High conventional prices keeping growers away from organic

By Adam Peleshaty
Glacier FarmMedia staff

Drought conditions in Canada and the United States, as well as rising input costs were just two factors fuelling the rise of conventional crop prices over the past year.

As a result, the rising prices have caused some organic growers to strongly consider switching over to conventional, if they haven’t already done so.

• Read more: Organic price quotes: Late April 

Scott Shiels, grain procurement merchant for Grain Millers Inc. in Yorkton, Sask., said that while demand for organic products remain strong and organic crop premiums have changed little, some growers are getting out of the organic sector.

“Because of such a strong increase in conventional grain prices, some of our acres are going back to conventional out of organic. We’re going to lose some producers this year, we’re going to lose some acres, which means we’ll lose some production,” he said.

“I have heard of a few people that aren’t growing organic this year,” said Jason Breault, elevator manager and grain buyer for RW Organic in Mossbank, Sask. “That always changes things up pricing-wise. There’s probably more coming out of organic than coming into it.”

Jason Freeman, chief executive officer of Farmer Direct Organic in Moose Jaw, Sask., said his business still has much of the same base of growers while acknowledging some are retiring.

When conventional prices are this high, you’re going to have a lot less transition to organics. – Jason Freeman

“We’ve worked with some of our farmers for over 20 years. It doesn’t seem to be an issue growing our base as our demand increases,” he said. “When conventional prices are this high, you’re going to have a lot less transition to organics.”

Freeman added that due to the rising costs of fertilizer and leftover pesticide residue from last year, some large-scale conventional farms are adopting practices seen at organic farms such as growing forages and using electrical weeding systems.

“Over the next 10 years, there will be a lot of opportunity for conventional farmers to reduce their chemical use so they can maintain the same fertility (for their crops) and become more profitable,” he explained. “It’s really exciting…Everyone wins right? Well, except for chemical companies.”

In Western Canada, recent weather may play a part in yields and prices. In the western Prairies, dry conditions have carried over into spring. Meanwhile, the eastern Prairies have received copious amounts of precipitation in recent weeks, delaying planting.

There’s not as much fear as there was before. – Jason Freeman

According to Freeman, most farmers would take wet fields over another year of drought.

“There’s not as much fear as there was before,” he said. “Most of the farmers, except in traditional dry areas, have a lot of moisture to seed into. People are feeling fairly optimistic.”

However, some growers are also waiting in trepidation.

“Everybody’s waiting to see if there will be another drought. That’s what everybody’s thinking,” Breault said, adding that most buyers believe they have enough supply until new crop as current demand has not been “too crazy”.

Shiels said prices may rise due to new crop quality issues related to wet weather and delayed planting. However, he doesn’t anticipate any significant price changes this spring.

“We’ll start to see (activity) perk back up in June when the guys come off the seeder and start looking to market that last bit of grain on the farm. That generally will soften prices,” he explained. “There is enough supply to get us through to harvest. We’ll probably see prices soften going into the summer and then we’ll start playing the weather game again and see where the new crop prices go from there.”