Countryside Organics and it’s predecessor company, Countryside Natural Products, have always held tight to a core value and policy of fairness with regards to the pricing of grains and how we factor grain costs into our feed prices. We have worked hard to weather seasonal bumps and spikes in grain prices to help avoid ratcheting prices on our products. As competition for North American Organic grains continues to heat up it is getting more and more difficult to absorb and weather the every increasing volatility in the market. There are a number of different factors which are playing into continued grain price volatility.
Corn: increasing demand, shrinking supply. We’ve seen a cost increase of 35% for organic feed corn just in the past six months. This on top of a 70% rise in 2011. Severe heat and encroaching drought conditions in the US Corn belt are exacerbating concerns and speculation about the 2012 crop and prices are likely if not certain to continue rising. What was set to be the largest US corn crop in 75 years is now likely to yield much lower tonnage than expected, bringing higher prices for conventional and organic corn. Continued high prices for conventional corn are causing an erosion of organic corn acre percentages as some farmers abandon organic for conventional. Additionally, steadily increasing land prices are driving higher acreage lease costs, which, in competition with conventional farmers for the same land, creates additional higher costs for organic corn production. Increasing worldwide demand and the continued pressure from ethanol production continue to push overall corn prices upward.
Corn, all by itself, is creating significant problems in organic grain pricing.
What else, besides corn? In general, prices are rising because there is an increased demand for organic foods coupled with a pronounced lag in the conversion of conventional farmland to organic acres. Increased demand with a lagging indicator for supply. What do we need? More organic acres. We need an end to the ethanol subsidies. An end to GMO subsidies. Overall, we need increased incentives to convert to organic acreage.
More organic acreage is vital.