USDA organic report: soybean acreage down, corn acreage up

According to a recent report by the US Department of Agriculture Economic Research Service (USDA-ERS), acreage of organic soybeans has dropped in recent years after reaching a peak of 174,467 acres in 2001. Organic soybean acreage in 2005 was 122,217.

Despite the decline, organic soybeans remain a leading organic crop in the United States, ranking third behind wheat and corn in total acreage in 2005.

The USDA-ERS report also finds organic corn acreage increasing, growing from 99,111 acres in 2004 to 130,672 acres in 2005.

Competition from China
Perhaps the biggest reason US organic farmers are growing fewer organic soybeans is that major soymilk manufacturers, such as WhiteWave Foods, are importing organic soybeans from China.

“The availability of foreign sourced soybeans certified organic under the NOP has held back price increases on organic soybeans contributing to the loss of financial allure to organic farmers,” says Lynn Clarkson, president, Clarkson Grain.

Another organic grain supplier says, “Cheap imports from China are having a net impact on US organic soybean production.”

Farmers lost Japanese contracts to China
Cathy Greene, senior agricultural economist and author of the USDA-ERS report, attributes two factors to the declining organic soybean acreage. “In the early part of the decade farmers had lucrative contracts with Japan, and those contracts have disappeared with Japan now contracting with China,” she says. In addition, Green says the US National Organic Program has streamlined the process for other countries to import organic products into the US. Instead of relying on country-to-country negotiations for importing products, foreign organic suppliers can gain access to the US market by being certified through an NOP-accredited organic certification firm.

Other grain suppliers also see US farmers losing organic soybean export markets. “The Japanese market has almost completely flipped over to Chinese beans because they are cheaper,” says Steve Ford, president, Stonebridge, Ltd.

Ron Haaland, vice president of marketing, Specialty Export Productions agrees. “China has cut into the Japanese and European markets,” he says.
Ron Roller, president, American Soy Products, Inc. says US soymilk manufacturers are also buying organic soybeans from South America.

“Totally destroyed us”
From one organic farmer’s perspective, US farmers can’t compete with cheaper Chinese soybeans. “What’s totally destroyed us is the Chinese coming in with $14 (per bushel) soybeans. A lot of farmers are saying it’s not worth growing soybeans,” says Mike Hilton, an organic farmer and consultant based in Lacygne, Kansas.

Hilton says farmers were getting paid as much as $16 to $22 per bushel for soybeans in recent years, but now prices have dropped as low as $11 per bushel.

In addition, Hilton and others question the integrity of China’s organic farming operations. There are reports of Chinese farmers using human waste called “night water” to fertilize their fields. “There is nobody watching what they’re doing over there,” says Hilton.

“Being certified in China is not the same as being certified in the US,” says Haaland.

Another grain supplier says, “Is it really organic coming from China? I have real doubts about that.”

“Loyalty isn’t with US organic farmer”
Experts say that cheaper Chinese imports are entering the US market because of the increasing domination of the organic market by large food companies who base their buying decisions on the cheapest price.

“Conventional companies are sourcing raw materials as cheap as they can and where they can get them,” says John Bobbe, executive at Organic Farmers’ Agency for Relationship Marketing.

Another organic grain supplier says, “The organic food industry is dominated by large corporations, and their loyalty isn’t with the US organic farmer; it is with getting the lowest price.”

Increased acreage every year
While others see decreasing organic soybean acreage, Jim Skiff, president, US Soy, sees it increasing. “We have increased our acreage every year for the last three years and will increase again this year,” he says.

Skiff says he receives many inquiries from conventional farmers wanting to know more about producing organic soybeans.

However, he acknowledges that imported soybeans are having an impact. “Our experience doesn’t jibe with (USDA-ERS) data unless food manufacturers are importing a lot more than I’m aware of, and that could be,” he says.

Corn acreage increasing
While organic soybean acreage is stagnating, organic corn acreage is increasing. Greene says this is due to increased demand for organic feed. “A big part of the growth is in feed grain due to the fast growth of the organic livestock sector,” she says.

Roller agrees, “There is greater demand and higher prices for organic feed crops, especially corn, fueled by the increased sales of organic milk, eggs, and meat products.”

Greene noted that demand for organic corn in food products has also increased.

As stated earlier, the USDA-ERS report finds organic corn acreage increasing with a 30% jump from 2004 to 2005. In addition, 2005 was the first year that organic corn acreage exceeded that for organic soybeans.
Organic corn acreage is expected to increase again in 2007 with prices ranging between $5.50 to $6.50 per bushel.

Another grain supplier says, “Most other grain production has increased for organic farmers. The only organic crop that has seen a decrease in value over the last three years is soybeans.”

Other grains and oilseeds besides corn competing with organic soybeans for acreage include milo, wheat, barley, oats, flax, and sunflowers.
Copyright The Organic & Non-GMO Report 2007. (February 2007).