Organic corn late to join pricing surge

Washington, D.C. - The conventional grain markets aren't the only ones taking off. Prices for organic corn have jumped, too, in recent weeks.
Organic corn was selling for less than $5 a bushel as recently as September, and prices were hovering near the level of conventional corn before shooting up in recent weeks to top $9 a bushel in some cases, according to government data.
That's good news for organic corn growers like Vic Madsen of Audubon, who says some of the prices being paid last year would barely cover production costs, if that.

"Anytime a person is in a niche business, whether a niche magazine or a niche motorcycle part, you're going to have more erratic price swings and organic proved that," Madsen said. "It sort of goes with the territory."
Organic farmers were long used to getting about twice as much for their corn as conventional farmers received for theirs. But organic farming requires more labor, and farmers can't grow organic corn on the same ground year after year. Corn must be rotated with other crops such as soybeans and alfalfa to maintain soil fertility and control insects and diseases, under federal rules.

The Agriculture Department's latest biweekly report of prices for organic corn in the Midwest found they were ranging between $8 and $9.25 a bushel and averaged $8.60. The USDA, which offers revenue insurance policies for organic corn, is projecting prices this year as high as $11.30 in parts of the country.
The higher prices could press the bottom lines of organic dairy farms, especially those in the Northeast, that have to buy corn for feed.

"For sure they're paying more money and not making as much money as they did before," said George Siemen, CEO of the Wisconsin-based Organic Valley dairy cooperative.
Organic corn growers this year have been waiting to sell until organic grain prices rose, Siemen said.
"It's been hard to get anyone to let go of organic corn because everybody is holding back," he said.
Kevin Dvorak, an organic grain trader with the Scoular Co. in Omaha, said the run-up in prices is forcing some organic livestock producers to reconsider expansion plans.

Contrast that to last year, when many organic consumers had "stepped away from the grocery shelf for a while" and "there wasn't a lot of demand for organic grain in general," said Dvorak.
He said he expected organic corn prices to continue upward until demand drops off.
But the price increases may have come too late to stop some growers from giving up on organic corn and switching back to conventional farming, according to some in the industry.

Growing conventional corn is easier, especially with the pest-resistant, herbicide-tolerant biotech varieties that make it easier to control insects and weeds.
The Agriculture Department doesn't track organic grain production the way it does conventional crops, so it's difficult to follow trends as they develop. But Maury Johnson of Blue River Hybrids, an organic seed supplier based in Kelley, says organic corn acreage could fall as much as 10 percent. He bases his estimate on seed sales and anecdotal information.

"We're estimating that there has been some loss of acres because of the high prices of conventional corn," he said.
Siemen is hearing the same thing. Rising land values are making it harder for organic farmers to bid against conventional land for rented acreage, he said. "It's really tough. It's a major setback," he said.
Such losses in acreage are a special problem for the organic food industry, because farmers can't go back and forth from organic to conventional. Farmers can't sell their crops as organic until they've stopped using synthetic chemicals and have been following other organic requirements for three years.

Madsen, a longtime leader in organic farming in Iowa, isn't going conventional but said he knows two or farmers who are. "Part of it is just because the herbicides make everything so much easier. They're just tired of the extra management," he said.
Last year was particularly difficult to farm organically in his area because the wet spring made it difficult to get into fields to kill the weeds. His land was dry enough for field work only a day and a half last June, he said.

"If you were thinking you didn't want to have that battle anymore, last year convinced people," he said.

(Source: http://www.desmoinesregister.com/article/20110306/BUSINESS01/103060319/Organic-corn-late-to-join-pricing-surge)