Seven or eight years ago there was no organic grain production in North Carolina.
Today organic corn, soybeans, and most recently wheat are becoming commonplace in the state, according to North Carolina State University organic crops specialist Chris Reberg-Horton.
“For the first few years I worked here, my primary interest was corn and soybeans, because that's where our growers were making the most money. Now, it appears in many cases wheat is more profitable, so we are now focusing more on this crop,” Horton says.
“We also have crushers coming into our state to buy organic sunflower and canola. They do it all with forward contracts, so it's very attractive for growers, because they have a set price before they ever put seed in the ground " he adds.
Short rotations with only two summer grain crops and one winter crop is a real problem for organic production. With the addition of sunflowers in the summer and canola in the winter growers have many more rotation options, Horton says.
“We also have several thousand acres of organic sweet potatoes and 45 registered organic tobacco growers in the state. So, in the organic realm we are beginning to get more diverse and growers are beginning to have more options for rotation crops, which can be a significant benefit to organic production.
“Organic canola is becoming very attractive in North Carolina, because we don't have the contamination problems common in other growing areas of the country.
“AgStrong, a north Georgia based company has been aggressive in lining up canola growers in recent years. Having canola as a second profitable winter crop with wheat gives organic growers in the state more options for year-long production’” he says
Canola is a wind pollinated crop and in some parts of the country cross-pollination of organic and non-organic canola has been a problem. In North Carolina we don't have large acreages being produced in a small geographic area, so contamination is less of a problem here, Horton says.
In 2012 Horton says North Carolina farmers grew approximately 12,000 acres of organic grain crops with much of that acreage being in a double-crop system. It’s a small, niche part of the overall agriculture picture in the state, but it is growing and profitable for most growers, he adds.
Prices for organic grain have traditionally been higher than conventional grain crops, and in some cases significantly higher. Organic corn, for example, was double the price of conventional corn for several years.
That gap narrowed this summer with high conventional prices, but has grown again as organic corn approached $15 per bushel in November.
In terms of yield differential there seems to be about a 25 percent yield risk with organic versus conventional corn, the North Carolina State University Specialist says.
“I think growers can make money with organic corn at $7-8 per bushel, and anything above that is extra profit,” Horton adds.
“With soybeans, I think were still losing 25 percent to 30 percent in yield with organic versus conventional planting. The big difference in yield loss risk with soybeans, I think, is not so much with genetics as with weed management,” Horton says.
“Growers seem to have less yield differential between conventional and organic wheat.
“Genetics is not a problem with wheat seed and most organic growers seeded at a higher rate, which seems to help them manage weed problems and other production problems.
“For grain growers who would like to set aside a few acres for organic production, they might try 100 acres of corn and soybeans to go along with 1,200-1,500 acres of conventional crops,” Horton says.
“And keep an eye on marketing your organic crop.”
Marketing organic crops varies a lot by commodity. Corn has been simple, while organic wheat has been a challenge for some growers.
The problem is not one of price, but rather how long the crop has to be stored. Most of the buyers will only take a truck load or two at a time.
Money to be made
“I tell growers there is a lot of money to be made in organic wheat but you have to be ready and able to spend time marketing it. In fact, we now have some organic wheat growers who act as brokers for other growers who are not as interested in marketing,” Horton points out.
The growth in demand for organic meat products has paralleled the demand for organic grains. To sell meat as organic products, that animal must be fed organic grain and/or grown on organic pastures.
Though organic meat is significantly more expensive than conventionally produced meat products, the demand continues to grow.
Horton says mainline retailers are now getting into the business of selling organic meat products. Costco for example has a line of organic ground beef products they sell nationwide through their club stores.
In some cases growers can significantly reduce the risk factor for growing organic crops by growing these crops under contract for a specific buyer.
“For example, we have one wheat grower who grows organic wheat specifically for a local brewer. While this has not been commonplace as a way to market organic grain, it seems the growers will have more opportunities to do this in the future’” Horton says.
Molly Hamilton, who works closely with Horton and is an Extension assistant at North Carolina State, says overall marketing organic grain is significantly different than marketing conventional grain crops.
Nearly all organic grains are marketed as either livestock feed or as food for human consumption. Organic grain for human consumption, called food-grade grains, generally earns a higher premium than organic grain for livestock feed.
On the other hand, growing for the livestock feed market lowers the risk of going organic for those who are new to organic farming.
For most North Carolina farmers, the livestock feed market is more easily accessible than the food-grade grain market. However, there are markets in North Carolina for food-grade organic wheat, Hamilton says..
Growing organic grain for the food-grade market requires a lot of attention to detail and experience with organic grain production and marketing. Quality specifications are more stringent than for livestock-feed grain, and markets are usually harder to identify. Often a specific variety is required by a buyer of food-grade grain, she adds.
The bottom line is that North Carolina growers will have many options for organic grain crops in 2013, but they should do plenty of homework before jumping into what appears to be a profitable business move, but may turn out to be something totally different for the ill-prepared.