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Part 2 for week of May 22



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The Midwest Organic and Sustainable Education Service (MOSES), based in Spring Valley, Wisconsin, today called on farmers to look closely and positively at the opportunities now emerging in organic agriculture.  According to MOSES executive director, Faye Jones (715-772-3153), booming retail sales of organic products over the last decade have begun to create new demand for organic farm production.   “The organic sales projections, while they vary to some degree from analyst to analyst, are all very, very positive.  Certainly, organic food is still a niche market, but it is clear that this market will continue growing.  There are some important economic opportunities here for farmers in the Midwest, particularly organic livestock producers and for those that raise the certified organic grain that these animals eat.”


MOSES (www.mosesorganic.org), organizes the Upper Midwest Organic Farming Conference which will take place February 24-26th  in La Crosse, Wisconsin.  The conference, now in its 16th year,  is the largest of its kind in the U.S., and in 2004, drew 1500 participants.


A recent report published by the industry trade publication,  Nutrition Business Journal**, says that in 2003, organic food sales were $10.4 billion in the U.S., up by 20% from the previous year.  This constitutes about 2% of all food purchases. The report projects that total U.S. organic food sales are expected to reach almost $24 billion in 2010. It  projects a 13.8% annual increase in organic sales the next 5 years, with some products projected to have much more significant percentage of growth than others (48.6% annual growth for organic poultry, 39% annual growth for organic meat). 


 The Nutrition Business Journal** projections, while very positive, are actually conservative when compared with recent projections reported by the Organic Trade Association.  The OTA projections call for US retail sales of organic products reaching $30.7 billion by 2007 with a five-year compound annual growth rate of 21.4% between 2002 and 2007.  This compares with a 21.2% growth rate from 1997-2002.  (by Datamonitor as reported by Organic Trade Association www.ota.com/organic/mt/business). Results of the Organic Trade Association’s 2004 survey of manufacturers including sales growth by food sector can be viewed at http://www.ota.com/pics/documents/2004SurveyOverview.pdf


Organic agriculture analysts vary in their assessment of how great the opportunities are for farmers in the region. Kevin Edberg (651-287-0184)  is the Director of Cooperative Development Services and was formerly a leader in the Minnesota Department of Agriculture’s Marketing Division. Edberg takes a fairly cautious approach.  He says that there is “not a


**While these projections forecast significant growth, they are conservative, when compared with the overall 20% growth of organic sales the last decade (77.8% annual growth of meat, fish and poultry from 2002-2003).  Researcher Grant Ferrier (619-295-7685, ext. 16)  of the Nutrition Business Journal, used a conservative approach in making these projections.  He looked at organic sales in “more mature markets” such as those in Europe and sees that growth there has not been as dramatic as in the U.S. and anticipates the organic market in the U.S. becoming somewhat saturated.


rampant undersupply” of organic products.  “But there are genuine opportunities out there.  The question is whether those products will come from offshore sources, current U.S. producers, or new U.S. producers.”  He believes that there is more of a shortage of organic animal products than organic grain.


Organic industry analyst Ann Woods of the Organic Alliance (715-632-2610) is less cautious.  She notes Midwestern farmers’ historical reluctance to transition to organic production and points to the 3-year conventional-to-organic transition period that purely conventional grain farmers would need to adhere to before marketing certified organic products as insurance that the organic marketplace would not become quickly saturated.


Mike Mazzocco, director of the Food and Agribusiness Management Program at the University of Illinois in Urbana, Illinois (217-333-1816) sees a significant opportunity for organic grain producers as well as a growing interest in organic production among conventional grain farmers.  He believes that “Supply (or the lack thereof) is really constraining the development of new organic products.”   In early January, Mazzocco led a workshop in Illinois that looked at opportunities in organic production.  Of the 100 farmers in attendance, more than 80% identified themselves as conventional producers.


      Jim Riddle, of Winona, Minnesota (507-454-8310) is chair of the USDA’s National Organic Standards Board and an Organic Policy Specialist with Rodale’s www.newfarm.org web magazine.  He leads seminars throughout the country on organic production and says that, “Many conventional and transitional producers want to know about the economics of organic production. Fortunately, the University of Minnesota has conducted research showing that organic systems are indeed profitable.”  Researchers at the University of Minnesota conducted a long-term economic analysis of the profitability of organic vs conventional cropping systems in Southwestern Minnesota. The researchers found that the organic system was equally profitable to the conventional system, even when the organic products were sold at conventional prices. When the organic products were sold at organic prices, the organic system was much more profitable.


