The US is importing more organic soybeans than it produces, according to recent data by the USDA’s Foreign Agricultural Service.
Despite steadily increasing demand for organic products, American soybean farmers have been reluctant to make the switch from conventional to organic. Thus, the US has been relying on imported organic soybeans (mainly from India) to fulfill its supply needs.
Organic soybeans imports jumped from about 24 million in 2013 to 122 million in 2017, increasing by over 400% in just 4 years. The need for organic livestock and poultry feed is fuelling this increase in demand. According to the agricultural consulting firm Agromeris, imports of organic soybeans and corn for feed have been growing at an average rate of 33% over the past 5 years, vastly outpacing the growth of organic feed grains produced by American farmers.
Meanwhile, conventional American farmers are struggling to break even. According to the USDA, net farm incomes are expected to decline to the lowest levels in 12 years. Struggling with low commodity prices (and concerns over a potential trade war), the premiums for organic and non-GMO crops are beginning to look more and more attractive.
Farmers who grow non-GMO soybeans see a premium of about USD 1.50 per bushel. The incentives for organic soybeans are even higher, paying farmers two to three times what they can expect to make from a bushel of conventionally grown soybeans. While overall yields are lower and the cost of labor higher, organic soybeans farmers enjoy higher returns for organic crops, according to studies by the USDA.
But making the transition from conventional to organic is not easy.
Farmers cannot use any pesticides or synthetic fertilizers on their land for three years before they can become certified organic by the USDA. Besides using non-GMO seeds and forgoing chemicals, organic farmers must also use equipment only on organic crops. These regulations can add significant costs for producers looking to farm both conventionally and organically. The USDA offers up to USD 20,000 per year for farmers looking to make the switch; however, some still feel the risk is too high to make the switch.
In order to reduce the organic trade gap and US reliance on imported organic feedstuffs, American farmers would need to convert approximately 600,000 more acres to organic.
If this trade war continues for much longer, producers may be enticed to switch by organic price premiums to protect their bottom line. If that’s the case, it’s always important to determine the risk-reward of getting out in front of the curve.
If you’ve already made the switch, you can post your organic and non-GMO soybeans on the FarmLead Marketplace to gain access to hundreds of qualified buyers.