Supply glut dragging down organics market

“It’s that time of year. Prices always come down around seeding time,” Scott Shiels of Grain Millers Canada says. Photo: iStock/Getty Images

By Marlo Glass
Glacier FarmMedia staff

A supply gut and questionable market demand has organic farmers concerned.

“What we’re hearing from farmers is they’re having a tough time marketing anything,” remarked Scott Shiels of Grain Millers Canada Corp. in Yorkton, Sask.

Many organic grains are in a supply glut, which sees feed wheat contracts trading around $12.50 per bushel, hard red spring wheat at $12.25 per bushel, and feed oats from $3.00 to $3.50 per bushel.

Organic barley prices range from $6.50 to $7.00 per bushel, though one industry expert hopes to see prices stabilize as more crops come to market.

“As we head into spring, producers are looking to clear up some bin space,” said Dan Martinello, an organic commodity trader with Westaqua in Vancouver, B.C.

“It’s that time of year,” said Shiels. “Prices always come down around seeding time. You get a lot of farmers selling because winter is over and it’s time to empty out the bins.”

“Prices are way down because there’s an over-supply of organic feed grains,” agreed Jason Breault, a grain buyer at RW Organics in Mossbank, Sask.

There’s a lot of grumbling at the farm gate that organizations across the Prairies spend too much energy on helping farmers transition into organics, instead of marketing organics to consumers. – Jason Freeman

Durum prices are in the $10.00 – $15.00 per bushel range, “leaning towards lower,” according to Breault.

Breault hypothesized that the particular over-supply of spring wheat has to do with other commodities not performing as well as historically expected.

“Sometimes, wheat is something cheap to seed, so [producers] seed it because they know what to do.”

Breault, however, remains optimistic for the future. Though the organics market is currently facing a downturn, he expects prices to bounce back up.

“A few producers will sell out to their neighbour, and suddenly there’s a demand and prices go flying back up again.”

Jason Freeman of Farmer Direct Co-op says crops from 2017 have contributed to a softening organics market, as producers are selling carryover inventory at reduced prices.

Freeman believes that the organics industry has focused its energy too heavily on transitioning farmers into organics, instead of growing market demand for organic products.

“There’s a lot of grumbling at the farm gate that organizations across the Prairies spend too much energy on helping farmers transition into organics, instead of marketing organics to consumers,” he said.

“If you have demand, the supply side will take care of itself. If you don’t have demand, you’ll have nasty fluctuations on the supply side, and we’ve already seen that.”

Freeman surmised if markets remain stagnant, there’s a risk that some producers might get out of organics altogether.

While producers may feel “insecure” about current market demand, the 2019 growing season may be an opportunity to position for success in years to come.

“The best thing I recommend is rotation, look after your land this year,” said Breault.

“I’m not sure how much money is to be made this year but if you can set yourself up for when prices come up, that’ll be better for everybody.”