Bookmark and Share

Advertise your listings FREE for 30 days.

  • Join over 3,500 agents advertising on Land Farm & Ranch
  • Post your listings on over 1,000 websites
    within minutes
  • Over 3,000,000 visitors per day

Follow Us On:

Steamboat - Ski Town, USA

Organic Trends Benefit Farmland by T. Marc Schober

Organic farming entails tasks like planting and harvesting, but organic farmers have additional work that differs greatly from conventional farmers. Organic production is very specific to comply with certifications and requirements mandated by the National Organic Program (NOP), which was created through the Organic Foods Production Act of 1990 (OFPA). The NOP develops, implements, and administers national production, handling and labeling USDA standards.

When dealing with food production, the term, “organic” is not interchangeable with natural, free-range, or hormone-free. Organic grains, primarily corn and soybeans, can be very profitable for farmers as organic grains can sell for large premiums from farmers who are certified. The growing consumption of organic foods is also helping increase the value of U.S. farmland because more land is required to produce organic food since yields are typically lower than conventional farming.

What is Organic?

Organic foods and grains are produced without using pesticides, non-organic fertilizers, antibiotics, and hormones. Farmers that use organic production methods, and that have been certified organic by the NOP’s 55 domestic or 42 foreign accredited certifying agents, can sell their grains to organic handlers and producers. For a farmer to be certified, they must present an application to an accredited certifying agent with four items included:

• The type of operation to be certified
• A history of substances applied to land for the previous 3 years
• The organic products being grown
• The organic system plan describing practices and substances used in production

Before farmers are able to be certified, their fields must remain organic (free of certain fertilizers and chemicals) for three years. During those three years, farmers are practicing organic farming without the ability to sell their crop at the higher organic prices. After being approved, farmers must maintain accurate records in order to continue their organic certifications.

Here is a short overview of organic farming from the Agriculture Marketing Service at USDA:

Organic food is produced by farmers who emphasize the use of renewable resources and the conservation of soil and water to enhance environmental quality for future generations. Organic meat, poultry, eggs, and dairy products come from animals that are given no antibiotics or growth hormones. Organic food is produced without using most conventional pesticides; fertilizers made with synthetic ingredients or sewage sludge; or ionizing radiation. Before a product can be labeled “organic,” a Government-approved certifier inspects the farm where the food is grown to make sure the farmer is following all the rules necessary to meet USDA organic standards. Companies that handle or process organic food before it gets to your local supermarket or restaurant must be certified, too.

Conventional vs. Organic

Although organic grains typically sell for a premium versus conventional grains, the USDA has no claims that organic is safer or more nutritious. The demand for organic foods has grown substantially as health conscious consumers demand a healthier diet.

The key differences between conventional and organic farming include variations in soil composition, weed control, yields, and prices. For organic farmers to be profitable, the organic price premium must cover their yield loss and higher input costs. Fertilizer is cheaper since synthetic fertilizers are prohibited, but cultivation and other weed control methods consume diesel and time in comparison.

Any plant material grown on a farm field will promote organic material in the soil. Since organic farm fields have a lot more growing in them than just the targeted crop, organic material in the soil is being built at a faster rate than most conventional farm fields. Increased levels of organic material in soil will translate into higher yields over time for farmers.

Weed control is the most noticeable difference between organic and conventional farm fields. Organic farmers will mow and cultivate weeds when they are small, with the intention to kill the weed before the weed’s seeds are able to spread. Many organic farmers will also add another crop to their rotation, like rye to follow corn, to make nitrogen, phosphorus and potassium more accessible for the next crop. Rye and other filler crops discourage weeds as well.

Yields are the most important statistic a farmer follows. For organic farmers, typically their yields will be lower than conventional farmer yields. Yields of organic crops are tied to the crop rotation practiced by the farmer.

Research from Iowa State University shows that organic corn yields are very different depending on the crops corn is rotated with. In a corn-oats/annual alfalfa rotation, organic corn yields were 146.4 bushels per acre from 2000-05. Yields were 163.7 bushels per acre if organic corn was in a corn-soybean-oats-alfalfa rotation. During these same years, conventional corn yields were 177.6 bushels per acre while in a corn-soybean rotation and 156.0 in a corn-corn rotation.  

Organic corn yields were proven to be significantly higher when in a four crop rotation, but farmers are only able to capitalize on organic corn prices every four year in a four crop rotation.

Organic farmers may have lower yields, but at times the price of organic grains can more than offset their lower yields. Organic grain prices follow some of the same trends as conventional grains, but the two are not completely correlated. Organic prices depend heavily on consumer demand and discretionary spending. During recessions, organic prices suffer due to lower demand.


Consumption Trends

Consumption trends show that the U.S. demand for organic foods is growing. Currently, 3.7% of total food sales in the U.S. are organic, according to the 2010 Organic Industry Survey. In the most concentrated organic food sector, fruits and vegetables, sales increased by 11.4% from 2008 to 2009, up to 38% of total sales.

Consumers are continuing to turn to organic foods, even in the recession. A recent study from Mambo Sprouts Marketing found that 88% of consumers have been taking additional steps to promote family health and wellness. Of the 88%, 59% were buying more organic foods and 53% were increasing organic food consumption. The trends show that the organic demand is not letting up anytime soon. If demand for organic food continues to grow, the entire food supply will continue to shrink.

Organic Demand Affecting Farmland Values

The U.S. economy is slowly coming out of its recession, which means organic food demands should increase as the economic conditions improve. As organic food demand increases, it will require more farmland for production since yields are not as high on organic farms. It takes over 20% more land to grow the same amount of organic corn as it does conventional corn, according to comparisons of Iowa State University yield tests. Luther Tweeten of Ohio State thinks it can take nearly twice as many acres to produce organic crop yields equivalent to conventional crop yields. The growth of organic grain production will increase the demand for farmland, as well as farmland values.

