A growing number of consumers are looking for healthier choices, particularly when it comes to grains. According to a new report from CoBank, a $120 billion cooperative bank that provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states increased consumer demand for organic and non-GMO foods. This 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.
“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 CoBank’s Knowledge Exchange Division. “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 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. In 2016 roughly 80 percent of soybeans supplying the U.S. organic market were imported.
The two main markets for organically produced grain in the U.S. are animal feed for organically raised dairy, beef, pork and poultry products, and ingredients used in organic consumer packaged goods. Analysts estimate that between one and five million U.S. acres would have to be transitioned to organic production in order to meet demand.
The report notes that some leading food manufacturers are finding new and innovative ways to incentivize growers for transitioning to organic production to help bolster domestic supply and reduce reliance on imports. Those include:
- free agronomic services to contract growers
- premiums for goods grown on transitional acres.
Growers and food companies can also use a new transitional certification to market their products for a price somewhere between that of organic and non-organic crops.
Demand for both non-GMO and organic crops will continue to grow said Kowalski, and, ultimately, monetary incentives will determine whether U.S. growers choose to step in and close the supply deficit. For growers in close proximity to a market and with options for multi-year contracts, non-GMO and organic production might be worth considering, he said.
This is encouraging news. Once again, consumers voices are making a difference – food producers are listening.