Three years ago, organic grain farmers could have been forgiven for thinking they’d found nirvana. They were the darlings of an ever-growing environmental movement. They were swooned over by consumers eager for safe and healthy food. And they were getting paid up to three times more than conventional.
With wheat at $25 and $30 per bushel, it’s no wonder they felt so good.
Since that time, prices have tumbled and markets collapsed. So while organic farming continues to flourish especially in fruits and vegetables, the pain has been intense on many grain farms.
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About a third of the 3,900 certified organic farms in Canada are grain growers in Saskatchewan, yet the peak of 2008 led to a very deep valley. It swallowed markets and glutted organic grain.
“As recently as January I spoke with people who have grain in bins from two years ago,” says Laura Telford, executive director of Canadian Organic Growers in Ottawa.
A decade ago organic prices were usually set as a premium over conventional prices. Not now. Recent increases in conventional grains haven’t been reflected on the organic side.
“It almost seems like the prices are getting decoupled,” says Telford.
Depressed prices are driving farmers out from under the organic umbrella. Most-recent statistics from 2008 showed only a slight decline in the number of organic farmers from the all-time high of 2007, but since that time industry analysts say a significant number of grain farmers have returned to conventional farming.
Part of the price crash is due to the overwhelming success of so-called “natural” products in the marketplace. Just when government finally brought in mandatory certification standards for organic production, this new movement has taken the legs out from under the process.
Processors take largely conventionally grown grains, package them using the same brand as their organic products, and sell them at a discount compared to certified organic, says Tom Cowell, general manager with Growers International, a subsidiary of Patterson Global Foods out of Winnipeg. The company buys, cleans and exports organic grains.
Consumers, Cowell says, are largely ignorant of the difference and consequently “natural” has taken as much as 50 per cent of the U.S. health food market. (see following story)
Beyond the “natural” threat to organics is the loss of European markets to competitors like Ukraine and Kazakhstan. While quality is inferior, these grains are finding their way into European markets at competitive prices. Loss of such markets means relying on U.S. markets, which a strong dollar hasn’t helped.
Organics around the world are becoming increasingly competitive. “‘Organic’ in the marketplace has become commoditized,” says Andy Hammermeister, manager of the Organic Agriculture Centre of Canada in Truro, Nova Scotia.
“With cereals, price has become the determinant rather than quality,” Hammermeister says. “It is no longer a niche, and Canada has to be conscious of competition. In the past where we might have had less competition an increase in price could hide some inefficiencies. We need to be streamlined and leaner.”
The need for efficiencies is driving research in organics. Despite the setbacks brought on by recession and the growing “local” and “natural” food movements, there is optimism in Canada’s organic sector.
Bolstered by $6.5 million in federal funding, researchers are examining ways to grow market opportunities by developing more efficient and profitable processes for organic farmers. Now, a partnership between the Organic Federation of Canada and the OACC has raised an additional $2.2 million.
Some very big numbers
For decades, organic’s numbers failed to impress. Yes, farm eyebrows might have lifted when they read headlines about organic posting gains of eight to 10 per cent a year, but on most farms, those eyebrows settled back down when the farmers reflected that eight to 10 per cent of very little is still very little.
Now, the numbers merit a serious double-take.
Seven percent of all Canadian farmers are certified organic, according to 2008 statistics from OACC. Perhaps the bigger surprise for conventional farmers is the size of those farms. In 2008 the country’s 3,900 certified organic farms had sales valued at over $2 billion.
Clearly, organic is no longer fringe.
While it still makes up only about two per cent of Canadian agriculture, organic does “create an alternative that farmers can make money at,” says Telford.
Plus, there is much more potential. With imports making up 80 per cent of organic products sold in Canada, there’s a lot of room for domestic production. Both Telford and Hammermeister see horticulture as the healthiest organic sector. Organic horticulture makes up 38 per cent of organic sales and last year had a 38 per cent growth rate.
“Fruits and vegetables are a key entry point for consumers into organics,” Hammermeister says. “It’s where they get into it and they branch out from there. Most of our product is imported. A fair bit of work is being done to develop import replacements. We need to identify key crops and what producers in Canada can do to compete.”
High-value fruit projects might provide export opportunities. Hammermeister points to Japan as a target market for blackcurrants grown in P.E.I. that contain natural antioxidants. ANNE OF GREEN GABLES is required reading in Japan, which might make a good marketing tool for the Island’s organic producers.
