Purdue Agricultures Magazine

Supply and demand
More producers switch to organic to meet growing consumer market

Grow it, and they will buy it—this seems to be the mantra for organic agriculture these days. One look at grocery store shelves reveals a host of “certified organic” fruits, vegetables, cereals and herbs. In the dairy and meat cases, organic milk, cheese, poultry, beef and pork are priced at a premium.

“Nationwide, the market for organics is growing at 20 percent per year,” says Corinne Alexander , professor of agricultural economics at Purdue University . “It's the fastest-growing food area. You can get in with just a couple of acres, and that's pretty high value.”

Organic products are those made or grown without the use of synthetic pesticides and fertilizers. Organic livestock is fed organic feed, grazed on organic pasture and slaughtered in an organic facility. Organically grown products in Indiana include soybeans, corn, wheat and a variety of vegetables.

Consumers buy organics for many reasons. “Consumers are becoming more health conscious,” says Alexander, an organic consumer herself. “Surveys have shown that the number-one reason consumers cite for purchasing organic products is health and nutrition,” she says. “Personally, I purchase organic because the farmer gets a higher price and, hopefully, a larger share of my food dollar.”

Rules, regulations and returns

To sell products labeled as organic, a farm must be certified by a U.S. Department of Agriculture -accredited certification organization. Certification requires that land used for organic production has been free of synthetic chemicals for three years and that seed is organic. Organic animals must be fed and maintained organically. This means no antibiotics or growth hormones. Pregnant females must be maintained organically for the last third of gestation for their offspring to be organic, and dairy animals have to be maintained organically for 12 months prior to milk harvest.

With organics, it's best to plan ahead, says Cissy Bowman, an organic farmer and executive director of Indiana Certified Organic, LLC , the only organic certification organization in Indiana. “People need to start thinking about getting certified two years out,” Bowman says. “You don't want to wait until you have a crop to sell to get certified.”

The USDA regulates labels for “100 Percent Organic,” “Organic” and “Made with Organic Ingredients.” There are also provisions for labels that claim some organic ingredients. “Probably at this point, 100 percent organic has the biggest market share, even if it's not labeled that way,” says Cathy Greene, a USDA Economic Research Service subject specialist for organic agriculture. “Fresh produce is still the most common type of organic product purchased.”

To carry the “100 Percent Organic” label, a product has to be just that. “Organic” means that the product is 95 percent organic. “Made with Organic Ingredients” means the product contains at least 70 percent organic ingredients. A complete list of organic requirements is available from the National Organic Program .

Organic in Indiana

The ins and outs of organics can be confusing, even to a seasoned producer, Bowman says. As more and more producers jump into the market, demand for information is also at a premium. “In the past, it's been hard to find information,“ she says. “If we had as much information 10 years ago as we have today, I think we'd have a much larger organic community.”

One information source, the New Ag Network , is a collaboration of Purdue ,Michigan State University , the University of Illinois and Iowa State University . The Web site keeps producers up to date on trends, problems and new techniques.

“The network and its resources serve producers who are interested in transitioning to organics, as well as those who are practicing low-input or organic agriculture,” says Liz Maynard ,Purdue Extension commercial vegetable specialist. “Having four universities in the network broadens the information that's available and brings more ideas to the table.”

The network also includes organic farmers from Indiana, Illinois, Michigan and Iowa who work with Extension educators and record their experiences during the growing season. Their reports, which chronicle both the ups and down of organic production, are posted on the Web site.

“If there's a problem, we discuss it. The other producers and specialists can give you some suggestions about how to fix it,” says network grower Gary Reding , Greensburg, Ind. “There's no need to reinvent the wheel.”

Reding is a conventional grower who is transitioning to organics. “Rather than producing a commodity and then hoping I get to sell it, I'd rather produce a specialty item that the consumer wants,” says Reding, who has 249 acres of organically grown grasses.

The opportunity to interact with other producers attracted Reding to the network. “A great part of the network is the conversations among members and finding out what other challenges people are encountering. If you can learn from someone else's mistakes, you don't have to make them all,” he says. “And you can find out who has what and who needs what.”

