Changemaker Award Recipients
MOSES Conference Highlights
Spring Transition for Grazing
Pages 5, 7, 9
Page 10
Page 13 TM
Volume 28 | Number 2
Midwest Organic & Sustainable Education Service
March | April 2020
2019 sees rise in organic field crop acres harvested, new certifications By Audrey Alwell
Efforts to educate farmers and support their transition to organic crop production are paying off. A new report from Mercaris, the data service and online trading platform for organic and non-GMO markets, shows a 13% rise in certified organic field crop acreage in the U.S. in 2019, and a 14% jump in the number of certified organic field crop operations. Nationwide last year, farmers harvested nearly 3.3 million acres of certified organic field crops, which includes corn, soybeans, wheat, oats, hay, and rye. That number is 13% higher than Mercaris reported for the 2018 harvest, which was only 2% higher than the prior year. “Despite what can be fairly described as the most difficult growing season in more than a decade, 2019 was a remarkable year for organic production,” said Ryan Koory, Director of Economics at Mercaris. “Overall acreage expansion did prove to be limited by weather throughout the growing season. That said, the addition of new organic growers suggests that 2020 could see organic production reach new record highs.” The final Mercaris 2019 Acreage Report shows that the number of growers converting land to organic production escalated significantly in 2019, with 908 newly certified organic field crop operations for a total of 18,556 across the country—that’s a 14% increase over 2018, which had only a 3% increase over the prior year.
“While growth in the organic industry was anticipated, the 14% year/year expansion in certified organic field crop operations well exceeded expectations,” Koory added. MOSES Organic Specialist and OGRAIN Crop Specialist Carmen Fernholz viewed the report’s findings with cautious optimism. “Organic field crop production is moving quickly into mainstream agriculture,” Fernholz said. “That could mean that a lot of conventional growers are jumping into organic for the price point since conventional prices have been so depressed. But organic is really about so much more than a premium price— it’s a whole system of working with the land, creating diverse rotations, and building the soil.”
Fernholz cautioned that farmers need to change their mindset when they go into organics. “We have to be prepared for downward pressure on prices if farmers approach organic production and marketing with a conventional production and marketing mindset,” he added. The number of acres of organic corn harvested per operation was down last year, as Mercaris forecast in the December Organic Broadcaster. However, 13% more certified organic operations harvested organic corn in 2019, which offset those per-operation production losses. The states with the highest number of organic field crop acres harvested are California, Montana, Texas, and New York. Wisconsin ranked fifth with 207,271 harvested acres or 6.3% of the country’s organic field crop harvest. One of the factors contributing to the rise in organic field crop acres harvested was organic wheat production, which was 16% higher than in 2018. That increase was fueled by growth in the High Plains region, the report said. The report also showed 1.1 million acres of organic hay and alfalfa were harvested in 2019, up 8% from the previous year with 11% more certified organic operations harvesting hay. The full report is available for purchase online at mercaris.com/analysis-acreage. Audrey Alwell is the Communications Director for MOSES.
New tools, bridge loan can help farmers transition to organic grain production By Paul Dietmann
PO Box 339, Spring Valley, WI 54767
Organic grain production might be an appealing option to conventional grain growers who have been contending with corn prices around $3.50 and soybeans in the neighborhood of $8.25. However, just as it takes agronomic expertise to successfully grow organic crops, it takes economic expertise to manage the farm’s cash flow and working capital during the transition years. Cash flow is a measure of all the cash coming into the farm and leaving the farm in a given month or year. Cash may come in from the sale of farm products, sale of surplus machinery, off-farm income, or
proceeds from loans. Cash leaves the farm through operating expenses, loan payments, new equipment or building upgrade, and to cover family living costs. If a farm doesn’t have enough cash coming in during the month to cover all the cash going out, a farmer will probably have to tap the farm’s operating loan or dip into its working capital. Working capital is the amount of current assets that remain after subtracting all the farm’s current liabilities. Current assets include cash and anything that will either convert to cash or be used on the farm within the next year. Managing cash flow and working capital are challenging for any grain operation, whether it is conventional or organic. Cash doesn’t come in until the crops are harvested and sold. And, long before crops go to market, a lot of cash goes out to pay for seed, land rent, soil amendments, loan payments, family living costs, and many other items. Cash flow difficulties can be particularly acute during the first two years of organic transition. Farmers may spend a significant amount of money on soil amendments during the first year of transition to give the soil time to respond before organic certification. They may need to buy some new equipment, like a rotary hoe or a cultivator. They might devote extra time to learn how to manage crops in an organic system. Crop yields will likely be low. All these things can have a negative effect on cash flow and can deplete working capital.
Tips to Lesson Economic Impact of Transition Keeping variable costs as low as possible during the transition years is very important. Variable costs are the costs that wouldn’t exist if the farm wasn’t producing anything. Items like seed, fuel, custom field work, and soil amendments are all examples of variable
costs. Variable costs are usually paid in cash during the crop year, while overhead costs, such as depreciation, are not. If the farm has livestock or if there are livestock operations in the area, hay can be an excellent crop to plant during transition. The first-year cash flow will likely still be negative. There are significant costs to establish hay and yield will be low in the establishment year. However, hay is a great soil-building crop. There is usually a decent local market for it—hay is expensive to haul long distances. After the first year, three or even four cuttings can be sold. Some growers in areas where hay is not a viable option will grow non-GMO soybeans during one of the transition years. The non-GMO premium for soybeans can be as much as $1 per bushel or more, and the cost of non-GMO seed is significantly less than GMO varieties. Also, planting a row crop like non-GMO soybeans gives growers an opportunity to practice using tools, such as a cultivator, that they may never have tried before. Mistakes made during the transition are less costly than they will be with a highvalue organic crop. It’s generally a good idea not to transition too many acres at once from conventional to organic production. Even if conventional crops have not been profitable in recent years, they still might provide better cash flow to the farm than would transitional crops. Organic transition is an investment that pays off in future cash flow, much like a wage earner puts money into a retirement fund expecting a payoff years down the road. And, just like most wage earners can’t afford to put 100% of every paycheck into their retirement accounts, most conventional farmers probably can’t afford to invest 100% of their land in organic transition in one year. Organic Grain Transition continues on 6