Understanding the barriers
It may seem counterintuitive for there to be a category like certified organic where there appears to be significant demand and producers are paid a premium compared to their traditional counterparts, and yet the market remains underserved.
“The trend of rising consumer demand continues, and U.S. production of organic grains and oilseeds has not kept pace,” said Todd Jones, member relations associate with Mercaris, Chicago, a subscription-based information and on-line trading company that serves the markets for organic and non-G.M.O. ingredients. “However, there are some important efforts under way to support U.S. organic grain production. They range from financial assistance for certification costs for growers, the rise of investment funds that are converting conventional
farmland to organic, vertical integration of the supply chain, and, of course, Mercaris.”
General Mills, for example, has invested $50,000 to support the Canada-based Prairie Organic Grain Initiative (POGI). The effort is a $2.2 million, four-year program targeted at achieving growth and stability in the prairie organic sector. According to General Mills, the organic food market has grown rapidly, which has made sourcing certified organic ingredients difficult. The POGI’s primary focus is to address the shortage of organic grain growers by initiating several programs that will entice conventional growers to make the transition to organic farming.
Yet even with the efforts and investment like the one General Mills is participating in Mr. Lewis of the O.T.A. said significant barriers remain to growing domestic production.
“For starters, there are the policy issues,” he said. “They can range from crop insurance to support for transition (to organic) to outreach. Organic farmers are not getting the same level of support from U.S.D.A. as conventional farmers.
“Organic food represents 5% of the U.S. food system, but the public investment for research is not commensurate. Without that investment organic lacks the funding needed for land grant universities to tackle the issues many farmers are facing.”
Beyond policy, Mr. Lewis said an even greater barrier may be a lack of infrastructure. Certified organic raw materials must be segregated from their traditional counterparts. That means an entire supply chain of storage, handling, transportation and even processing must be established.
“It’s economies of scale organic producers don’t have access to,” Mr. Lewis said. “At every step along the supply chain costs are greater, because the infrastructure isn’t as complete.”