt sustainable methods of growing food.

She said it makes business sense to get ahead of the curve and deliver what the public wants.

“For those that are forward looking, organic represents opportunity.”

See also: U.S. a ready-made market for prairie organics

See also: Which statistics?

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  • Rob Bright

    Very encouraging. This could open the door for a new generation of young farmers/new farmers who want to fill the gaps in the missing supply for the organics market.

    • richard

      asuming they have the money or inheriate the land….like 1 in 10 live below the poverty line in canada, 1in 8 aren’t adaquitly feed

  • richard

    I could be wrong but it really looks like nothing more complex than two competing visions of agriculture…..One being pedal to the metal, slave to technology, war with nature, energy addictive, ram anything down your gullet, entropy……versus food is sacrosanct…… And what the techno priests completely miss in all their rage and bluster is that its not the producers who will determine the outcome….its the consumers…. The shift is on… the outcome is clear….get over it.

  • hyperzombie

    Really, Consumers want cheap foreign Organics, not homegrown ones.They have fallen for the marketing not the product, North American Organic farmers are just paying for Marketing of foreign Organics that just will continue to cut into there bottom line.

    • Dayton

      There was a time “Organic” was called a passing fad, trendy. Market share is continually moving in one direction. Now it’s mainstream and here to stay. Best of all farmers who have decided to farm with these methods are profitable or should I say sustainable.

      • jay

        Sustainable….. possibly

        How do you keep weeds under control? Tillage which is proven to be very detrimental to soil Health, it’s hard on microbiology lots of peer reviewed work on that.

        Also nutrients N is easy can make your own using legumes.

        P is hard cause when you ship your crop off you are shipping P as well hard to get that back without asking for the waste back from your consumers.

        K is similar but have enough in Prairie soils to last a long time.

        So without resorting to some kind of fertilizer you will eventually mine out your soils that is not sustainability.

        So that means you must at some point start using organic fertilizers, which especially when it comes to P and K is simply mined so not much difference between organic and conventional fertilizer. Except a stamp of approval by an inspector.

        As far as pesticides

        Copper sulfate as a fungicide
        Gerbbilic acid as a growth regulator
        Preacetic acid
        Rotenone (links to this and parkinsons)
        Virus sprays.

        And alot of other are all allowed on organic fields in canada. So to say organic production is pesticide free is a lie.

        • Dayton

          Certified organic states: “No” synthetic pesticides/ fertilizer. As far as FM control there is a market for that so not to worry. High yielding conventional production sucks the life out of the land. Low production, crop rotation with minimum tillage of legumes does not. See the benefits of Clover as an example of pulling available nutrients from 6 to 8 ft. depth creating pathways for the future. Tell me why are discs and cultivators so popular all of a sudden if your no till is the answer? Our farm yields have increased by 100% in the last 15 years, wonder why? We learn how to adapt.

          • jay

            Synthetic or not organic production can still use pesticides. That was my point to claim organic production is pesticide free is a stretch

            No reason why conventional growers can’t use clover and alfalfa to do the same things for the soil that organic growers do.

            No reason that conventional growers can’t have better rotations (not many do granted)

            Our yields in last 20 years have increased by at least 100% and our soil organic matter has increased by 3%

            Soil health is better by all measures.

            Organic production done right can improve soil health but done wrong is mearly the wheat fallow system that our grandparents did that turned the prairie into a dust bowl.

            Organic production does not have a monopoly on soil health improvements lots of conventional guys doing lots of great things.

            Also how do you address your nutrient issues when there is no more nutrients left for your deep rooted crops to scavenge for you.

            In short to say all organic ag is good and all conventional ag is bad is shirt sighted and not looking in depth at the issue.

          • Dayton

            We grew non GMO Canola and HRSW in the early 80’s yielding 40 bu.+ and your saying you have doubled that? … How has your input cost and price of products compared? Quite the concept “growing more for less”.
            You haven’t answered why most “NoTill” farmers are making a dust bowl every spring with high speed discs and heavy harrows?
            Sure some organic farmers (fruit and vegetable) use non synthetic pesticides, we haven’t but the standards are quite clear which ones are prohibited. There is a reason for that. 0% chance of our products ending up in any water source or in the food chain. You must be farming in a bubble if you have no drift (overlap) or cross pollination. As far a nutrient uptake goes look around your farm yard. Native grass and trees have been growing for a couple thousand years quite comfortably.
            It’s nice to see conventional farmers adopting some organic practices, like legume plowdow, increased seeding rates, competitive variety’s and tracking systems from field to fork. Had the agronomy steered towards less high input strategy with less chemical and fertilizer 25 years ago Organic’s may have been a non starter. However you and I both now that isn’t the case is it?

          • jay

            Native grass and trees don’t export any nutrients that is not taken off the land as meat and the meat is consumed and used by predators that stay on the prairies

            Native systems are closed current organic systems are not

            As far as conventional guys going back to tillage that is because they are growing the wrong crop mix. And not using enough water and feeding and utilizing the soil correctly.

            Canola up at to 40-60 bu/ ac from 20-30 in the 80’s

            Wheat Up To 60-80 from 30-40 in the 80’s

            Most tillage here is from organic wheat fallow guys

            As for ROI make a 2-1 min return on every input we apply have yield maps, check strips and data to prove that.

          • Dayton

            Must be a lot of farmers growing the wrong crop mix. 60 km. winds and soil is moving today and it’s only Feb. Your organic wheat fallow guys will be addressed as black summer fallow is frowned upon. Rules state a plow down should be implemented at least 1 in 4 years. But through an inspector I’m sure they have been notified.

            “As for ROI make a 2-1 min return on every input we apply have yield maps, check strips and data to prove that.” Is that net for every crop?

            I’m sure Broadacres and One Earth used a lot of data too. I prefer my accountant and banker to collect the results. We are closer to 5-1 ROI net on crop expenses less land and equipt. But that’s us we have seen 10 -1 and so have many others on certain crops. Some less but seldom at a net loss. Under a tight margins system you need perfect weather every year. Lots of capital and labor intensive. Most of our grain is delivered before seeding so we go fishing in June or until our first plow down mid July. Then wait for harvest.

        • Two Americas

          “Gibberellic acid,” I think you mean, a hormone found in plants and fungi. Its chemical formula is C₁₉H₂₂O₆.

  • Welderone

    I just bought organic bread at Safeway. It cost $4.89 for a large loaf. When organic wheat was $10.00 a bushel it might have been 30 cents cheaper. So organic wheat this year is over $20.00 a bushel. So it is just a myth the price of bread is bringing organic farmers 20 dollars plus when they sell their wheat. The markets are totally controlled by supply and demand. Well done organic growers! You may have many good future years with organic grains.

  • richard

    this is very encouraging and mirrors what we are going through in Kenya as most consumers turns to organic produce and farmers revert back conventional farming the is always a question on sustainable production volumes to sustain the business case. The Economic sense and consumer demands are two drivers which Organic advocates can build their case upon to encourage the farmers but i must admit it will take like 3-4 years before fruits are realised.


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