2011: A tough year for organic farmers
Monday, October 3, 2011
Premiums are lower and competing eco labels cloud the marketplace. But the Organic Council of Ontario is still seeing good though not spectacular growth
by MIKE MULHERN
Dan Konzelmann's farm looks like any other. The house is modern, the tractors are big, the rows are straight and his crops are clean. The difference between Konzelmann and the majority of farmers in Ontario is that he doesn't plant GMO crops or use pesticides and herbicides and his farm has to pass a certification every year. Konzelmann farms organically.
Organic farming in Ontario has a relatively small cast of players. Laura Telford, executive director of the Ottawa-based Canadian Organic Growers says there were 685 organic farms in Ontario and 33 more in transition in 2010. Most organic farmers in Ontario grow field crops and forage, but there also are organic dairy farmers, livestock producers and vegetable growers as well as farmers with orchards, vineyards, maple syrup, greenhouse and mushroom production.
Nor are all organic farms small operations. Konzelmann cultivates 1,600 acres in the Petrolia area. He grows a wide variety of crops including corn, soybeans, peas, barley and spelt using a seven-year rotation.
"One-seventh of the fields will be summer fallowed," Konzelmann says. "When I grow corn, I plow down lentils the summer before and all the cereal grains I grow, plus the peas, have red clover underseeded just to help build nitrogen for the next crop." Except for hybrid corn seed, which he buys, most seed is drawn from his own bins.
Markets for his crops include local organic livestock producers, but his soybeans go to Japan. Some corn goes offshore, but most stays in Ontario along with crops such as barley and beans.
"It's good to know a lot of people," he says. "You have to establish your market. Soybeans and corn are easy to market, but with peas and barley and other stuff you need somebody who wants that and I have a big hog farmer who buys most of that stuff. I have some dairy farmers, too."
While prices for organic products were very good a few years ago, Konzelmann allows that they are now closer to prices conventional farmers are getting and some organic farmers are returning to their conventional roots. According to Ontario agriculture ministry data, organic soybean prices fell from a high of $29 a bushel in 2008 to a low of $17 in 2010. Organic corn prices fell from more than $11 a bushel in 2008 to a low of less than $5 in 2010, although the price curve for corn was showing upward movement in 2010.
Roger Rivest farms 800 acres organically with his son Jeff near Leamington. He is also the organic grain division manager for Keystone Grains Ltd. Rivest thinks organic prices were too high.
"We've gone through a spell where there wasn't enough organics and the prices got too high," he says, adding that high feed prices drove a lot of organic beef producers out of business and hurt grain companies, too. "A lot of feed companies bought $12 corn and ended up selling it six months later for $6, so there was a lot of healing to happen."
He believes the livestock industry is "coming back strong." Some organic farmers, he says, went back to conventional because grain prices for conventional and organic are quite close. Others did so because they couldn't handle the weed pressure.
"The No. 1 problem is Canada thistle," he says. "If someone could come up with a way to control that, he'd be a multimillionaire."
Rivest believes organic is in a rebuilding phase and, if the price is right, more people will get into organic in the future.
"There's only one thing that affects any farmer's decision," he says. "It's always return per acre or dollars per bushel. If beans get back to $26 a bushel, you'll see expansion." Three years ago, he notes, $24 to $26 a bushel was pretty common. "I even landed beans in California for $50 a bushel." Rivest grows corn, oats, spelt, wheat, soybeans and he is starting to grow alfalfa for hay.
Growth good but not spectacular
The Organic Council of Ontario draws its members from among producers, processors, marketers, retailers, restaurants, consumers, suppliers, distributors, certifiers and others. Jacob Pries, in charge of membership and communications for the council, says he is still seeing good but not spectacular growth in the organic sector. "Before the recession," he says, "we were on the 20 per cent side of growth. In the midst of the recession, we were below 10 per cent and now we're back up around 10 per cent."
It's not just the recession that's affecting demand for organics. Like everyone in the organic sphere, Pries expresses concern about other eco label claims, such as local, natural and sustainable which create consumer confusion and fragment the marketplace.
"Organic is the only term that has the force of law behind it," he says. "If 'natural' is on a label, you can't be 100 per cent sure that's true, because there's nobody to enforce it."
Telford says 2011 has been a tough year for organic farmers. "It's even tougher than the recession year, because I think we expected to see a bigger pickup," she says. "We thought once people started making money again, they'd start spending on organics but the markets are actually failing a bit."
Telford agrees that the profusion of other label claims such as natural and sustainable and the government-backed push for buying local adds to consumer confusion. "Organic still dominates any other eco label," she says, adding that natural and local are giving organic a run for its money. "But I'm not sure either of those labels have legs, since they are not based on standards and they don't have independent inspection and government oversight. But the public doesn't know that."
The picture may be clearer with the arrival of Local Food Plus, a Toronto-based, charitable, not-for-profit organization that attempts to define the meaning of "local" for the consumer. Local Food Plus does require certification based on a point system and on-farm inspection. It authorizes the label as an addition to the organic appellation or as a stand-alone label showing, primarily, that the product is local within the province in which it is sold and that the producer complied with a number of guidelines.
Don Mills, vice-president of Local Food Plus, says the logo tells consumers that the product is third-party certified, that it's from Ontario and "that the pesticide use is not zero but it is minimized as much as possible." He says there are a set of labour, environmental and animal welfare standards which go along with the label. Farmers who meet their standards can be certified for a one-year, flat fee of $199, or they can be certified for three years for $450.
The organic certification fee, on the other hand, is based on an annual on-farm inspection and the cost varies depending on the number of acres, the animal population and whether processing is involved.
