The United States is one of the world’s largest producers and exporters of conventionally grown grains. America’s farmers grow and ship out to foreign destinations vast amounts of cereal grains and grain legumes. But the production of organic grains in this country has been slow to take off, even as demand for organic grains has grown to unprecedented levels.
The U.S. Organic Grain Collaboration, in partnership with the Organic Trade Association, has released a critical and timely report looking at the state of organic grain in the United States. The report, titled “U.S. Organic Grain – How to Keep It Growing,” drills down into the key barriers in expanding domestic organic grain production, and identifies specific industry solutions to overcome the hurdles.
The report reflects three years of collaborative work between a group of leading organic food makers and organic businesses. It highlights three top challenges to growing more organic grain in the U.S., and recommends proven strategies the industry can adopt to address each challenge: new contracting mechanisms for growers to reduce financial risk, the development of markets for essential fertility-building and-weed-suppressing crops necessary in organic rotation, and more organic coaching and technical assistance for growers.
“This insightful and useful report is an example of what happens when organic companies work together to help empower other organic stakeholders,” says Laura Batcha, CEO and Executive Director of the Organic Trade Association. “For organic to keep advancing, everyone in the organic supply chain has to collaborate, and this new information provides a roadmap to ensure and improve the future of organic grain production in the U.S.”
It would be hard to overestimate the role of grain in the human diet, in the advancement of agriculture and in the development of civilizations. Grain provides more food energy than any other food group, it keeps nutritious foods on our tables and feeds the world’s livestock herds, and it is the fundamental underpinning of organic agriculture and the food industry.
But while organic grain production in the United States is growing, it is not doing so fast enough to meet the needs of the nation’s robust and expanding organic livestock industry, nor is it always growing in such a way to ensure a sustainable supply into the future. Because of the gap between domestic output and demand, the volume of imported organic grains has skyrocketed in the past several years.
A group of leading organic food companies and the Sustainable Food Lab formed the U.S. Organic Grain Collaboration in 2014. Its goals are to address the short supply of domestically grown organic grain, and to collaborate to develop strategies and tools able to be adopted by other stakeholders in the organic supply chain to improve the resilience of organic grain farmers and boost organic grain production. It is a project of the Organic Trade Association’s Grain, Pulse and Oilseed Council, and its members are Annie’s, Ardent Mills, Clif Bar, Stonyfield, Organic Valley, King Arthur Flour, and Pipeline Foods.
“We recognize that we can’t change the world alone, so it’s important for us to work with industry partners such as the Organic Grain Collaboration,” says Shauna Sadowski, Senior Manager of Sustainability, Natural & Organic Operating Unit at General Mills, of which Annie’s is an operating unit. She added, “Annie’s is a founding member of the Grain Collaboration because we believe that industry collaboration is imperative to address agricultural sustainability challenges and scale positive impact.”
This new report, done in coordination with the Sustainable Food Lab, is an update of a study the Grain Collaboration commissioned in 2014 on the U.S. organic grain sector. It provides current information on organic grain production and market trends, along with specific recommendations and on-the-ground examples of ways to increase the supply of organic grain.
“As organic food companies work to expand their offering of organic products, the organic grains industry faces the challenge to ensure stable, profitable and sustainable growth,” says Elizabeth Reaves, Senior Program Director for the Sustainable Food Lab and one of the authors of the report. “Organic grain crops are a financially viable choice for American farmers, and the industry is mobilized to reduce the barriers and increase the number of organic grain producers while supporting sustainable growth and farm viability.”
Why aren’t U.S. farmers growing more organic grain?
In 2016, U.S. production of organic wheat, oats, barley, corn and soybeans totaled 765,000 acres, producing 46 million bushels and generating $336 million in sales. The top five organic grain-producing states, Montana, Iowa, Minnesota, Wisconsin, and Wyoming, represent almost 40 percent of U.S. organic grain acreage. Another 17 states each have at least one percent of total organic grain acreage, mainly in the Midwest and upper Great Plains. Midwestern states tend to grow more corn and soybeans, and Great Plains states predominantly grow small grains such as wheat, barley, and oats.
