Organic acreage ascending

by Jeff Gelski
Share This:

By the end of this decade, the supply and quality of organic wheat and wheat flour should improve and become more dependable. General Mills, Inc., Minneapolis, Minnesota, U.S., and Ardent Mills LLC, Denver, Colorado, U.S., both have set up initiatives centered on increasing organic acreage, and they expect to reach their goals by 2019.

Differences may arise when working with organic wheat flour compared to working with traditional wheat flour.

“It’s critical that the baker or developer understand the impact of flour on the recipe and manufacturing process,” said Peter Asta, research and development manager for Ardent Mills. “If this is done carefully, the baker can work to specify the correct organic flour. More emphasis on understanding the impact of process, especially mixing and proof times, is critical as there are fewer options out there for organic dough conditioners, enzymes and other ingredients.

“Bakers must also note that the organic wheat crop can change from year to year due to weather and growing conditions as it does with conventional wheats. As more organic wheat is planted and milled, it will allow for better risk management and a wider range of specifications.”

Overall adoption of organic wheat, corn and soybeans remains low, standing at less than 1% of the total U.S. acreage for each crop, the U.S. Department of Agriculture (USDA) said last November.

“One reason for the low levels of organic adoption among U.S. field crop producers may be a lack of information about the relative costs and returns of organic and conventional production systems on commercial farms, and the performance of farms choosing the organic approach,” the USDA said.

Organic wheat yields tend to be 9 bushels per acre less than conventional wheat yields. Average additional economic costs are $55 to $62 per acre, but price premiums for organic wheat for food reach above $10 per bushel higher than the economic cost differential of $3.90 to $4.46 per bushel between organic and conventional wheat production.

A Rabobank U.S. Talking Points report issued in March of this year addressed organic crops.

“To help reduce the risks for skeptical farmers and to trigger the necessary supply response from the double-digit growth in demand for organic foods, food companies are increasingly playing a role by initiating long-term contracts with farmers,” the report said.

General Mills plans to double the organic acreage from which it sources ingredients and expects to reach its goal of 250,000 acres by 2019. The company expects to reach $1 billion in net sales from natural and organic products by 2019.

Last June, General Mills said it was investing $50,000 to support the Prairie Organic Grain Initiative (POGI) in Canada. The POGI, a multi-year program, seeks to build resiliency and stability in the organic field crop sector while increasing the quantity and quality of organic field crops in Canada.

Ardent’s organic initiative

Ardent Mills has set up an Organic Initiative 2019 that includes providing education and support for farmers and providing customers of Ardent Mills with an assured supply for their new product and menu introductions, said Shrene White, director of specialty grains for Ardent Mills.

As part of the initiative, Ardent Mills wants to help U.S. wheat growers double organic wheat acres by 2019, based on 2014 Census data showing 263,881 in harvested organic acres. Transitioning from conventional farming to organic farming takes three years, White said. Bids for organic wheat are about twice the value of bids for conventional wheat.

“Organic farming practices are very different than conventional farming practices, and making these changes can be a big undertaking for a grower,” he said. “To some farmers this may be totally new territory. Options for crop rotations, weed and disease management, and changes in yields are some of the expressed concerns. Also, financially, farmers want to know that there will be a long-term market for their organic wheat.”

He said Ardent Mills encourages growers to work with their organic certifier.

“We also like to connect a new organic grower with a ‘grower mentor,’” White said. “This allows them to ask questions and gain a better understanding of what exactly is required to become certified, what challenges could arise, and best practices.”

Ardent Mills held a series of grower meetings earlier this year as part of its Organic Initiative 2019.

“We are looking forward to another round of grower workshops this summer,” he said. “We would like to have some panel discussions with growers and wheat breeders and start working on our long-term goal of delivering better organic wheat varieties that will benefit both growers and flour customers.”

Other efforts are under way to increase organic wheat acreage.

Cascade Milling, Royal City, Washington, U.S., doing business as Cascade Organic Flour, LLC, plans to double its organic wheat acreage to 5,000 irrigated acres in the Columbia Basin of central Washington by 2018. The acreage increase will allow Cascade Organic Flour to produce 30 million lbs of whole wheat organic flour from its own organic wheat production in less than two years.

Bay State Milling, Quincy, Massachusetts, U.S., offers organic product that meets the U.S. Department of Agriculture’s National Organic Program standards. Organic offerings come in traditional flours, specialty flours, gluten-free products, sprouted products, other specialty products and edible seeds.

The difference in economic costs between organic wheat and conventional wheat is $55 to $62 per acre, according to the U.S. Department of Agriculture. Photo courtesy of AdobeStock

Private label, millennial markets offer organic opportunities

U.S. annual sales of organic foods and beverages have grown by double-digits in recent years. Within the category, two segments may be ripe with opportunity: millennials and private label.

Executives of SunOpta, Inc., Mississauga, Ontario, Canada, expect a majority of the company’s growth to come from private label for three reasons, said Rik Jacobs, president and chief executive officer, in a March 1 earnings call.

“First, private label, organic and non-GMO is a high growth segment,” he said. “Given the lack of dominant organic brands and categories that are rapidly penetrating conventional retailers, the private label opportunity is significant. Millennials especially are looking not only for organic but also for value, which means they are much more inclined to buy private label brands.

“Second, in these emerging categories, it would be extremely rare for retailers or food service operators to invest in physical assets, and the pace of change in consumer preferences, enhanced product innovation almost demands that captive brands be outsourced. And, third, selling to retail also satisfies our strategy where we capture higher value end margin by leveraging our unique vertical integration.”

Data from Information Resources, Inc., (IRI) a Chicago, Illinois, U.S.-based market research firm, show 25% of millennials eat foods that are certified organic, which compares with 17% of young baby boomers (ages 45-54) and 19% of older baby boomers (ages 55-64), said Sally Lyons Wyatt, executive and practice leader for IRI.

U.S. organic food sales reached $35.9 billion in 2014, up 11% from the previous year, according to a survey released in April 2015 by the Organic Trade Association, Washington, D.C., U.S. More than 200 companies responded to the survey, which was conducted and produced by Nutrition Business Journal.

The sales figures should continue to rise since General Mills, Inc., Minneapolis, Minnesota, U.S., expects to reach $1 billion in net sales from natural and organic products by 2019.

“Arguably, it is ‘mission accomplished’ for the food movement when a large player such as General Mills is set to achieve $1 billion in natural and organic sales by 2019, a year earlier than planned,” said a Rabobank U.S. Talking Points report issued in March of this year. “The company is already one of the top five buyers of organic fruit and vegetables in the U.S., and one of the top three natural and organic U.S. food manufacturers. This would have been unthinkable a decade ago.”

Partners