"It really is a sliding scale based on how long it takes to do the certification," Telford says.
"If you're a small farmer, say a market gardener with five acres and it takes two and a half hours, the fee would probably be around $600. If you're a larger operation like a dairy, if you have livestock and crops, you are probably looking at a minimum of $1,100 or so and if you have processing, it's much more."
A large chunk of organic production in Ontario is dairy. There are two primary organic milk producers in Ontario – Organic Meadow in Guelph and Harmony Organic, which bottles its milk products at Hewitt's Dairy in Hagersville. They both produce their own line of dairy products and compete with larger players such as Parmalat and Natrel.
The larger of the two is Organic Meadow with about 60 dairy producers, who are part of a co-operative. General manager Ted Zettel says Organic Meadow markets products produced by 100 Ontario farmers in total. In addition to milk products, they produce and market grains and eggs.
"The grain business is mainly a wholesale business for ingredients for further processing for flour, for oatmeal and in livestock feed."
Zettel says the organic sector is growing, although not as much as in former years. "We have experienced not what I would call a downturn, but a definite slowing of growth." He says label claims such as natural and local are also a concern for the organic milk sector. "It is a concern for us because of the confusion among consumers," he said. "People don't understand the difference between conventional and organic."
Respect for the cow is No. 1
Robert Kuenzlen, marketing director for Harmony Organic, says Harmony's producers are organic and Local Food Plus-certified as well as kosher-certified. The 14 Harmony producers are located in a triangle between Kincardine, Stratford and Chatham.
Lawrence Andres, owner of Harmony Organic, is also a milk producer milking 100 cows near Kincardine. Andres, born in Canada and raised in Switzerland, came back to Canada in 1978 because he wanted the opportunity to farm.
"After my agronomic studies, I had two options," he said, "either to work for the government or some corporation over there – we didn't have a farm at home – or come to Canada because it was virtually impossible to start farming in Switzerland."
Andres had farmed organically in Switzerland and continued when he started in Canada. He's been in the organic milk business for 40 years.
To be a Harmony producer, Andres says, respect for the cow is the key. "If you're a Harmony producer," he says, "you have to tune into this philosophy. The animal is the No. 1 concern and the people who produce milk for Harmony do have to share those values."
While Harmony producers do not own any part of the company, they do not have to pay a fee to be a Harmony producer and they get training and support, as well as having their annual certification fee paid – $1,200 a year per producer, on average.
Andres says Harmony farms range in size from 200 to 1,300 acres. Most producers grow their own feed grain, but the organic diet is mainly roughage. "We're trying to get by with as small amount of grain as possible," he says.
No matter how it is sliced, Andres says organic production is more costly. "The feed is much more expensive. As long as you have your own feed, it doesn't hit that hard, but if you have to buy some feed, then it really shows."
For their pains, organic dairy producers get a premium, but only for the milk that is actually sold as organic. Some milk, especially if it is delivered on the weekend when small dairies do not process, goes into the conventional pool at the conventional price.
Organic Meadow's Zettel says the price varies depending on a number of factors, including milk components such as fat. The premium for organic is less than 20 per cent, he says, but it could be more if there was greater utilization. If they used 100 per cent of the milk, Zettel says, "the theoretical premium is 23 per cent," according to Dairy Farmers of Ontario (DFO).
"It (the premium) is always less because it's just impossible, logistically, to get it all into organic products. Some of it ends up being shifted into conventional products," he says.
DFO, which controls all milk produced in Ontario, manages the organic milk supply. Dave Nolan, director of marketing logistics for DFO, says utilization is running around 90 per cent. "Sometimes as high as 95 per cent of the organic milk gets utilized for organic purposes," he says.
As Andres sees it, because of the additional cost and commitment, "the extra premium you have is actually well deserved." BF
Author wants surprise inspections, but does anyone else?
While organic producers struggle with consumer confusion over competing label claims, at least one industry observer thinks more needs to be done to strengthen the organic pedigree.
Mischa Popoff, in his 564-page book "Is It Organic?" claims: "The global organic industrial complex promises everything and delivers nothing." His central beef is that organic crops are not tested in the field, so cheaters can get away with, perhaps, using Roundup to control weeds or some other infraction of the rules.
Popoff, who is based in Osoyoos, B.C., wants surprise inspections, in the field, for organic producers to ensure they are not cheating. However, he agrees few Canadian organic farmers are cutting corners, partly because testing by buyers can be surprising and very thorough.
Organic producer Dan Konzelmann sold some corn to the Israelis recently and the buyer tested for 60 different things before approving the purchase. And he says the Japanese are even more particular about the soybeans they buy.
The Canadian Food Inspection Agency oversees organic inspections in Canada. The current organic certification drill is for an independent inspector to come to the farm every year at an appointed time and assess farm records to make sure the farmer is following organic procedures. There also is a visual inspection of fields and facilities, fees are paid, and the farmer is good for another year of organic farming.
Popoff, himself an organic inspector and former vice-president of the B.C. Conservative party, believes farms should be inspected the same way restaurants are. "Any restaurant anywhere in the world and here in Canada is subject to unannounced visits from the health inspector and that's how organics should work," Popoff says.
Farmers and the organizations that represent them, however, aren't making any such request. Anyone who has tried to pin down a farmer during planting or harvest knows how futile that can be. Imagine a surprise inspection just as the combine is hitting the wheat field, at milking time or when the hogs are being loaded for market.
The organic movement has competitors with eco claims such as natural and sustainable taking credit for being distinctive when they may or may not be. Organic has more going for it than its less-regulated fellows, but Popoff wants to raise the organic bar even higher. BF