Domestic marketing opportunities in horticulture are also being examined. “The price differential is not that great at a maximum of about 25 per cent, and farmers markets are now saturated,” Telford says. “We are starting to look at non-direct, wholesale markets… There’s been a tiny shift away from direct marketing towards more-efficient farms to feed restaurants and retail. This means a shift in their procurement processes because they’re not set up to do this.”
While Telford worries the organic grower population is aging, she points to the huge organic vegetable movement in Canada as a bright spot. It is made up mostly of young women. While this creates a challenge in terms of knowledge transfer, Telford believes these new organic entrepreneurs are the future of the sector.
In farm country
The horticulture gap in the West is another opportunity. “Smaller communities commuof on the Prairies did see an increase in the number of markets and vegetable producers, but they are nowhere near having a local food system. Lots of (research) groups are paying attention atten-to that,” Telford says.
“The landscape is really changing,” she adds. “We have to be nimble as an organization.”
Partly to address the product replacement issue, another thread of the OACC research is in “branding towards claims we can make about the production systems,” Hammermeister says.
While some in the industry would like to see more work done toward comparing the nutritional value of organics, he feels the focus should be “on the ecological benefits of organic farming and the quality characteristics that promote environmental stewardship.”
But do consumers care? A growing number choose organic for perceived health benefits even though the industry makes no such claim. Hammermeister says research thus far can only conclude that “in pretty much all cases organics is shown to be at last as nutritious as conventional.”
Meanwhile, Telford says relations between organic and conventional farmers are also getting smoother.
Both sides continue to move away from criticizing one another, Hammermeister says. “I am baffled when conventional people say organic shouldn’t be worth more when essentially we’re training the consumer to appreciate the value of food.”
THREAT OF NATURE
Can organic outlast “natural”
By Anne Lazurko, CG Contributing Editor
While I don’t profess to be an organic foodie, or one of any nature really, I assumed it would be a relatively easy to walk into the local health food store and identify the truly organic products sold there.
That’s when I found myself confronted by walls and shelves of products claiming to save me from almost any health calamity you can imagine, and when I learned I have to be careful not to assume anything.
“Are these organic then?” I asked of the tubs of hemp hearts neatly displayed near the door on a rack bearing the sign “organic hemp hearts.” It seemed an obvious enough, if stupid, question.
“Well yes, they come from an organic farmer,” was the reply.
“There’s no certification label on them,” I commented, picking up the tub and turning it round to search for what I had recently learned was the only logo I could trust to show me a fully certified product.
“Well no, but the farmer who supplies them assures us his farming practices are more organic than what the standards demand,” the store clerk says with great conviction.
I don’t know what hemp hearts are, but I thought I better muse over them to give the impression I shop for this kind of thing all the time.
“He told us it’s too expensive to certify,” the store clerk continues. “If you speak with him you just know they’re organic.”
I don’t allow my jaw to drop.
The hemp hearts come from Rocky Mountain Grain Products, a name I’ve encountered on several different health food retailer websites. Claims of numerous health benefits that are good for consumers and agronomic practices that are good for the environment don’t seem to be backed up with either science, third-party wisdom, or, perhaps most importantly, traceable certification standards. They are simply made as if, ipso facto, you will believe.
And it would appear some of you do. Websites called “health and wisdom,” “clean food connection,” “allergic living” and “nourishing food” jump out of the search engine. They are soup-to-nuts stores, with organic and natural marketed as providing the same health and environmental benefits in foods, drugs and body care products.
It is a kind of marketing that threatens the core of the organic industry today. According to polls in the U.S., “natural” has taken over as much as 50 per cent of the organic market, with a majority of consumers assuming their purchases are good both for themselves and the environment.
“Whether you’re committed to organic production or to your health, ‘natural’ has no guarantee,” says Tom Cowell, general manager with Growers International, a subsidiary of Paterson Global Foods out of Winnipeg. The company buys, cleans and exports organic grains. “Processors are essentially duping people into thinking they are buying organic using the term ‘natural.’”
After years of work to establish and implement mandatory standards to attain organic certification, the success of the natural movement in the market is clearly a frustration, particularly for grain growers because substitution of their product is much easier than in other sectors.
Cowell believes he knows what’s happened. In 2007-08, organic prices skyrocketed and retailers and processors were seeing a 15 to 20 per cent annual growth in organic sales. The problem with organics is the supply is more finite than conventional because it takes three years to increase production due to certification production processes.
“In the board rooms they sat around and got a lesson in supply and demand of organics,” Cowell says. There were reports consumers don’t know distinguish between organic and natural, and with natural you don’t need a security of supply because the inputs are basically conventional.
