Organic grain prices rebound

Posted at 4:07 PM on January 25, 2011 by Mark Steil

Organic grain farmers are breathing a little easier now that prices have rebounded from some very low, very unprofitable levels.

Most of 2009 and the first half of 2010 was an uncharacteristic "rough patch" for organic farmers, Organic grain marketer Tim Ennis says. For example, the price of organic corn reached a low point of $4.50 a bushel, but has since rebounded to over $7, said Ennis, who works for the National Farmers Organization..

The big cause of the grain price downturn was the recession. Organic food products like milk and eggs generally cost more at the grocery store than their conventional counterparts. That's mainly because of how the organic food is produced. It costs more.

Organic farmers don't use chemicals to kill weeds and insects. They also don't use conventional fertilizer or genetically modified seed to boost yields. As a result, their overall yields are lower compared to conventional farmers.

The lower supplies boost prices. Those higher prices are passed on through to consumers when the organic grain is used as livestock feed to make milk, eggs or meat.

During a recession, some consumers who typically buy organic, switch back to conventionally produced products to save money. That reduces sales of some organic food, lowering demand and price for the organic grains that go into producing them.

Ennis says during the rough patch most organic farmers had enough financial reserves to get through the unprofitable prices. But he says some farmers did exit the business.

Prices of some conventional grain, like corn, over the last six months or so have been nearly as high as the organic market. Ennis says that situation tempted some farmers to leave organic production and go back to conventional agriculture.