Go big or go home… or go organic

Organic farming provides a living conventional methods no longer do

by Laura Rance • Posted: 01/7/2017

Making a seeding plan for the coming crop year is a complicated process for Prairie farmers.

While market prices play a big role in their decisions, crop rotations can be equally important to profitability because they boost fertility and help control weeds and disease.

Profitability is also relative to the cropping system the farmer has chosen, a point illustrated rather graphically by Manitoba Agriculture’s annual crop-production costs.

The province produces budgets based on average costs of production, estimated market prices and generally accepted management practices for crops grown under conventional and organic management.

Farmers can look at these budgets and compare them to their own production costs to get an idea of the relative profitability of different crops. Even if the provincial budget shows negative profit, farmers may still consider growing a crop, either for its rotation benefits or because they plan to be better than average.

The top crops are radically different between the two production systems. Hemp — for oil and seed, not “weed” — ranks at the bottom of the list of options for a commodity farmer, showing a net profit of minus $1.61 per acre. For an organic producer, it’s ranked No. 1, with a whopping net profit of $499.35 per acre.

The best pick for conventional farmers is navy beans, showing a net profit of $155.16 per acre, followed by soybeans at $65.64, confectionery sunflowers (the kind you spit) at $41.69 per acre and winter wheat, which is planted in the fall and harvested the following July, at $37.58 per acre. Spring milling wheat ranks low on the commodity farmer’s list, right next to hemp.

On the organic list, winter wheat ranks No. 2 with a net profitability of $338.79 per acre, followed by spring wheat at $249.07 per acre, flax at $176.62 per acre and oats at $160.30 per acre.

These budgets illustrate the huge difference in per-acre profitability between conventional and organic systems once cost of production, differences in yields and market prices are considered. For example, a quarter section (160 acres) of organic winter wheat could put more than $54,000 into a farmer’s bank account after production expenses.

Under conventional systems, that crop would generate about $6,000.

The organic budget factors in the reality that farmers using this production system must grow their own fertility, which means investing some of their land into green-manure crops for part of a four-year rotation cycle.

Increasingly, organic farmers are growing alfalfa, a leguminous perennial that produces fertilizer, improves soil health and chokes out weeds.

But that means they have livestock or know a livestock producer willing to buy the forage produced. Or they sell the seed.

Livestock plays another important function in organic systems. Manure is a good organic source of phosphorus, which research has shown is gradually depleted in long-term organic crop production.

Just looking at the numbers, you’d expect farmers to throw their whole farm into either hemp or beans and get high on the profits.

But in this climate, few would dare pin all their hopes on one crop. Besides, the highest-paying ones are often the riskiest to grow.

The data suggest, however, that a farmer operating under an organic system can still generate a living from a section of land (640 acres), a feat long gone in commodity agriculture. It also explains why commodity farms keep getting larger. Generating the same income from conventionally produced winter wheat would take nine times as many acres.

The organic certification process takes three years and learning how to farm successfully without chemical production aids can take a lot longer. It is labour- and management-intensive, and marketing options are more limited.

While demand continues to exceed supply, there is a likelihood that market premiums would shrink if too many farmers switched to organic. That said, these systems also benefit from having lower cash costs, which reduces their exposure if yields fall short.

It’s clearly not the way most farmers want to farm. Nevertheless, organic systems have emerged as an option for those who don’t subscribe to the mantra “get big or get out.”

Laura Rance is editorial director for Farm Business Communications. She can be reached at [email protected] or 204-792-4382.

Read more by Laura Rance.