Organic bids unaffected by soaring conventional markets

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By Phil Franz-Warkentin
Glacier FarmMedia staff

Bids for many organic commodities were few and far between in February, with prices for any grains or pulses still trading holding relatively steady despite ongoing strength in the conventional sector. The narrowing price spread between conventional and organic crops may lead to a reduction in organic acres as producers reconsider their seeding options.

“The conventional market has jumped enormously, but the organics didn’t follow at all,” said Wes Reid of W.A. Grain and Pulse Solutions in Alberta. He added that producers are watching the strong conventional prices and are looking for higher organic prices, “but the buyers are saying ‘no.'”

That wide discrepancy between what farmers want to sell for and what end users want to pay has some producers questioning the extra challenges that go into growing organically.

Organic doesn’t change as much on the daily, but it has larger swings when it does swing. – Andrew St. Jean

High quality organic milling wheat is currently trading at less than double the top end bids for conventional feed wheat, said Reid, adding “there’s a disconnect.”

“The supply has to be used up and depleted, and then the organic buyers will come back to the marketplace and start relating to what the producers are asking,” said Reid. “If this continues for another year, you’ll probably lose 10 per cent of organic farmers – they can’t hold out that long,” he added.

“Producers are watching it… but it hasn’t had a huge impact yet,” said Dwayne Lee, of Growers Direct, in Winnipeg, on the strength in the conventional market. He noted that the day-to-day volatility of the conventional market means there will be times when organic and conventional prices close in significantly. However, organics generally manage to hold a premium in the long run.

“Organic doesn’t change as much on the daily, but it has larger swings when it does swing,” said Andrew St. Jean, of Beechwood Agri Services in Ontario.

Jason Breault, of RW Organics in Saskatchewan, noted that organic feed barley is “pretty much the same as conventional,” with only a 25 cent premium in some cases.

The dynamics in conventional are completely different than the dynamics in organic. – Harro Wehrmann

When it comes to organic acres, “we’re in for a little bit of a downturn,” according to Breault. However, he added that such a decision likely wouldn’t come easy, as taking land out of organic means it would take another three years to re-certified again.

“The dynamics in conventional are completely different than the dynamics in organic,” said Harro Wehrmann, of Wehrmann Grain & Seeds Ltd. in Ontario. “The second guessing will probably be coming from people who are on the verge of converting to organics,” questioning a move to an organic cropping system if conventional prices are so high. As a result, he expected to see some attrition in the conversion to organics, especially in Western Canada.

In Ontario, “the market seems to be picking up a bit,” said St. Jean. After a quiet winter, “grain is moving again and there’s a bit more demand.”

“There’s a real shortage of soybeans, with some issues going around worldwide,” said St. Jean. He said certifiers in India getting decertified has put pressure on the meal market, causing volatility in soybeans.

Wehrmann added that a lack of containers and inspectors was contributing to nearby strength in soybeans, noting that “food and feed soybeans are basically the same price.” He added that “feedmills are only buying hand-to-mouth, they don’t want to go long just in case things change.”

Corn, meanwhile, is more subdued, according to Wehrmann. He pointed out that the closure of restaurants due to the COVID-19 pandemic meant that there has been less demand for organic chicken.