        Bob Scowcroft, Director of the California-based Organic Farming Research Foundation (831-426-6606) agrees that there is definite growth potential in organic agriculture but takes a more cautious outlook.  He cautions “We’re in a mini-boom right now, which will probably be followed in a few years by a mini-bust.”  He urges farmers to expand organic production, but to do so modestly, perhaps increasing their organic production by 5% per year.  He suggests farmers adhere closely to organic farming principles, maintaining crop rotations and biological and economic diversity.  “Don’t go out there and do fence row to fence row organic grain production.” Scowcroft is also concerned about how U.S. organic producers will be affected by the growing investment in organic agriculture by the 11 dominant global agribusiness corporations, 9 of whom already have organic divisions.


NOSB Chair, Riddle, has worked as an organic producer, certifier, author and instructor for the past 25 years and is gratified to see the growth and popularity of organic agriculture.  He projects continued demand for the wide range of agricultural products that can be grown organically in the Midwest. “As consumers learn more about Mad Cow Disease, genetic engineering, frog deformities caused by herbicides, and environmental degradation caused by conventional farming practices, they turn to organic food, which offers a safe, healthy, flavorful, and ecologically sound alternative.”


MOSES’ Jones is confident that the market for organic foods will continue to grow and is pleased to see how consumers are rewarding organic farmers for their efforts and commitment.   “It’s very encouraging to see organic producers beginning to derive some financial benefits from the marketplace.  What is important is that their care of the land and livestock translates into many more benefits for the rest of society --  money and resources kept closer to home in rural communities,  less toxic substances in the air we breathe and in the water we drink, food without antibiotic residues, more biodiversity on the landscape and healthier soils. And new research is beginning to show nutritional benefits (higher anti-oxidant levels) from organically-produced food as well.”


Key Midwest Organic Farming Sectors



        Nationally, organic dairy products represent 3% of total dairy sales. Total U.S. sales of organic dairy  products in 2003 were $1.38 billion, according to Nutrition Business Journal**. The publication projects annual growth of 15.6% from 2004-2008 for organic dairy products, reaching $2.81 billion in 2008.


           La Farge, Wisconsin organic dairy processor, Organic Valley/CROPP, saw sales increase by 33% in 2004, going from $156 million in 2003 to $208 million in 2004.  Projected Organic Valley/CROPP sales for 2005 are $259 million, a 25% increase.


To put the Nutrition Business Journal** numbers in perspective, a 15.6% increase in 2005 alone ($216 million) is greater than all of the organic dairy sales by Organic Valley/CROPP in 2004, in essence requiring the equivalent of a new Organic Valley/CROPP every year (analysis by Kevin Edberg).


In terms of price, Organic Valley/CROPP dairy producers were paid more than 25% more than their conventional counterparts in 2004, a premium of $4.16 per hundredweight.  This premium was actually considerably less than in previous years as the conventional price per hundredweight of milk reached levels not seen in recent years.


Tim Griffin of Organic Valley/CROPP (888-444-6455 ext. 285) believes there will be the need to double their milk production to meet demand in the next 5 years.  Organic Valley/CROPP currently has 689 organic farmer-members in 20 states.  50% of all of Organic Valley/CROPP’s production is from the Midwest.  65% of their producers are in the Midwest


Poultry and Beef

Organic poultry sales were $46 million in 2003.  Nutrition Business Journal** projects an annual growth rate of 48.6% which means a doubling of sales by 2005 and increasing 4-fold by 2007.

Organic beef sales were $10 million in 2003. Nutrition Business Journal**projects annual growth rate at 39% through 2008.  This means $26.85 million in sales, more than double that of 2003 by 2006.

Organic Valley/CROPP also now sells organic meat and poultry and has been running want ads in regional newspapers calling on producers to supply them with more organic poultry, hogs, and beef.

Organic industry observer, Lynn Clarkson,  of Clarkson Grain (www.clarksongrain.com) in Cerro Gordon, IL (217-763-2861) compares the current 5% of market share which organic fruit and vegetables have in the U.S. with the much smaller market share held by organic dairy, meat and poultry.  He notes that organic rules for meat were only adopted by the USDA in 2002 and that the approval of these rules will help expand this market dramatically.  Clarkson anticipates organic meat, dairy, and poultry to have 5% market share by 2010.


Produce and Soymilk

Organic soymilk sales were $927 million in 2003 with an 11% annual growth rate projected by Nutrition Business Journal** from 2004-2008.