Organic farming is becoming more efficient due to improving technology, but will increased production be able to meet the increased demand of organic food? The current U.S. supply of corn is at less than 30 days, according to the November USDA WASDE Report. Farmland will undoubtedly benefit from the increased amount of organic production due to limited supply of farmland and tight grain supplies.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

 (Source: http://seekingalpha.com.)



Next/Previous Post:


30 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

  1. The Diet Solution Program says

    Almost all of what you mention is supprisingly precise and it makes me ponder the reason why I hadn’t looked at this in this light before. Your piece really did turn the light on for me personally as far as this particular subject matter goes. However there is actually 1 issue I am not too comfy with and while I make an effort to reconcile that with the actual central idea of the issue, let me see exactly what the rest of the subscribers have to say.Well done.

  2. teach and learn french fast says

    As a result of France’s extensive colonial ambitions between the 17th and 20th centuries, French was introduced to America, Africa, Polynesia, South-East Asia, and the Caribbean.

  3. Natural store coupons says

    You certainly have some agreeable opinions and views. Your blog provides a fresh look at the subject.

  4. Carl Landry says

    Nice Blog!

  5. Tania Molitoris says

    I would like to point out my respect for your kind-heartedness supporting men and women that really need help with this important theme. Your very own dedication to passing the message all around appeared to be definitely functional and has constantly allowed regular people like me to get to their desired goals. Your own interesting key points implies a great deal to me and extremely more to my office colleagues. Thanks a ton; from all of us.

  6. 法律諮詢 says

    I appreciate your site and will subscribe to your rss feed so I can read anytime. Wonderful information?2

  7. Natural Store Coupon Code says

    Hello! I just would like to give a huge thumbs up for the great info you have here on this post. I will be coming back to your blog for more soon.

  8. dieta says

    de donde sacaste esta informacion.

  9. love the green says

    Well not really much to add here as this was superbly written. I can say that this was definitely what I was looking for though. I can’t count how many times I have looked on a blog for something and came up with something completely unrelated like searching for work boots and coming up with , or something like that. You know, while we are on the topic of this industry, you have to admit that it is becoming more and more diluted with a bunch of BS rather than quality information such as this article. I will definitely add this one to my list of RSS feeds. I just hope you keep it updated more often than you are right now, hah! Anyways, have a nice day and nice post.

  10. Cher Mccoggle says

    I am ready to go to Bahamas in 2011, I really enjoy reading about it, People and Places in Bahamas are truly fascinating

  11. pioneer car audio says

    I wish to say that the data you offer in this put up is excellent, fresh and helpful and Whoever check out this remark I extremely suggest your blog, in fact I already add it to my favorites. Stay running laborious and I am satisfied that there are people who are prepared to percentage their wisdom and expertise to the world such as you do in this blog.

  12. Creative marketing Hampshire says

    Among the first things a great deal of small businesses did when the economic crisis struck was to cut their marketing budget. Brand consultants and marketing agency’s were no longer needed, but now that the crisis is getting better lots of firms are pouring cash back into marketing. Locating a marketing agency is a piece of cake, there is tons around, and just about all can be discovered over the internet.

  13. Cars says

    I like the blog, but could not discover how to subscribe to obtain the updates by email.

  14. air max pas cher says

    I do not even know how I ended up here, but I thought this post was good. I do not know who you are but definitely you are going to a famous blogger if you are not already ;) Cheers!

  15. How to become a CNA says

    I took the Hurst review course too and loved it! It helped me so much on my exam! I found I was nervous too, but when I left the building, I knew I passed it with flying colors (scored 75). You’ll do great! :)

  16. Shelby car says

    I really enjoyed what you had to say.

  17. 1967 Shelby parts says

    great writing skills brotha! you are really talented.

  18. dieta man says

    Hey just wanted to give you a quick heads up. The text in your article seem to be running off the screen in Firefox. I’m not sure if this is a formatting issue or something to do with internet browser compatibility but I figured I’d post to let you know. The design look great though! Hope you get the issue fixed soon. Many thanks

  19. 1969 Camaro parts says

    haha the one who is posting the comments. My sis advised me about your site and how great it is. She’s right, I’m really impressed with the writing and slick design. Fantastic :D

  20. 1967 Camaro parts says

    Well I sincerely liked studying it.

  21. Camaro parts says

    Hello, I am not able to see your site correctly inside of firefox, I am hoping you can look into fixing this.

  22. free music says

    i like it Land Farm And Ranch | Organic Trends Benefit Farmland at T. Marc Schober now im your rss reader

  23. como bajar de peso despues del embarazo says

    I was wondering if you ever considered changing the page layout of your site? Its very well written; I love what youve got to say. But maybe you could a little more in the way of content so people could connect with it better. Youve got an awful lot of text for only having one or two images. Maybe you could space it out better?

  24. Diflucan says

    I feel like you could probably teach a class on how to make a great blog. This is fantastic! I have to say, what really got me was your design. You certainly know how to make your blog more than just a rant about an issue. Youve made it possible for people to connect. Good for you, because not that many people know what theyre doing.

  25. Black Tea says

    Awesome post mate.

  26. Joe Sumruld says

    Will i link as much as this, by my url page? I’m likely to get as many causes of facts as i am able.

  27. Lynell Cothran says

    Hey there, please tell us when we will see a follow up!

  28. Codi Boom says

    Concise and written well, thanks much for the info

  29. how to quickly become an rn says

    It really is amazing how much demand for organic has grown recently.

Continuing the Discussion

  1. Link Building Services linked to this post on March 8, 2011

    Great Websie…

    I loved this great post I saw today….



Some HTML is OK

or, reply to this post via trackback.

*


SSL