New-crop organic premiums vary by crop

Flax flowers in bloom. Photo: Laura Rance

By Jade Markus
OrganicBiz staff

Offshore competition is putting pressure on organic wheat prices, but premiums remain high for new-crop flax, oats and mustard, according to analysts and traders.

Meanwhile, strong prices for conventional pulses may discourage growers from making the extra effort to produce organically.

As new crop prices emerge, buyers are aggressively seeking out special crops, said Laura Telford, organic sector development specialist at Manitoba Agriculture, Food and Rural Development. She named flax and mustard as two crops seeing significantly strong pricing.

We’re really trying to encourage our members to grow hemp, because it is a growing market. – Jason Freeman

“It’s just slow and steady up, and it’s been that way for a while,” Telford said.

That’s also the case in Saskatchewan, according to Jason Freeman, general manager at Regina-based Farmer Direct Co-operative Ltd.

“Flax is good, both brown and gold flax are great,” he said.

Farmer Direct Co-operative is offering brown and gold (also known as yellow) flax contracts at $40 per bushel to its members, and $0.90 to $1 per pound for yellow mustard.

“We are also really trying to encourage our members to grow hemp, because it is a growing market,” Freeman added.

Grains

Buyers are not actively seeking out crops that have been under pressure in previous years, such as soybeans and wheat, Telford said. “That’s a big change, and I think those may be the crops where we see some imports.”

Despite weaker demand for grains, prices are still relatively strong due to losses in the Canadian dollar against a bundle of currencies.

Freeman said there are significant stocks of organic wheat available, “but organic grains are moving much better than conventional grains,” he added.

Oats are one of the strongest spots in the organic market, according to Bryce Lobreau, owner at Pipestone, Manitoba-based Pristine Prairie Organics. He is offering $7 per bushel for new crop oats.

“There’s some gluten-free markets for oats that are paying a premium above that. That’s a real strong point,” Lobreau said.

Price advantage

Organic producers tend to look at absolute prices for organic commodities as well as the price advantage compared with conventional crops, Telford said.

Strong conventional pea and lentil pricing will likely make organic versions of those crops less attractive this season, she added.

“The premium has disappeared and I think producers look at that and do the logical thing.”

However, Telford added that there’s only a certain amount of flexibility for producers to switch up crop rotations based on market trends.

“They kind of have to follow what works for their rotation, so within that structure there isn’t a great deal of opportunity to be swayed by market trends.”

Outside markets

Lobreau said organic prices remain relatively strong, but competition from other regions has pressured the over all market.

“Prices have come off their highs because of imported grains. There’s some competition from overseas, so that’s putting a top on how high our prices can go,” he said.

Argentina and Ukraine are two of Canada’s main competitors in the organic wheat market, Telford said.

That price depression from rival growing regions is especially prominent in the organic feed sector, Freeman said.

“We’re trying to maintain our prices, but there has been pressure on the price of feed because there’s a lot of offshore corn hitting the markets.”

India is typically Canada’s main competition in the pulse market, Telford said, but adverse weather in the country could mean more room for Canadian crops this season.

New growers

The market has seen increased interest from producers who are looking to become certified organic, which could depress premiums, especially for grains.

“There’s more producers becoming involved, and we’re going to see an effect eventually,” Lobreau said.

That effect won’t be seen for a few years, as it takes 36 months, or three growing seasons to become certified organic in Canada.

Freeman also thinks an increased number of farmers transitioning to organic will put pressure on the market long-term.

“Because of the price differential there are a lot of conventional farmers looking to transition to organic,” he said. “I don’t know if the market can sustain that much transition, so I think there will be a glut, especially in organic grains.”

Telford said it’s difficult to calculate the exact number of producers transitioning to organic in Manitoba, as regulations don’t require producers to register for pre-inspection until 15 months into the 36 required months.

“But I have definitely noticed that trend at least in Manitoba and I am hearing the same thing across the Prairies. There’s a lot of new entrants,” she said.

Telford estimates an increase of more than 20 per cent in the last year alone.