Insulated from last year’s price hikes, organic feed now faces escalating costs
After nearly two years of volatile corn and soybean markets, organic feed producers now face rapidly increasing costs alongside their conventional counterparts.
Organic corn and soybean prices were only marginally higher than conventional prices this time last year, with corn running US$7.50 per bushel and soybeans about US$19, according to Ryan Koory, vice president of economics for organic commodities marketplace Mercaris. Prices this year, he said, are running US$10 per bushel for corn, and US$33 per bushel for soybeans — with the potential for soybeans to reach even greater heights.
“I hear people saying they are going to hold onto their soybeans until they hit US$50 this year,” and their strategy may not be too far-fetched, Koory said. “They may hit US$50.”
The price hike, Koory said, is primarily a result of the trade situation with India. In January 2021, the U.S. Department of Agriculture (USDA) announced that it would no longer recognize India’s organic certification process, and that organic growers in that nation would have 18 months to apply for certification with the USDA. Because it seemed as though farmers had plenty of time to comply with the new rules, the announcement didn’t trigger an immediate reaction, Koory said. But then the U.S. International Trade Commission announced that it had begun an anti-dumping investigation focused on organic soybean meal from India. Imports from India, which previously supplied on the order of 40% of the organic soybeans used for feed in the U.S., began to drop rapidly.
“Imports from India are down substantially — the lowest since we started tracking in 2015,” Koory said.
Organic soybean production has increased in the U.S. in response, hitting 9.4 million bushels in 2021 — a 15% larger crop than 2020. And producers have begun to seek out alternative oil seeds such as sunflower and canola, but these too are in limited supply.
“With India accounting for so much of the U.S. supply picture, it is virtually impossible to propose a situation in which you will find that supply somewhere else,” Koory said. “You can’t ratchet up U.S. soybean acres that fast.”
Corn, meanwhile, hasn’t seen quite the same rate of escalation. Current prices represent more of a recovery from last year than an increase above norms, Koory said. But prices may begin to creep higher as the influence of inflation and high costs in conventional farming kick in, he said.
Fertilizer prices present a particular challenge, Koory said. Even though organic farmers cannot apply chemical fertilizers to their fields, the rising cost of nitrogen has the conventional sector reaching for other solutions—and competing with organic farmers for the manure they typically apply to their own fields.
“Farmers have definitely talked about not being able to get a hold of fertilizers or reducing applications,” Koory said.
With soybean prices at record highs, there is also some speculation that farmers may reduce their corn acreage this year, which is nudging the price of corn upward as producers seek to secure contracts ahead of a potentially tight market this fall.
“My heart goes out to the individuals working in procurement or farmers trying to figure out planting,” Koory said, “because there are so many things that are potential huge market risk factors right now, and it’s hard to lean in on one thing and say, ‘If I can figure this one thing out, I can make this work.’”