Prices of organic had doubled or even tripled and remained at high levels even when conventional prices had peaked. So processors decided to package conventionally grown products as “natural,” and sell them at a five to 10 per cent discount to organic, Cowell says. “It is the purposeful substitution by large corporations who were fully organic and are now ‘natural.’”
“Organic is the hook to get people in and gives credibility to natural,” Cowell says. “But are there any benefits to really tight organic regulation if we don’t make the consumer aware that natural is not really natural? …The consumer protection agencies should be protecting the buyer.”
The Canadian Food Inspection Agency isn’t exactly clear in the description of natural in its online guidelines.
“Advertisements should not convey the impression that ‘Nature’ has, by some miraculous process, made some foods specially to take care of human needs,” it says.
It’s a loose, almost light description for something that has taken such a huge chunk of the market.
“It’s massive food fraud,” says Wallace Hamm, organic producer and general manager with Pro-Cert, Canada’s largest organic certifier. “During the recession, certified organic processors either jumped off, switched, or worse straddled the lines,” he says, referring to the fact some processors package organics, but also package conventional products as natural under the same brand, and then sell them for less.
“The industry didn’t anticipate the fraudsters would simply jump sideways. We thought we’d kicked them off the wagon, but they just jumped to another one,” Hamm says.
Consumer education is key. “Consumers are not static, so we have to educate them continuously,” he says.
If consumers want organic they need to know two key things, according to Hamm. They need to know what the certified organic seal looks like, and who the reputable certifiers are, says Hamm. “The consumer needs to be concerned.”
By the way, neither the processors nor retailers of “natural” foods contacted, returned my calls.
TAKING THE LEAP FROM CONVENTIONAL TO ORGANIC
Who Are Today’s Organic Farmers?
By Rebeca Kuropatwa
There are two surprises. The first is that many — and probably most — of today’s organic farmers never intended to go organic. Earlier in their careers, they farmed conventionally and were happy and proud to do it, and in their minds, anyone who is currently farming conventionlly is more or less as likely to make the switch as they were.
The second surprise when you talk to organic farmers is that they are as committed to the success of their farms as any conventional farm. They don’t leave their business brains behind when they make the switch. In fact, from their point of view, going organic may be one of the first solid business decisions they’ve ever made.
For this issue, COUNTRY GUIDE sent me to talk to two families that switched from conventional to organic. Here’s what I heard.
With four young children, Kate and Doug Story moved to Doug’s family farm 20 years ago. It’s a mixed farm area, located inear Grandview in western Manitoba
If your image of an organic farm is a small plot on the outskirts of a city with a steady stream of Toyota Priuses driving in the laneway, this isn’t it. Grandview is a good four hours from Winnipeg, and being so far from retail markets, the Storys sell most of their grain through brokers, like any other grain farmer, and their cattle through the local auction mart.
Kate and Doug began farming the same way Doug’s parents did.
When the old way doesn’t work
“We were beginner farmers trying to learn how to use these things,” Kate says. “With my environmental background, I had a different kind of view… but, we did what we had to do.”
Try as they might though, conventional farming wasn’t paying off for the young family, Kate says. Input prices were simply too high.
The Storys began searching for alternatives, tives, guided in part by their suspicion of chemicals.
Still, says Kate, they knew their top priority. ority. “We looked for anything that would allow us to raise our kids on the farm and actually make a living.”
“Somewhere along the line, my brother got cancer… I told Doug we should try organics… He was sceptical.”
When making the switch from conventional to organic farming, the biggest hurdle the Sto- rys encountered was overcoming their own reluctance to trying something new.
“Once we started trying it our farm started making money,” says Kate. “Not a lot, but at least we weren’t continuing to lose money like some of our neighbours.
“Today, our farm is more productive than it ever was when being managed conventionally by Doug or his parents. We’re very happy with what we do, and are financially better off.”
Nearly 300 kilometres south, Marie and Gerrard Deruyck began their switch from conventional to organic farming in 1997, motivated more by their own organic beliefs. Then their son Dan followed in their footsteps, with his first organic crop in 2006.
Marie and Gerrard’s farm, located south of Treherne, became organic-certified in 2000, says Marie. “We were conventional farmers for years until my husband became tired of putting that many chemicals on the crops.”
“The more chemicals we used, the more we had to use,” Marie says. “We were also spending lots of money… it was high time we tried going organic.”
It isn’t all about the money
Gerrard is suspicious of the companies that make and sell chemicals, and he believes their products are simply bad for the soil and the environment. “Chemical companies don’t want people to find out about this, so the information can be hard to find.”
