Organic Food vs. Ethanol

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The good news is that organic farming continues to grow globally - 0.65% of the world's agricultural lands are now managed organically. That amounts to about 30 million hectares on 700,000 farms in 138 countries, as of 2006, according to The World of Organic Agriculture: Statistics & Emerging Trends 2008 report (International Federation of Organic Agriculture Movements (IFOAM), The Foundation Ecology & Agriculture (SÖL), and the Research Institute of Organic Agriculture (FiBL)).

As in previous years, Australia has the most organic land (12.3 million hectares), followed by China (2.3 million hectares) and Argentina (2.2 million hectares). The U.S. holds fourth place, with 1.6 million hectares in 2005. Organic Monitor estimates international sales reached $38.6 billion in 2006, double that of 2000.

Universities, schools and hotels are among the many institutions beginning to offer organic food. Hilton's new Eat Naturally catering program at Hilton and Doubletree Hotels in Southern California focuses on offering local, organic food choices. Shangri-La Hotel and Resort in Bonita Springs, Florida is another example, having achieved organic certification for its 8.1 acres of property, where it grows food for its hotel restaurant. Mega-supermarket chain Safeway, Inc., has formed partnerships to sell its 300 item "O Organics" line of organic foods and beverages to foodservice outlets, and to Asia and South America.

But even as we're seeing conventional supermarkets and hotels embrace organic, there isn't a corresponding interest from the conventional farmers to transition to organic practices. The surge in corn crops to produce ethanol is negatively impacting both the conventional and organic food markets.

Who will produce our organic grains and oilseeds?

By Lynn Clarkson

North America's organic pioneers have succeeded in finding wonderful markets. Fueled by eager consumers, demand for organic products has grown at double digits for over a decade. Unfortunately however, organic production of grains and oilseeds has not kept up with demand. With the recent growth in organic dairy and meat production, domestic supply seems to be falling increasingly short of demand and is getting tighter.

As a result, prices are going up. Grains (corn, wheat, oats, sorghum) and oilseeds (soybeans, canola, sunflowers) provide organic raw materials and ingredients for foods and feeds. Well over 50% of conventional corn and soybeans go into feed markets. As demand matures for organic dairy, poultry, beef and pork, a similar percentage will likely apply to organic production.

The projected conversion of conventional U.S. farmland to organic certification is not going well. To put it bluntly, the U.S. dedicates about 160 million acres to producing conventional corn and soybeans, and less than 400,000 acres to producing certified organic corn and soybeans.

The organic community had hoped that more and more conventional acres would undergo transition. Some hoped more farmers would embrace organic values. Others hoped that more farmers would go organic to get prices that typically run twice those paid for conventional crops.

But domestic farmers have been slow to convert for a matrix of reasons:

fear of the unknown
reluctance to commit to limited access markets
local social pressures
the three-year transition period
concern that organic is a fad

Most recently, conversion has run head-on into the new U.S. energy policy.

The Ethanol Factor

The energy bill, not the farm bill, now drives U.S. agriculture. While growth in imports of food from China, India and other rapidly developing countries has contributed to moving the supply/demand balance, government-mandated, subsidized demand for corn ethanol is the gorilla in the market.

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