Fall 2016 Logan County
Farm Outlook Magazine

The benefits of growing organic corn and soybeans
By  Angela Reiners
Data compiled from USDA reports by Jan Youngquist

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[November 04, 2016]  What's new in farming? It's not all about new machinery and better seed or chemicals. There's a relatively new area of agriculture that is creatively new and, at the same time, very old: organic production.

Making the transition to grow an organic corn or soybean crop requires time and patience, plus some fundamental changes in farming techniques.

The land will need to be farmed according to new national standards such as not using synthetic chemicals as pesticides and fertilizers, and not planting genetically modified seed.

Going organic requires a long term strategy because you will need to learn production standards, develop a transition strategy, find potential markets for products, keep detailed records, apply for certification, and become officially certified.

The process for land to become organically certified takes three years and there are several standards that must be followed.

The USDA states organic crop production standards require that :

  • Land must have had no prohibited substances applied to it for at least three years before the harvest of an organic crop.
     
  • Soil fertility and crop nutrients will be managed through tillage and cultivation practices, crop rotations, and cover crops, supplemented with animal and crop waste materials, and allowable synthetic materials.
     
  • Crop pests, weeds, and diseases will be controlled primarily through management practices including physical, mechanical, and biological controls. When these practices are not sufficient, a biological, botanical, or synthetic substance approved for use on the National List may be used.
     
  • Operations must use organic seeds and other planting stock when available.
     
  • The use of genetic engineering, ionizing radiation and sewage sludge is prohibited.


Starting the process of becoming organically certified requires specifically documenting the last time prohibited materials were used. Compost, animal manure, and green manure are some of the fertilizers that may be used in the place of synthetic fertilizers.

Atlanta's PrairiErth farms, owned by the Dave Bishop family, has been organically certified for a few years. In the farm's fertilization processes, "We use compost as fertilizer and all of the compost comes directly from our farm. Whether it be manure or vegetable waste, it breaks down for a season, then is spread on the field in the following spring. We also use cover crops, also known as green manures. These crops are grown for the sole purpose of what they return to the soil when they are then tilled under."

The health of the soil is very important for growing organic crops. In the article "Time to Transition Your Farm to Organic," Illinois Stewardship Alliance's Conservation Associate, Woody Woodruff says, "One of the underlying principles of organic farming is the building of healthy soils with good structure, high organic matter, diverse soil micro and macro fauna, and high water-holding capacity."

The Guidebook for Organic Certification published by the Midwest Organic and Sustainable Education Service (MOSES) says, "Organic farmers don't substitute 'approved' inputs in place of synthetic fertilizers and pesticides. Rather, organic farmers continuously improve their farm system by building and balancing soils..."

With all the changes during the transitional period, patience is needed. As Tom Doran, a field editor for Agrinews says, "Getting through those first two years of transitioning to organic is a challenge."

Harold Wilken switched over to organic production at his farm near Danforth several years ago and describes some challenges. Wilken says, “You really have to tighten your belt in those two years because you are getting conventional prices and farming organically. But nowadays the costs of conventional farming are so high that actually going into transition isn’t as bad as it used to be."

Several other measures need to be considered when making a transition to organic farming. The USDA says organic operations must implement preventive practices based on site-specific risk factors, such as neighboring conventional farms or shared farm equipment or processing facilities.

The organic system plan documents several measures. For example, organic farmers must plant "early or late to avoid organic and GMO crops flowering at the same time" due to risks of "cross-pollination."

Communication with conventional farmers is beneficial. The USDA says it may be helpful to "sign cooperative agreements with neighboring farms to avoid planting GMO crops next to organic ones."
Some organic farmers may "... designate the edges of their land as a buffer zone where the land is managed organically, but the crops aren’t sold as organic."

It is also important to "Thoroughly clean any shared farm or processing equipment to prevent unintended exposure to GMOs or prohibited substances."

Good record keeping is another important part of the transition. The Illinois State Department of Agriculture shows a list of information required to become organically certified, such as by showing "substances applied to land for the previous three years" and "Organic products being grown, raised, or processed."

The applicant's organic plan, must show "practices and substances used in production" and "describe the monitoring practices to be performed to verify that the plan is effectively implemented." It should also detail "the record-keeping system, and the practices to prevent commingling of organic and non-organic products and to prevent contact of products with prohibited substances."

The transition from traditional to organic also means finding a market for products, but that may be less challenging. As organic products have become more popular, there are more markets for these products, and sales have increased in recent years. Organic grains for livestock and poultry feed capture a premium price.

