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Imported organic grain creating volatile market for U.S. farmers

An economist with CoBank says organic grain imports are limiting the ability of U.S. farmers to supply the domestic market.

Director of Industry Research Dan Kowalski tells Brownfield premiums for organic grain are becoming increasingly volatile as organic imports have surged in the last year.  “When you’re looking at a three year conversion, knowing that that’s not stable, and you’re thinking about five, 10, 15 years down the road, you’re making a major decision on your farm that may not payout over the long-term.”  He says organic corn imports doubled in 2016 to almost half of the total U.S. supply and 80 percent of organic soybeans were imported.

Kowalski says most organic feed grains and oilseeds are being imported from less developed agricultural countries including India, Ukraine, Romania and Turkey.  “Through globalization, these countries have realized there’s an opportunity for this and we can get a great premium for what we were getting before, we really didn’t have a market and now we do—that’s pretty hard to stop once that market’s been created and it’s been realized.”

Kowalski says some food manufacturers would prefer a more stable domestic organic grain supply and are expanding incentives to help ease the financial burden a three year transition to organic can have on farmers.  “They’re trying to create incentives, provide free agronomic services, provide sort of a lesser premium than organic but something more than conventional—they’re trying to do a lot of things to attract growers.”

He estimates between 200 and 300 thousand acres are currently transitioning into organic production, while one to five million acres of organic grain are needed to supply demand in just the next three years.

AUDIO: Interview with Dan Kowalski