Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag...
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![Page 1: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/1.jpg)
Organic Agriculture ……
How Viable / Still Viable?
Craig Chase, Field SpecialistFarm & Ag Business Management
![Page 2: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/2.jpg)
Session Agenda
1. Economics of organic agriculture.a) Neely-Kinyon long-term rotation study.b) Organic budgets.c) 2008 updates.
2. Economics of transitioning.
![Page 3: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/3.jpg)
Neely-Kinyon Organic Study
• The Neely-Kinyon Research Farm is located in SW Iowa (Greenfield)
• Focus on comparing Three Production Systems– Conventional corn-soybean rotation– Organic corn-soybean-oat/alfalfa– Organic corn-soybean-oat/alfalfa-alfalfa
• Organic cropping systems were established in 1998; certified organic in 2000.
![Page 4: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/4.jpg)
Yields, by Crop and Rotation,2000-2004
154144
156
41 4240
0
50
100
150
200
C-Sb C-Sb-O/A C-Sb-O/A-ARotation
bu
/ac
re
C or n
Soybean
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Estimated Fieldwork, by Rotation, 2000-2004
2.362.60
0.89
0.001.002.003.00
C-Sb C-Sb-O/A C-Sb-O/A-ARotation
hr/
acre
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Production Costs by Crop & Rotation, 2000-2004
152150
191
110111121 132156
116
0
100
200
300
C-Sb C-Sb-O/A C-Sb-O/A-ARotation
$/ac
re
Cor n
Soybean
A ver age
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Returns to Land & Management, by Crop and Rotation, 2000-2004
115
384 431
94
450 461
104
320 303
0100200300400500
C-Sb C-Sb-O/A C-Sb-O/A-ARotation
$/ac
re
Cor n
Soybeans
A ver age
Iowa average prices used per year; minimum price was the loan rate.
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Yes, but…
That’s a research farm and doesn’t reflect my farm. Besides the conventional C-Sb isn’t really conventional.
Response:• Developed the Iowa Organic Budgets (Fm-1876) to
represent state costs and returns.• Revised Iowa Crop Production Budgets (Fm-1712) to use
as a comparison.
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Yields by Crop and Rotation
170
150
50
4030
60
90
120
150
180
210
C-Sb C-Sb-O/A-ARotation
bu
/acr
e
Cor n
Soybean
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1.0
1.8
0.0
0.5
1.0
1.5
2.0
C-Sb C-Sb-O/A-ARotation
hr/
acre
Estimated Rotation Fieldwork
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Production Costs by Crop & Rotation
$270
$215
$148
$116
$209
$141
$50
$100
$150
$200
$250
$300
C-Sb C-Sb-O/A-A
$/ac
re
Rotation
Corn
Soybean
Average
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Returns to Land & Management
$85
$446
$142
$397
$114
$329
$0
$100
$200
$300
$400
$500
$600
C-Sb C-Sb-O/A-A
$/ac
re
Rotation
Corn
Soybeans
Average
Prices: $2.15,$6.00; $4.50, $13.60, $2.30, $90
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Yes, but …
• With the ethanol boom and higher corn and soybean prices, organic production no longer has an economic advantage to conventional agriculture.
• Besides conventional corn has higher yields than the Extension publication shows.
![Page 14: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/14.jpg)
Yields by Crop and Rotation
180
150
50
40
30
60
90
120
150
180
210
C-Sb C-Sb-O/A-A
bu
/acr
e
Rotation
Corn
Soybean
![Page 15: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/15.jpg)
Production Costs by Crop & Rotation
$365
$239
$182
$146
$274
$161
$50$100$150$200$250$300$350$400
C-Sb C-Sb-O/A-ARotation
$/ac
re
C or n
Soybean
A ver age
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Returns to Land & Management
$524
$1,236
$408
$753
$466
$782
$0
$500
$1,000
C-Sb C-Sb-O/A-ARotation
$/ac
re
Cor n
SoybeansA ver age
Prices: $5.00, $12.00; $10.00, $23.40, $5.25, $190
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Yes, but…
• Government program payments aren’t included.
• Answer:– At current higher prices, there are no
government program payments except direct payments and those are the same regardless of what is grown.
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Bottom Line
• In general, well-managed organic rotations are more profitable than well-managed conventional corn-soybean rotations…– with or without premiums– around the state– with or without government program payments.
• Given high corn prices, organic systems that lose all their price premiums will be less profitable than the conventional system.
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Bottom Line
• However, as fertilizer, pesticides, seed, etc. increase in cost, organic systems may be economically competitive even without price premiums.
• Organic production is the classic risk/reward situation. You risk profitability during the transition to receive much higher returns once the system is up and running.
![Page 20: Organic Agriculture …… How Viable / Still Viable? Craig Chase, Field Specialist Farm & Ag Business Management.](https://reader035.fdocuments.us/reader035/viewer/2022062516/56649d9f5503460f94a89436/html5/thumbnails/20.jpg)
Questions
Questions on
Profitability of Organic Production?
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Organic Agriculture ……
Making the transition…
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Organic Transition Economics
• Step 1: develop a transition production plan…
Example – You inherited a 240-acre farm. It is currently in a corn-soybean rotation. You want to transition into organics.
You decide to transition field-by-field.
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Field Plan
For simplicity,
Assume you can divide the 240 acres into 4, 60-acre fields. And you will be producing conventional and transitioning crops on the same farm.
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Field Plan
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Field 1 Conv Corn
Conv Sb
Conv Corn
Trans Oats
Trans Alfalfa
Field 2 Conv Sb
Conv Corn
Trans Oats
Trans Alfalfa
Organic Corn
Field 3 Conv Corn
Trans Oats
Trans Alfalfa
Organic Corn
Organic Sb
Field 4 Trans Oats
Trans Alfalfa
Organic Corn
Organic Sb
Organic Oats
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Returns to Land & Management
$466 $456$466
$641$466
$594
$0
$500
$1,000
C-Sb C-Sb-O/A-ARotation
$/ac
re
Y r 1
Y r 3A vg
Prices: conventional - organic prices once certified
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Questions…..
Any questions or comments?
Thank You for This Opportunity!
Craig A. ChaseFarm Management Field Specialist
720 7th Avenue SWTripoli, IA 50676(319) 882-4275