Organic produce (vast majority fresh) sales were $4.3 billion in 2003.  Annual growth rate projected by Nutrition Business Journal**at 11% through 2008


Demand and Price for Organic Grain


Lynn Clarkson clearly believes that there is a need for more domestic organic grain production, particularly for feeding the growing organic meat market. Clarkson Grain deals in conventional, organic and non-transgenic grains.  It began trading grain in the organic marketplace in 1991 and today operates 25,000 tons of dedicated commercial organic storage backed by several times that in farm storage (from their website)


Lynn Clarkson encourages grain producers to move into the organic marketplace.  “For a long time, we’ve been looking at at least double or triple conventional prices for organic.  Today, in Decatur, IL, the conventional price for corn is $2/bushel while organic, on the low end can get $4.10 to $4.75.  With soybeans, conventional beans today are at $5.10 per bushel with organic beans getting $11.50-12 and even more, $18-20 per bushel for food-grade beans (for soy foods).”


Clarkson differs with those organic grain producers who are holding out for prices as high as $20-25 per bushel for soybeans.  “I think that there is a “sweet spot” in the marketplace for feed-grade organic beans at about $10-15 per bushel.”  He suggests that that price is cheap enough that livestock producers will not need to shop around for alternative protein sources and also low enough to ward off global competition.


OFARM (Organic Farmers’ Agency for Relationship Marketing) www.ofarm.org  works to make sure that organic producers secure a good price for their products.  Their director is John Bobbe (920-825-1369), based in northeast Wisconsin.  Bobbe believes that weather conditions in the U.S. and organic grain imports will play a significant role in the demand for organic grain products. With respect to price, OFARM’s established target prices for organic grain producers for 2003-04 were $10-12 per bushel for feed grade soybeans, $16-20 for food grade soybeans, and $4.25-4.75 for corn.


On January 6, 2005, Farmers Co-op Elevator in Houston, Minnesota was paying $1.70 per bushel for conventional corn and $4.85 per bushel for conventional soybeans (telephone inquiry 507-896-3141).


South Dakota State University researchers Thomas Dobbs and Nicholas Streff examined the prices farmers received for organic corn, soybeans, wheat and oats from 1995-2003 and compared them with conventional grain prices for that period.  On average, during this period, organic corn prices were 196% higher than conventional corn prices, while organic feed-grade soybeans were 266% higher than conventional soybeans.  A complete copy of this study is available directly from Dobbs at  [log in to unmask] or from MOSES’ Doug Nopar at [log in to unmask]


U.S and Global Organic Acreage


2001 acreage in organic certification in U.S. was 2.35 million acres—57%cropland, 43% rangeland/pasture.  This is .3% of US farmland.   Catherine Greene of the USDA’s Economic Research Service [log in to unmask] (202-694-5541)  anticipates updated estimates of organic acreage and production volumes to be completed later this winter.


Global organic acreage is 59 million acres (24 million hectares)

(as reported by Organic Trade Association www.ota.com/organic/mt/business)


Australia—24.6 million acres

Argentina – 7.4 million acres

Latin America – 14.3 million acres

Europe – 13.5 million acres

North America – 3.7 million acres


Economics of Organic Production


Profitability of Organic Cropping Systems in Southwestern Minnesota, Paul R. Mahoney, Kent D. Olson, Paul M. Porter, David R. Huggins, Catherine A. Perillo and R. Kent Crookston, Renewable Agriculture and Food Systems 19(1)(2003):1-12.


       Abstract. In spite of concerns, Minnesota's dominant cropping system is the corn-soybean rotation using synthetic pesticides and chemically processed fertilizers. Using experimental data from 1990-99, this study compared the profitability of organic versus conventional strategies. Net return (NR) was calculated from actual yields, operations, inputs, prices, and organic premiums. Yields and costs were lower for the 4-year organic strategy. With premiums, the 4-year organic strategy had NRs significantly higher than conventional strategies; without premiums, the NRs were statistically equal (p=0.05). Thus, the 4-year organic strategy was not less profitable nor its NR more variable than the conventional strategies in this study.


From http://www.apec.umn.edu/faculty/kolson/research.html








Vicki Morrone

Organic Vegetable and Crop Outreach Specialist

Michigan State University

C.S. Mott Sustainable Food Systems

303 Natural Resrouces Bldg.

East Lansing, MI 48824


517-282-3557 (cell)

517-353-3834 (fax)

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