Organic Crop Production

Can you make money going organic? We know there is a growing demand for organic products. Prices for organic over the past 5 years have been consistently strong. Grain prices have been 2-3 times conventional grain prices. 

Organic Grain Prices

Organic prices are set based on supply and demand. Prices have no connection to the Chicago Board of Trade prices that set the trends for most conventional crops. Therefore, the current upswing in corn prices has no impact, just as the low prices of the past few years had no impact.

Organic grain prices for next fall are strong. This is due to both the food grain markets and the strong livestock feed markets for the rapidly growing organic livestock sector. A weak spot this winter has been in food grade soybeans, which have come under increasing pressure from Chinese soybean imports and the hesitation by Canadian organic grain handlers to try to match their low prices. China has also been strong in the Japanese market, which has been a destination for many Ontario soybeans over the years.

Organic Crop Budgets

The 2007 OMAFRA Crop Budgets (www.omafra.gov.on.ca/english/busdev/facts/pub60.htm) include budgets for organic grain corn, soybeans, spelt, winter wheat, barley and oats. The organic production includes slightly more expense for mechanical weed control and hand weeding. The expenses for herbicides and fertilizers are omitted. Costs for manure/compost and cover crops are also included as appropriate, but the actual costs of these inputs will vary depending on the farm. Overall, the costs per acre are very similar for organic and non-organic crop production when using conventional tillage.

Organic Crop Returns

The following chart estimates some yields, prices and gross margins (using the budgets) for organic and non-organic production. Organic yields are assumed to be about 20-25% lower than conventional yields, but this varies and generally improves with organic experience. Prices and yields will vary for your farm situation. I recommend you look at the OMAFRA crop budgets to enter in your own input numbers. Land costs and the cost of transition to organic are not included in this comparison.

These numbers can look impressive for organic, but organic is not for everyone. Converting to organic tends to be a long term commitment and requires good records for the certification process. The transition to organic will take 2 to 3 years, where the field must be managed as organic and the transition crop is generally not able to get premiums. The best transition crops tend to be cereals and hay crops. Weeds are usually the biggest problem to manage in row crops, but good rotations help to manage weeds. You must use non-GMO crops. More information on organic on our OMAFRA website.

Related Links:

• 2007 OMAFRA Crop Budgets
• Organic Crops Factsheets and Infosheets

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