From 2008 to 2016, U.S. farmland devoted to the production of organic grains, corn and soybeans grew by over 20 percent. Over a similar period, however, the U.S. organic livestock products industry nearly tripled in size, with sales at the farm gate jumping from $1.2 billion to $3.3 billion. Further up the supply chain at the retail level, the markets for organic livestock products like dairy and eggs, meat and poultry have been on fire, with organic dairy and egg sales growing to $6.5 billion in 2017 -- almost double the 2008 level of $3.6 billion – and organic meat and poultry sales nearly tripling to $1.2 billion in 2017.
Overall retail sales of organic food in the United States have exploded, with sales ballooning from just over $20 billion in 2008 to more than $45 billion in 2017, according to the Organic Trade Association’s 2018 Organic Industry Survey. Along with expanding sales of organic dairy, meat and poultry, sales of organic grain-containing products like organic breads, cereals, pastas, snacks and other organic processed foods have also jumped significantly.
While a combination of the inadequate supply of U.S.-grown organic grain to feed the nation’s livestock sector and the inability to keep up with the overall needs created by the increase in the demand for organic have created a gap between supply and demand, the rise in demand from the livestock feed sector has been by far the biggest factor. To make up for short supplies, organic product users have looked beyond the shores of the U.S. for organic grains and feeds. Since 2011, the value of imported organic grains and soybeans has skyrocketed from $42 million to $401 million.
This over-reliance on imported organic grain is both a missed opportunity for the American farmer and a weakness recognized by all the major components (organic livestock and food manufacturers) of the supply system -- from the U.S. organic grain growers to the consumer brand companies whose products and pricing strategies ultimately depend on the integrity of organic certification and the trust of consumers.
Like conventional grains, the price of organic grains can be volatile. Prices from 2011 to the present have been described as an “unstable rollercoaster,” and the price premium of organic grains over conventional grains can fluctuate with market swings. In addition to the boom-bust cycle that can limit growth in organic, the report identifies three key barriers that make it especially challenging for farmers to convert to organic grain production:
- The risk associated with the high cost of transitioning to organic and the uncertain market guarantee at the end of the transition period;
- The lack of markets for necessary lower-value rotation crops that boost soil fertility and suppress weeds;
- Insufficient technical assistance and farm management resources.
Recommendations and solutions
It takes an organic village to enable a meaningful boost in domestic organic grain production. As stated in the report, “The issues and barriers organic grain producers face cannot be addressed by individual farmers alone. To meet the needs of the market and increase organic grain production, growers need coordinated industry assistance to address the systemic challenges.”
The report identifies three industry solutions that “can improve farmers’ ability to enter organic, optimize production and eventually stay in organic,” and illustrates how Organic Grain Collaboration members have put into action strategies in their own supply chains that could be developed into industry-wide practices.
One: Employ pricing and investment mechanisms.
Organic grain production is more expensive than conventional, and the mandatory transition period for farmers can be a huge and daunting obstacle. Developing pricing mechanisms to help producers reduce risk and make long-term investments can help improve competiveness and successful transition.
For example, forward contracts – agreements to buy the product at a certain price on a certain date--provide the confidence needed to transition more acres to organic production. Forward contracts are the foundation to creating a stable organic grain supply. Once in place, they can be leveraged in several ways to help finance or offset the costs of transition.*
A successful forward contract strategy is already in place at the organic dairy cooperative Organic Valley. Organic Valley offers a fixed price premium to its members when they are transitioning a dairy herd to organic. The cooperative’s Organic Transition Premium program helps producers pay some of their additional production costs while transitioning, and can be applied to the costs of the organic certification audit. In return, Organic Valley secures its dairy supply, which is an essential part of its business planning.
“Our main goal with the Organic Transition Premium program is to support our dairy producers transitioning to organic during a financially vulnerable period when they are practicing organic methods but not certified and commanding the organic premium,” says Travis Forgues, Vice President of Farmer Affairs for the Organic Valley CROPP Cooperative. “For the cooperative, the premium serves to increase long-term stability in a milk supply once a farm does transition, and gives us an added competitive advantage when we are seeking new farms and milk. It’s a win for farmers and a win for the cooperative.”
