By Kristen Corselius

Posted January 29, 2004: Even the gray gloom of a rainy November day couldn’t stifle the energy bubbling forth from Iowa State University’s Scheman Building, where some 350 farmers, scientists and consumers convened to discuss one of agriculture's fastest growing sectors at the third annual Iowa Organic Conference.

Iowa now boasts over 100,000 of the country’s 2.5 million organic acres. Ranked second in the nation for organic soybeans, fourth for organic grains and eighth in organic livestock, Iowa is becoming a major player in field of organics.

In his opening remarks to conference attendees, Brent Halling, Iowa’s Deputy Secretary of Agriculture, praised Iowa’s organic growers and researchers. “I am gratified and satisfied with the progress organic agriculture has made in Iowa and nationally,” he said. With annual growth expected to continue at 20 percent, Halling argued that organic production is not just a trend, but here to stay. “There are exciting opportunities for organic agriculture in Iowa.”

Conference speakers encouraged participants to get involved in the larger organic movement, beyond the farm. Now a $10 billion industry, organic agriculture has captured the attention of multinational companies—making attentiveness on the part of producers more important than ever. As one speaker stated, “We have to be activists, not just farmers.”

What follows are a few of the day’s highlights on the profits, policies, and production of organic agriculture in the Upper Midwest.

Organic Valley’s success

The day began with Theresa Marquez, director of marketing for Organic Valley Cooperative, offering insights from one of the country’s oldest and most accomplished organic dairy pools.

Organic Valley is the brand for the Cooperative Regions of Organic Producer Pools (otherwise known as CROPP) based in Lafarge, Wisconsin. The 650-member farmers' cooperative is now the largest farmer-owned organic dairy in the country, possibly in the world. Since it began in 1988, Organic Valley continues to surpass the industry’s annual growth average of 20 percent. This year’s projected revenue is $156 million, up 22 percent from record sales and profits in 2002. Organic Valley pays the highest prices for dairy in the country, almost twice the price of conventional milk (OV pays $17.95 cwt compared to $10.97 cwt for conventional). While national statistics estimate that 28 farmers go out of business each day, Organic Valley plans to add 121 new farmer members to their dairy pool next year.

What’s the secret to Organic Valley’s success? Marquez said it's “all about having a fabulous product and trying to predict trends.” And, she added, making sure the cooperative continues to align its values with its customers'.

To maintain product quality and integrity, Organic Valley sells product exclusively from its farmer-members. Those same members determine the pay prices for milk and control the market’s supply. Other elements of Organic Valley’s success include a diversified product line, a low debt load, and innovative marketing strategies such as regional branding and celebrity endorsements.

Organic Valley does face challenges, however. Marquez finished her talk by sharing some of the factors that threaten Organic Valley’s future as a family farmer cooperative. The three biggies include industry consolidation, frequent buy-out offers, and repeated attempts to prohibit or discredit meaningful labels like “organic” (such as the Hudson Institute’s “Milk is Milk” campaign).

In her final remarks, Marquez urged farmers to stay current with industry news and respond to efforts to slander organics. “We all need to step up right now and write letters to the editor" or otherwise contribute to the public debate, she emphasized. "Consumers need the real facts on organic agriculture."

Program opportunities for organic farmers

Later in the day, Larry Beeler of the Iowa Natural Resource Conservation Service joined Traci Bruckner of the Center for Rural Affairs and Amy Natvig of northeastern Iowa to discuss state and federal program opportunities for organic farmers.

Granted, it's federal money: Larry Beeler of the Natural Resources Conservation Service spoke about federal conservation programs.

Beeler explained changes to the Environmental Quality Incentives Program (EQIP) under the 2002 Farm Bill. EQIP is a federal program offering financial and technical assistance to implement structural and management practices on eligible agricultural land.

According to Beeler, each state now determines the main problem areas to be addressed using EQIP dollars. In Iowa, a state technical committee provides input on environmental concerns associated with Iowa agriculture. Most EQIP funds are dispersed to the county level based on the recommendations of the state technical committee.

Although EQIP funding at the state level is no longer available to transition to organic crop production, funding may still be available at the county level. Beeler recommended that producers interested in converting to organic should contact their local NRCS offices and encourage local counties to include incentives for organic production. In addition, he mentioned that the USDA Agricultural Marketing Service now provides financial assistance via the Iowa Department of Agriculture to have crops certified as organic.

Traci Bruckner talked about the Conservation Security Program (CSP), a new farm program passed under the 2002 Farm Bill. Considered by many to be a landmark program, CSP will provide incentive payments to enhance conservation practices on working lands. Unlike other farm programs that help bring farmers into conservation compliance, CSP rewards farmers who already employ good conservation practices and want to do even more.

Although organic growers would not automatically qualify for CSP, Bruckner told participants they could have an advantage over conventional growers due to the conservation practices required for organic certification. “You will have a huge leg up to qualify because you [organic farmers] have extended crop rotations.”

For Amy Natvig, CSP can’t come soon enough. Natvig and her husband Mike raise organic crops and livestock on 420 acres in northeast Iowa. She gave a slide show of the conservation practices used on their farm. In addition to following an eight-year rotation, they’ve restored prairie, put in buffer strips, and installed terraces and windbreaks. The Natvigs receive no support from the government to implement these costly practices. They do it because of their commitment to ecologically sound farming.

Still, Natvig expressed frustration that her neighbors continue to get government support simply to raise corn and soybeans. She is hopeful, she said, that CSP will “help level the playing field as far as federal dollars go and finally get some of the money to the little guys.”

Bruckner and Natvig also encouraged the audience to pay attention and get involved in the rule-making process for programs like CSP. Although passed as an entitlement program under the 2002 Farm Bill, CSP has already faced numerous attempts to cap or eliminate it. Thanks to the vigilant efforts of farm groups and farmers, CSP is now back on track to full entitlement status. Although delays in the proposed rule continue to slow the program’s implementation, CSP supporters hope the program will be up and running in 2004.

Is organic farming more profitable than conventional farming?

Yes--according to both Holly Born of the National Center for Appropriate Technology (NCAT) and Craig Chase, an Iowa State University (ISU) farm management specialist. In an afternoon session, Born and Chase shared their analyses of studies comparing the profitability of organic versus conventional systems.

Born presented economic data from organic research conducted at the national level. She found that although price premiums for organic grains and soybeans have fallen somewhat since the 1990s, organic agriculture continues to be profitable, thanks to lower input costs and strong yields.

Contrary to the notion that switching to organic agriculture entails a dramatic drop in yields, Born found that average productivity per acre in organic systems is 90 to 93 percent that of conventional agriculture. And in fact, under drought conditions or in drier areas, organic systems actually perform better.

Chase shared similar results from data collected over four years at ISU’s Neely-Kinyon Research Farm. He compared the economics of Iowa’s conventional rotation (corn, soybean) to two certified organic rotations (corn, soybean, oat/alfalfa and corn, soybean, oat/alfalfa, alfalfa).

Chase found that although the organic rotations had considerably lower input costs than the conventional, the yields for the systems were comparable. Moreover, returns on land, management and labor were significantly higher in the organic rotations than in the conventional rotation—especially when organic growers had access to on-farm compost. Based on his research, Chase argued that price premiums for organic are not as critical for economic viability as commonly thought. Including high-value crops such as soybeans, however, is important for higher average rotational returns.