For example, Reding says he has a market for food-grade products, but not feed-grade products. Organic dairy and meat products represent new territory for Indiana producers. “Up until this point, we haven't had a lot of organic milk or livestock production in Indiana,” says Jeff Burbrink , agriculture and natural resources educator in Elkhart County . “The real drawback is finding enough certified organic feeds to give the animals. Certified organic soybean meal is selling for more than $700 per ton. Non-organic soybean meal usually sells for half that price.”

In June, Purdue Extension educators in northern Indiana teamed up with Horizon Organic , a Dean Foods company that markets a full line of organic dairy products throughout the United States, to talk to Hoosier dairy producers who are interested in switching to organic. Burbrink hosted one of the meetings. “There were about 15 farms exploring the idea of getting into organic milk production,” he says.

An expanding market
Organic agriculture is on the rise, as are other value-added niche markets that promote wider use of agricultural commodities. Bowman says the number of organic farmers in Indiana that were certified doubled between 2002 and 2003. In 2002, only 24 farms were certified; in 2003 more than 40 farms were certified.

Organics is a segment of agriculture that has reached a level where the USDA now includes it in the Census of Agriculture . According to the 2002 census, the first year the USDA surveyed organic production, U.S. farmers used 562,486 acres to produce $392,813,000 of certified organic crops. Indiana farmers used 1,419 acres of land to produce approximately $851,000 in organic products. That's an average of $600 per acre. Traditional farming averaged $318 per acre in sales for the same year.

Some of the differences are evened out by production costs, because it's more expensive to produce something organically. “Organic agriculture is a lot more labor intensive.” says Corinne Alexander. “A lot of time and labor is substituted for chemicals. It's also a lot more risky. If you end up with a pest infestation or weed problem, it can be serious because you don't have the chemicals to control it.”

Research reduces risk

Purdue researchers are working to reduce the risks and improve organic agriculture production.

In 2000, Purdue Agriculture faculty Rick Foster (entomology ), Peter Hirst (horticulture ) and Paul Pecknold (plant pathology ) began researching organic production methods that are viable in Indiana.

“Previously, Purdue hadn't been heavily involved in organic research,“ says Foster. “In my Extension work with fruit and vegetable growers, I knew that there was a growing interest in organics.”

One of their success stories is helping fruit growers deal with Japanese beetles. “By testing some organic pest control methods, we thought we could find techniques that conventional growers also could use to be less reliant on pesticides,” Foster says. “We're already starting to see some good results.”

The researchers found that using neem, a naturally occurring oil derived from trees in Africa and Asia, has applications for control of Japanese beetles in Indiana. Foster learned about the effectiveness of the natural pesticide through his work in western Africa during a U.S. Agency for International Development (USAID) project. In Africa, growers make neem from local trees, and mix it with water for spraying. “We started using it on our organic apples because we didn't have anything else for Japanese beetles. We've found that it does a pretty good job if it's applied at the right time,” Foster says.

In addition, Foster and Steve Weller , professor of horticulture, are searching for ways to help farmers transition from conventional to organic practices. “We just started a long-term project where we're converting 16 acres of the Meigs facility (at Throckmorton-Purdue Agricultural Center ) from conventional farming to organic vegetable production,” Weller says. “We're testing methods to build soil quality organically and studying the effect it has on crop growth. We're also looking at various pest management options.”

Other research in Purdue Agriculture is focusing on weed control, one of the biggest problems faced by organic producers; economics of organic agriculture; and the types of products most in demand in the consumer market.

Market predictions

Like farmers who are switching from conventional to organic production, the organic market is still in transition.

“What's really interesting is that, originally, people would go and purchase the organic products directly from the farmer at a roadside stand or farmers' market,” says Alexander. “But there's been a shift. Now, about 50 percent of all organic products are purchased from grocery stores.” The products make it to grocery shelves through farmer-owned cooperatives like Wisconsin-based Organic Valley and from wholesalers who purchase organic products from farmers.

Alexander predicts the organic market will continue to grow. “There is a large demand here that's not being met,” she says. “It's a growing market, but, because it's so small, it's hard for buyers and sellers to find each other. That's why things like the New Ag Network and Purdue's research are important.”

And more and more producers are exploring organic production. “In the past year, three different conventional producers have approached me about transitioning, because their landowners required that the land be farmed organically,” Reding says. “It's a perception of being healthy. The word organic implies healthy to a lot of people, and that's what consumers want.”

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