ST. LOUIS — Rapidly growing demand for organic feed ingredients in the United States has created a tightening supply of organic corn and soybeans, attendees at the Organic & Non-G.M.O. Forum learned on Oct. 30 at the Hyatt Regency hotel in St. Louis.
J. Peter Golbitz, president and chief executive officer of Agromeris, discussed the impact of imported organic grain on U.S. prices and supply on the second day of the two-day conference, which examined a broad range of topics related to organic and non-G.M.O. crop industries.
Mr. Golbitz said the organic poultry industry in the United States is the primary driver of organic feed demand. Organic poultry production more than doubled from 2015 to 2016 and grew another 50% in 2017.
“The year-to-date figures in 2018 show continued growth over 2017,” Mr. Golbitz said, noting that the compound annual growth rate in organic poultry production over the past four years is 46%.
Although end users of organic corn and soybeans in the United States are still heavily dependent on foreign suppliers, that trend appears to be slowing somewhat as imports in 2018 are showing reduced growth, Mr. Golbitz said.
“Total imports of organic corn are expected to finish at about one-half of the volume of 2017, while 2018 soybean imports may end up at 25% less than in 2017,” he said. “With domestic production increasing and imports leveling off or in decline, we are likely to see reduced dependence on imports going forward. But that depends on how fast demand grows and U.S. production can increase.”
Mr. Golbitz noted that imports from Turkey, which was the top supplier to the United States in 2017, have dropped substantially this year due to a leading supplier from that country having its organic certification revoked due to fraud.
“In May 2017, fraud was uncovered in the import supply chain, and this resulted in a slowing of imports and an initiation of numerous efforts by buyers to stimulate more domestic production,” he said.
Over the past four years, organic corn acres have grown at an average rate of 34.8% per year, while organic soybean acres have grown at an average rate of 27.6% per year, he said.
“With an estimated 639,000 acres in organic corn and soybean production in 2018 in the U.S., to keep up with the growing market and to reduce dependence on imports we will need to bring on an additional 1.3 million acres of organic soybeans and corn within the next five years,” he said.
Despite a significant premium being paid for organic corn and soybeans — U.S.-produced organic soybeans for feed averaged $18.72 per bu this year through August while G.M. soybeans averaged about $9 during the same period — organic acreage isn’t increasing at the rate desired by end users.
Organic grain producers speaking at the forum all noted that success in organic farming requires managing various risks, such as weed control, and patience, since transitioning from conventional to organic crops usually takes three years and turning a healthy profit can sometimes take longer.
Mr. Golbitz said it is incumbent upon end users to work with producers to help them reduce their risk during the transition with long-term contracts and favorable off-take agreements for rotational crops.
“You must embrace the thought that producers are your partners,” Mr. Golbitz said.