World Grain - December 2017 - 72

FEATURE: ORGANIC INDUSTRY FACES INFRASTRUCTURE CHALLENGES

Left: Peter Golbitz, president of Agromeris, said
the U.S. organic industry has become too reliant
on imports and needs to focus on increasing
acreage domestically.
Right: Pipeline Foods' Eric Jackson said it is time
for the organic and non-GMO industry to invest
in infrastructure. Photos by Susan Reidy.

IMPORT CHALLENGE
Infrastructure improvements aren't
just needed for moving domestic product but also to handle imports. The United States doesn't produce enough organic and non-GMO grain and oilseeds
to meet current demand, so imports are
added a cost of 59¢ per pound, not in- needed. Jackson said about 75% of orcluding the price of the grain.
ganic products consumed in the United
With an investment of $6 million in States are imported.
the machine, it would be possible to earn
The U.S. organic feed industry has
$2.28 million per year, for a 38% return become dangerously dependent on imon investment. Cost to move the product ports, putting their operations at risk and
would drop down to 21¢ per pound.
removing the incentive for producers to
A hub supply chain, similar to the con- increase domestic organic acreage, said
ventional marketplace, would allow for Peter Golbitz, president of Agromeris.
traceability and lower operating expense.
"We need to decrease reliance on
"It's going to take real money and the imports that can be grown easily and
capital expense is going to go up," Jack- in abundance in the U.S.," he said durson said. "The tradeoff is a high degree ing his presentation at the forum. "We
of traceability and much lower operating need to increase domestic production
expense.
to help create healthier soils and great³,W¶V WKHVH HI¿FLHQFLHV WKDW FDQ EH er farmer returns."
shared appropriately through the marImports of soybeans and corn grew
gin structure at the various nodes on the 50% between 2015 and 2016 to reach
chain that are adding value. It is exciting 926,000 tonnes, or nearly 50,000 full
to think about how we can change the container loads, Golbitz said. Virtueconomics so that the grower can make ally all of this grain is going into the
more and the consumer can pay less."
feed stream.
72

"Imports are growing more quickly
than U.S. production," he said.
Imports are priced at or below U.S.
production, which is discouraging domestic production and processing. The
organic poultry market is at the greatest
risk for constrained growth due to limited feed supply, Golbitz said.
He said there is a role for imports,
particularly to balance supply and demand. But imports are not a long-term
solution.
"I think it's important that domestic
supply get built out as quickly as possible," he said. "U.S. buyers of organic
feedstuffs need to make investments in
U.S. production; we need logistics and
infrastructure. There seems to be a concerted effort to build out that production
domestically."
There are opportunities for U.S. producers: The value of the imported grain
last year was about $410 million and
equivalent to 600,000 acres.
U.S. acres have been increasing at an
average of 12.7% per year the past three
years, but the need has increased 34.6%.
At the current rate of growth of acres for
soy and corn, it would take to 2025 to
produce what is needed for 2016, Golbitz said.
That means millions of acres domestically need to be converted to organic
acres to meet the projected 15% annual
growth rate in the next 10 years.
"We think there is a great opportunity
to convert a lot of conventional acres,"
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strategy and a great economics story for
the growers who are participating."
During a panel discussion at the forum, Nathaniel Lewis, farm policy director, Organic Trade Association, said
LW¶V GLI¿FXOW WR JHW VWDWLVWLFV RQ DFUHDJH
that is in the process of transitioning
into organic or non-GMO acres. Acreage must go through a three-year period
free of prohibited substances such as
pesticides and fertilizers before it can be
FHUWL¿HGRUJDQLF
A 2015 survey showed that 150,000
acres, of which 141,000 acres are cropland, are in transition. Those acres are

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