USDA delivers 'pot of money' to boost organic food and feed grain output but 'significant' barriers to entry remain
“This is the biggest pot of money ever for organic research. It is a positive step and one that could, potentially, help remove the number one barrier to farmers converting or starting organic production – yield losses due to inefficient weed control,” Nathaniel Lewis, senior crops and livestock specialist at the Organic Trade Association (OTA), told FeedNavigator.
This week saw US agriculture secretary Tom Vilsack reveal the availability of more than $66.5 million in funding for research and extension activities to address both the needs of the specialty crop industry and solve critical organic agricultural production issues in the US.
The US Department of Agriculture (USDA) grants have been made available through the 2014 Farm Bill.
Organic feed demand
The growth in demand for organic animal feed in the US is far outstripping supply, says the OTA.
But organic food represents just over 4% of the $760bn US food industry, and only 1% of the agricultural land base there is given over to organic crop production.
As such, a significant quantity of organic food and feed grains has to be imported into the US from Canada, Eastern Europe, and South Africa.
Last June we spoke to Lewis about the barriers to wider US domestic production of organic feed, and he stressed then that the OTA, in an attempt to broaden the availability of such crops, first needed to identify all the challenges that exist for converting to an organic model from a conventional one.
“In that context, we engaged with Sustainable Food Lab on a nationwide scoping study to evaluate barriers to growth in the organic grain sector from a regional market based perspective.
We have published the results of that research, and are now focusing our efforts in New England and the Northern Great Plains on pilot projects to grow the acreage dedicated to organic grain production,” he said.
Scoping study on barriers to organic production
Changing from conventional to organic production is a regulated process - organic certification requires that crops do not receive any synthetic chemicals including fertilizers or pesticides for three years. And the conversion period can have a substantial negative impact on farm incomes.
The findings of the OTA scoping study would indicate that perceived financial risks to organic feed grain conversion include cash flow management and access to capital for seed, as well as the infrastructure and equipment investment needed.
Production challenges reported included the knowledge requirement for shifting management systems and adopting a rotation, the cost and availability of inputs, and a lack of weed management expertise for organic grain production systems.
Finding buyers for the whole rotation, proximity to markets, lack of organic grain price transparency, and high prices for conventional crops were the biggest marketing challenges recorded.
Social attitudes and norms in the farmer’s community towards organic practices also play a role in a farmer’s willingness to convert.
Risk-sharing
But Lewis argues: “If farmers can reduce their exposure through contracts with feed manufacturers or other stakeholders, it would make the switch to organic systems more appealing.”
He said a number of US companies sourcing organic grains for food production and livestock feed see the benefit in addressing the bottlenecks to production through initiating different types of risk sharing models.
“The long and short of it is that grain handlers are desperate for supply of domestically sourced organic feed crops.
Anecdotal reports of some of their initiatives to spur conversion include one that acts like a quasi-government subsidy – handlers pay farmers twice what they would get for conventional crops per acre if they hold off doing anything with the land for two years to allow transition to organic production,” said Lewis.
Crop insurance
One critical impediment to greater take-up of organic farming is the lack of a robust organic crop insurance model.
Federal crop insurance, delivered by the US Department of Agriculture, provides risk management tools for US farmers to stay in business after a difficult crop year.
Lewis said that while changes to organic farming risk coverage have been ushered in under the 2014 Farm Bill, they still don’t go far enough. OTA's Farmer Advisory Council has made the insurance issue a top priority, advocating for appropriate price elections on the full range of organic crops.
“The challenge is the lack of transparency around pricing of organic grains, which are sold privately and often on a contract basis,” he added.
Indeed, the Sustainable Food Lab report notes an opaque value chain in the US organic market in general, with a lack of communication on planting, dates, yields, market demand as well as prices.
Lewis said the USDA’s pilot insurance program, Whole Farm Revenue Protection, would suit the diversified nature of organic farms as it takes account annual farm revenue and not the value of crops.
But the model needs restructuring, he argues, as currently a high percentage of organic farmers would not eligible for such coverage. “If a farmer, no matter how efficient, can’t get insurance cover, they will also not get an operational loan,” said Lewis.
Stimulus for new entrants
He notes with optimism though an increasing number of federally backed programs aimed at getting young people and returning veterans involved in expanding US domestic organic feed grain production, supporting such entrants on access to land, capital and equipment needed.
“The development of the organic feed crop market is the focus of such projects as the quality standards for organic food would be too high for young farmers to meet,” said Lewis.