Two: Develop markets for lower-value crops that increase soil fertility and suppress weeds.
While forward contracts and other pricing mechanisms are necessary for a stable organic grain supply, they are not enough to ensure the sustainability of that supply. Organic grain farmers don’t just grow one type of grain. To control weeds and maintain soil health, organic grain rotations cannot be limited to corn, soy, and wheat. Smothering forage crops are essential to control perennial weeds, and extended crop rotations with nitrogen-fixing cover crops can improve soil health and break pest and disease cycles. To add such crops to their rotations, farmers need to have a market for them.
Novel products like Annie’s Mac and Cheese made with wheat and nitrogen-fixing pea crops are beginning to provide a solution.
“We’re partnering with organic farmers in Montana to create two products that feature ingredients grown using regenerative practices,” says Sadowski of Annie’s. “Diversity is critical for thriving and regenerative ecosystems, so we’re incorporating multiple rotational crops from each farmer’s land into these products—wheat and oats for the bunny grahams, and wheat and peas for the mac and cheese. Without a strong market established for each crop within a diverse rotation, farmers do not have the full set of resources they need to advance extended rotations.”
Three: Increase the number of trusted advisors and farmer networks for organic farmers.
Conventional farmers have a strong network to go to for support and guidance, but not so for organic. The report recommends a new model of extension support for organic farmers, calling it “adaptive knowledge networks.” These networks would support farmers to learn and innovate together around solutions and research that have been adapted for regional conditions.
The report also notes that not all farmers rely on extension or publicly supported farmer education services. With that in mind, it urges that training crop consultants--train-the-trainer programs--to become more knowledgeable about organic practices should be a priority goal of the sector.
A project to better train agricultural professionals working with organic or transitioning farmers is being supported by the Organic Trade Association’s industry-invested organic research, promotion and education GRO programming. Called the Organic Agronomy Training Series (OATS), two Grain Collaboration members – Clif Bar and Pipeline Foods – have stepped up to make the project a reality. Clif Bar has provided a cornerstone donation of $50,000 for the project, while Pipeline Foods has spearheaded a broad coalition to implement the project.
The program is being launched in the spring of 2019 with a series of regionally specific multi-day trainings throughout the Midwest designed for those who consult with organic row crop farmers.
“OATS will help an entire region’s agronomic support network to become conversant, and eventually fluent, in organic production systems,” says Anders Gurda, Senior Manager of Agronomy Solutions at Pipeline Foods. “Moving forward though, the OATS curriculum and structure can and should be expanded to other production systems in other areas. OATS has been intentionally built to be adopted, and adapted, over time.”
“Farmer-to-farmer learning networks are great, but they are strengthened by having professional agronomists that can support them and provide access to appropriate tools and resources,” says Matthew Dillon, Director of Agricultural Policy and Programs at Clif Bar. “We hope other companies will join Clif Bar in funding these efforts. Collaboration is key when it comes to ensuring that the next wave of organic farmers have the information and tools they need to be successful.”
An organic and collective approach
An organic farmer doesn’t operate in a vacuum. His or her success depends on a complicated and interwoven network of educational, financial and technical support. Coordinated industry assistance is critical to providing the foundation for organic to continue its growth pattern.
“The scope of our challenge is great, and we’re stronger working together to problem solve than alone,” says Batcha of the Organic Trade Association. “The companies that formed the Organic Grain Collaboration understood that, and their insight and unwavering commitment to organic is what will allow our industry to keep advancing.”
Since completing its report, the U.S. Organic Grains Collaboration has expanded its capacity by merging with the Organic Trade Association’s Grain, Pulse, and Oilseed Council, which now includes 17 companies. Ongoing projects will be coordinated within the full council.
*Various options to support farmers in managing price volatility, ensuring cost recovery and becoming more competitive in the marketplace are discussed in an accompanying paper commissioned by the Sustainable Food Lab, Price management and investment mechanisms: Case studies for the US organic grains sector. Download a copy at OTA.com. //
Maggie McNeil is Director of Media Relations for the Organic Trade Association (firstname.lastname@example.org)