In today's increasingly health conscious society, the market for organic products is growing along with plenty of informational resources. Grocers and other consumer markets carry an expanding line of organic products.

 



Though the transition and implementation may be challenging, the change may be beneficial to those who may want more control over input costs and market options.

According to the University of Illinois Extension, "Growing organic grain is an emerging trend in agriculture. An increasing number of farmers realize that gaining control over their marketing, and tapping into the strong demand for identity-preserved organic grain has many benefits."

Organic crops show higher profits

Certified organic crop acres more than doubled between 2002 and 2011, and that trend continues today. Of the then over 3 million acres certified organic, 264,000 crop acres were in corn, soybean and wheat.

As organic production interests increase and new local markets emerge, organic crops are offering new opportunities to the farmers.

Experts find it challenging to report and project just how much profit might be realized by turning to organic, as records currently only offer "limited time-series data."

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The USDA put together a report in 2015 based on an Agricultural Resource Management Survey (ARMS) that was conducted of targeted organic farms.

The economic analysis examined only operating or variable costs. It excludes the economic costs of land, labor and capital. Mean figures were used that also incorporated transition to becoming certified organic costs. Organic production figures are expected to continue to change for the better.

Summarized high points from the 2015 study:

  • Significant price premiums paid for certified organic crops.
     
  • Additional economic costs of organic versus conventional production were more than offset by higher returns from organic systems for corn and soybeans, although not for wheat.
     
  • Organic field crop production was, on average, conducted on farms with less total acreage and less field crop acreage than conventional farms.
     
  • Despite having fewer acres, producers of some organic field crops were less likely to work off-farm. These producers were also more likely to have attended college than conventional producers.
     
  • Most organic producers used mechanical practices, such as tillage and cultivating for weed control.
     
  • Organic corn and soybean producers more often rotated row crops with small grain and meadow crops and often included an idle year in the rotation.


     
  • Experimental research on organic field crop production has found similar yields and lower per-acre costs from organic relative to conventional field crop production.
     
  • Observational study of commercial organic and conventional field crop production found lower yields and mostly higher per-acre total economic costs from organic systems.
     
  • As in much of the economic analyses using experimental data, per-bushel operating costs of organic relative to conventional systems were similar in this study. However, the per-bushel economic costs of organic production were significantly higher because of the higher per-acre costs and lower yields.

The economic costs of organic compared with conventional production estimated in this study were roughly between $83 and $98 per acre higher for corn, $55-$62 per acre higher for wheat, and $106-$125 per acre higher for soybeans. These estimated cost differences are all higher than those suggested by the relative means.

Results of this study conclude, "some conventional farms may be able to earn greater returns if transitioned to organic production."

Researchers observed:   "adoption of the organic approach among U.S. field crop producers remains extremely low, the report surmised that, "perhaps a key factor is that organic field crop production is particularly challenging compared with conventional production in achieving effective weed control and crop yields.

"The processes involved with organic certification can be complex and time-consuming."

-----

Additional economic research and analysis figures in 2015 show organic corn and soybean production had higher returns than traditional corn and beans.


Click on image for larger version

Organic production costs are higher than conventional costs, but higher prices received for organic crops more than offset the higher costs for organic corn and soybeans, although not for organic wheat.

Difference between organic
and conventional

Crop Economic costs
($ per bushel)
Economic costs
($ per acre)

Returns above economic costs
($ per acre)
Corn 1.92
to 2.27
83
to 98
51
to 66
Wheat 3.90
to 4.46
55
to 62
-9
to -2
Soybeans 6.62
to 7.81
106
to 125
22
to 41

Source: USDA, Economic Research Service calculations using Agricultural Resource Management Survey data and include production cost differences plus organic transition and certification costs.  The range of costs and returns was generated from alternative statistical methods.

While organic wheat profitability remains low, field to table marketers are excited by new hybrid wheat with higher nutrient and protein values, as well as plans to develop hub (localized) stone grinding. Wheat would likely gain a new standing in the local organic feed and food markets and become profitable in the near future.

Resources:

Read all the articles in our new
Fall 2016 Logan County
Farm Outlook Magazine

Title
CLICK ON TITLES TO GO TO PAGES
Page
Year in Review 4
Sustaining the farm 6
On-farm storage helps with profitability in 2016 10
How commodity prices and profits are affecting equipment sales 15
Agricultural science and technology:  Have we gone too far? 15
The benefits of crop rotation 22
Finding some profit:  The benefits of growing organic corn and soybeans 26
Growing alternative crops for more profit 32
Is the Illinois Nutrient Reduction Strategy counter intuitive to profits? 41

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