Organic farm profits nearly double in 2007
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Driving into the yard of the Jonathan Olson farm in southwest Minnesota is a bit like stepping back in time, to the family farms of 50 years ago.
On hand to greet visitors are goats, cats and a dog. Overhead, a windmill creaks in the breeze, the farm buildings are old but solid, and surveying the scene, Olson said, even his farming practices recall a simpler time.
"We're basically doing some of the same techniques they were in the 50s," Olson said. For this organic farmer, that means no chemicals on his fields, no weed killers or insect sprays. Walk around the place though and it's quickly apparent that the quaintness extends only as far as the big modern tractor parked in the shadow of a grain bin. It helps Olson cover more ground than his ancestors in the 1950s ever dreamed possible.
Olson farms 950 acres in all, planted mainly to organic corn, soybeans and wheat. And, unlike the 50s when there was little demand for organic crops, today the outside world is very interested in everything Jonathan Olson grows. He said consumers are buying organic products mainly for health and environmental concerns. He said that means organic food companies call often to buy his grain.
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"There's been an increasing demand for organic products," Olson said. "I think what I've heard is that organic products continue to increase in demand 15 to 20 percent per year, as the market continues to grow."
All of that demand made 2007 a very big year for organic farmers. A report from the University of Minnesota, the state university system and the Minnesota Agriculture Department, analyzed the finances of 45 organic farms in Minnesota. It found their average profit in 2007 was almost $59,000, nearly double the year before.
Meg Moynihan, of the state agriculture department, helped write the report. She said the popularity of organic food is so strong that shortages have developed. She said there's not enough corn, soybeans and other feed grains available to produce organic meat and dairy products.
"Which is good news for the feed grain producers in the Midwest, meaning there's more market opportunity for them," Moynihan said. "But bad news for the organic dairy and hog and beef producers that are purchasing grain because of course then their feed bills are so much higher if they can't raise that themselves."
"There's been an increasing demand for organic products."
Farmers who raised organic grain saw profits increase ten-fold over 2006. From just over $8,000 a farm to more than $80,000. Corn, driven by livestock demand, was a star performer; averaging about $8.50 a bushel. By comparison, conventional farmers got about $3.70 a bushel for their corn.
Organic dairy farmers though, suffered from the high priced grain, because their feed cost more. The report said their profits dropped 15 percent in 2007.
With all the good news, you might think there would be a stampede by farmers to convert their land to organic production. Moynihan said that's not happening, mainly because non-organic farmers are also making nice profits.
"Conventional commodity prices are so high," Moynihan said. "And that may reduce a little bit of the incentive for people to consider organic."
A report from the University of Minnesota and Minnesota State Colleges and Universities, found that overall farm income for conventional farmers last year averaged better than $105,000. That's nearly double what organic farmers made. The report on organic farmers said farm size accounts for most of the difference. With their larger acreage, conventional farms generate larger volumes of grain and other farm products leading to higher profits.
Time is another factor that may limit a switch to organic farming. It takes three chemical-free years before a field is certified organic. It also typically takes more work time to run an organic operation. Jonathan Olson estimates it takes three times as much labor to raise organic crops as it does conventional ones. Weeds are the main reason, since he doesn't use chemicals he spends a lot of time on the tractor, plowing weeds under.
"I pride myself on having clean, organic, fields," Olson said.
He thinks this year will be another strong one, financially. Prices have remained high, and if frost stays away for a couple more weeks, it looks like his yields will be good.
