Increasing consumer demand for organic and non-GMO foods led to a sharp rise in organic grain imports in 2016—prompting food manufacturers to explore new incentives for U.S. growers transitioning to organic production, according to a new report from CoBank. While U.S. production of non-GMO crops has risen, domestic production of organic corn and soybeans remains well short of demand.
“Domestic supplies of non-GMO corn and soybeans increased steadily in 2016, as growers converted acreage and captured moderate market premiums,” says Dan Kowalski, director of the Knowledge Exchange Division at CoBank. “Transitioning to organic production, however, is a multi-year, risk-reward calculation that’s likely holding some U.S. growers back from taking advantage of the market opportunity.”
Imports of organic grains, particularly corn, from countries such as India, Ukraine, Romania, and Turkey surged in 2016 to meet the burgeoning U.S. demand for organic food products. Organic corn imports more than doubled from 2015 to 2016 and accounted for nearly one-half of the U.S. organic corn supply. The domestic shortfall for organic soybeans was even greater, with roughly 80 percent of soybeans supplying the U.S. organic market imported in 2016.
Animal feed for organically raised dairy, beef, pork and poultry products, and ingredients used in organic consumer packaged goods are the two principal markets for organically produced grains. For U.S. farmers to satisfy this growing appetite for organic foods, analysts estimate between one and five million U.S. acres would have to be transitioned to organic production.
“Apprehension among growers is likely fueled by the three-year transition period before their crops can be certified as organic,” says Kowalski. “Remaining profitable during that period is often a struggle and, coupled with the volatility of organic price premiums in 2016, grower uncertainty about the sustainability of financial rewards for transitioning to organic is warranted.”