When the Deruycks were conventionally farming, Gerrard says, “It was like an endless cycle. You need five or six different chemicals just to grow a bushel of wheat, and we were getting more and more diseases.”
Still, conventional agriculture has an advantage. It’s simpler. “You just spray with your big chemical sprayer to stop diseases,” Gerrard says. “We (organic farmers) have to find another way to deal with them. It’s a bigger challenge, but we’re learning.”
Even though Gerrard said the organic system is more complicated, he adds, “Once organic farmers get their systems going, they should be able to compete with conventional farmers.”
Some other farmers in the area talked derisively about the Deruycks, calling them names like hippies when they first switched to organics, but that didn’t deter them. “We just wanted to do what’s right,” said Marie.”
“If you follow the special system we’re using, with green manure and such, there’s no reason why you won’t get a good crop with yields pretty close to conventional crops,” Marie says. “There’s also no cost or need for things like fertilizer and weed control.”
Although Gerrard said he would love to have a bunch of farmers over to sit around the table and talk about the bottom line in farming income nowadays, “No one wants to sit down and compare theirs to mine, because their fertilizer and chemical bills are so high that they’re not making any money… Monsanto is.”
Marie adds: “Change comes slowly. After seeing our success, some people came to us for advice and tips and went organic too.”
The neighbours
The Storys also learned that it takes some patience to deal with the reaction from neighbours. “There’s always the fear that they’ll think you’re weird or that your field will have weeds. But we ended up with some really cream crops,” Kate says, adding “There are always some weeds, but then our conventional neighbours have them too.”
When the Storys made their switch to organic farming, they did it gradually, first trying it out in one field, then another, and eventually transitioning their whole operation. The switch took about five years. By 1999, their farm was mostly organic.
“We really knew organics was going to work for us the year of the drought,” said Kate. “Our wheat looked fantastic — a nice, clean, and heavy crop.”
“Our fields get cleaner of weeds with each passing year,” said Kate. “And we’re building our soil’s natural biodiversity, so our crop yields get better and better.”
Dan Deruyck, Marie and Gerrard’s son is married to Fran, has four children (aged 17-28), two grandchildren and a third one on the way. He grew up on his parents’ farm and has been farming since 1988.
Side-by-side with his parents’ land, Dan’s farm is located down Number 2 Hwy, between Brandon and Winnipeg. Between him and his parents, they farm 1,000 acres.
A little slower to make the switch to organics, Dan had his first organic crop in 2006, switching about two acres at a time to organic. “The market just took off. We couldn’t keep up with the demand.”
According to Gerrard, Tallgrass Bakery, which has two locations in Winnipeg, needs about 50,000 lbs. annually of oil sunflower seeds. “We supply them, but can’t keep up with the demand. We’re at around 30,000 lbs. this year, and haven’t found any other Canadian organic sunflower growers.”
There are other markets too, Gerrard says. “Dan de-hulls and works with confectionary-type sunflowers for bakeries to put in their bread — a different kind of sunflower than what I grow.”
The greater the variety of organic products Dan produces, the greater the need he has for different equipment, like the sunflower equipment. “We’re slowly getting that line up going,” says Dan.
Word-of-mouth
Dan does the produce deliveries for his and his dad’s farm. “We started off with a small customer base. Then, through word of mouth, the companies we supplied told others, including those outside of Manitoba, about us. Thanks to this, we didn’t spend anything on advertising. We deal mostly with small, independent bakeries and stores, and now also buying clubs.”
“If they want something custom-ground, we do it,” said Dan. “They also enjoy the direct interaction they get with us, and being kept aware of what’s going on out there.”
Marie has been seeing a steady increase in organics and the demand for it. “A lot more bakeries and stores are going organic. We also started at the right time. Younger people today want better quality food. Many young people come to our farm just to see what we’re doing, and many will buy too.
“We’ve found that organic is a better way to farm with better food quality. We now grow all our own food. All the grains, we mill into flour. We’re the only ones in our family that not only grow but also process our own food.”
Although the income is nice, going organic was about a lot more than that for the Deruycks. “We love what we do and that makes a big difference,” said Marie. “We’re making a living in a more honest, healthy way. We don’t want to be taking pills as we’re getting older. We want to be working and happy. We don’t have time to get old or complain.CG
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“ The days of out-and-out out acrimony are behind us.”
— Laura Telford
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“ I’m baffled when conventional people say organic shouldn’t be worth more.”
— Andy Hammermeister
