Thursday, March 06, 2008

Grain Crisis!

This is going to be a pretty big challenge for the Organic industry and may chase away some people. Grain prices have exploded and are driving prices significantly higher and driving some bakers and producers out of the business. The farmers are going to make a killing, which is always nice, but we may see prices of organic grains and breads jump 100%-150% in the next 6-12 months if nothing is done. Here's an article about it:
Fallout Expected From Super High Grain Prices

The explosion of record high prices on the conventional has pushed the organic sector even higher and the fallout is already happening—organic bakers are pulling out.

“The whole thing is chaos,” said Bob Quinn, who runs the Kamut Association, which is based in Big Sandy MT. “It is so extremely out of control, I don’t know how it is going to play out.” Farmers under contract to plant organic Kamut, a high protein hard red spring wheat, will plant 60,000 acres in Montana and Canada this year.

In trading at the Minneapolis Grain Exchange, hard red spring wheat closed at a record $24 a bushel Feb. 27. The asking price for organic hard spring wheat has now soared to between $30 and $36 a bushel.

“Prices like that are sustainable,” said Travis Sitter, a buyer for Hesco in Watertown, SD. He said some organic cattle and dairy farmers can no longer afford the high price of organic soybean and corn meal, and are switching back to conventional. Bakers are already up in arms and planning a March 12 “Crisis” March on Washington, DC where they will meet congressmen and USDA officials.

“Commodity prices for every item we use are out of control and rising faster than we could ever hope to catch them,” said Michael Kalupa, president of the Retail Bakers of America. “If there is not some type of relief, many businesses will fail.” Ben Volk with Dakota Organic Prairie Flour in Harvey, ND said two east coast bakeries that were buying organic flour switched back to conventional.

What worries Ron Schlecht, a buyer for SK Foods International in Fargo, ND, is that expanded spring planting of hard red spring wheat will prevent farmers from growing other crops such as edible beans. “I don’t know if we can get any flax,” he said. He said one wheat processor told him he did not have conventional grain seed for his customers. Schlect and others said that most organic farmers have set aside enough organic seed for this year’s planting. They all expect more acreage to be planted both in the US and Canada.

Lynn Clarkson, who heads Clarkson Grain in Cerro Gordo, IL, blames the burst in commodity prices on ethanol. He said that subsidies totaling 40% on corn and processing have thrown everything else off. “Land values are going up and the biggest hedge funds are dumping funds into the commodities market,” Clarkson said.

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1 comment:

Heather said...

Organic can have higher yield than conventional methods of farming & conventional grain will surely keep going up (not only because of the current boom in growing corn to feed cars rather than people, but also because conventional farming uses a whole lotta petrol to grow crops & petrol is not going to get cheaper), so organic may be able to become competitive with conventional-- if the public can get the Feds to A) put farm subsidies where they belong- to smaller indi & organic farmers growing not just grains but fruits & veggies (Monsanto has enough money, they don't need welfare from taxpayers)& b) there are real economic incentives again for small farmers (right now being a small farmer is such a gamble that there's a real dearth of younger people entering the profession)