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Corn+Soybean Digest

Organic Opportunities

It could be a scene from the past: young people with hoes, weeding long rows of soy-beans by hand.

That pretty much describes certified organic soybeans being grown to exacting specifications without using synthetic chemicals, fertilizers or biotech seeds.

Mark Askegaard, Moorhead, MN, raises food-grade organic soybeans, wheat and golden flax in the Red River Valley. He's one of about 3,500 Midwest farmers meeting the demand for organic soybeans and grains. He relies on delayed planting, extended crop rotations, green manure, cover crops and intensive cultivation to produce high-value specialty crops.

Organic crops earn significant premiums — two or even three times the price for conventional crops. But it costs more to produce a bushel of organic soybeans or corn. Yields are lower, labor and fuel costs are higher and agronomic risk is greater. Now, there's a new menace: Soybean aphids threaten the sustainability of organic soybeans.

“Organic is more risky,” Askegaard acknowledges, “but with risk comes opportunity. I enjoy the challenge. Part of the organic philosophy is to add more value to crops. You try to capture that extra value, instead of trying to be a least-cost producer.”

ASKEGAARD, 49, BEGAN the transition to organic production in 1995, after farming conventionally for 15 years. He's the fourth generation of his family to work this land — 900 acres of Fargo silty-clay soils about three miles from the Red River.

The Red River Valley has a robust organic farming community, says Phil Glogoza, a University of Minnesota Extension crops specialist in northwest Minnesota. One reason: “Historically, we didn't have the pest problems you see farther south.”

Askegaard began with just one organic soybean field. “It went well. I thought, ‘If I can do it on one field, I can do it on all my fields.’” He converted the farm in stages, and by 1999 his entire operation was certified organic by the Organic Crop Improvement Association,one of about four dozen U.S. organic certification agencies.

Askegaard's rotation is designed for fertility and pest control. It starts with a green manure crop, usually buckwheat, seeded in July or August. He lets the crop grow for about 30 days and then incorporates it before it sets seeds. The roots mobilize nutrients, especially phosphorus. The residue builds organic matter, which has risen from 2.5% a decade ago to 4% today, he says. In September, he plants a winter cover crop of oats or barley. The roots trap nutrients and prevent erosion.

The following spring, Askegaard plants wheat interseeded with red clover. The clover fixes nitrogen, mobilizes phosphorus and crowds out weeds. Clover's deep root system breaks up tillage pans and improves water infiltration. Askegaard plants the two crops at the same time using a press drill and grass seed attachment.

“In a good stand of wheat, the clover doesn't compete” with the grain, he says. By wheat harvest, the clover is about 4 in. tall, and before incorporation in late fall, it can be as tall as 3 ft.

Wheat is followed by clear-hilum soybeans, used to make tofu and soymilk, or golden flaxseed, a popular nutritional supplement.

ASKEGAARD PLANTS soybeans in 30-in. rows to allow for in-season cultivation, his main weed control method. Before planting, he field cultivates twice. To reduce early season weed competition, he delays seeding until the last week of May and bumps up the rate to 180,000 seeds/acre.

Without herbicides, annual weed pressure is unrelenting. After planting, Askegaard harrows, then rotary hoes two or three times, then harrows again. He also hires workers to walk the rows and hand weed. “It's much more labor intensive than conventional production,” he says.

In the 15 years since he's been an organic producer, Askegaard has seen a shift to more perennial weeds, especially Canadian thistle. To combat perennials, Askegaard overwinters red clover, plowing it down the following spring, and then idles the field for a season. He cultivates several times to disrupt weed cycles. About 40% of organic farmers include a fallow year in the rotation, a 2006 USDA survey found.

“Organic growers are well a-ware that tillage is an issue,” says Kathleen Delate, an organic crops expert at Iowa State University (ISU), “and are constantly looking for improvements in weed control that minimize the use of steel in the field.” Some growers, for example, are experimenting with using propane torches to flame weeds.

Weed control used to be Askegaard's biggest management challenge. That was before soybean aphids invaded northwest Minnesota in 2006, devastating organic fields.

“We could grow organic soybeans just as well as conventional beans, until soybean aphids came along,” Askegaard says. In 2008, “we lost half our production to aphids.”

Conventional soybean growers have effective foliar insecticides to control aphids. But organic growers have few remedies, says Glogoza, the University of Minnesota crops expert. “Soybeans are a very strong crop in an organic system.” But the threat from soybean aphids “changes the sustainability of organic soybeans. We're trying to figure out an effective approach.”

In 2009, Askegaard had heavy aphid pressure in one 74-acre soybean field, and hot spots in other fields. He sprayed the heavily infested field with PyGanic insecticide, a natural pyrethroid that's approved for organic crops. He and Glogoza experimented with an air-assist sprayer, which delivers more insecticide lower in the canopy than a boom sprayer. Covering the lower leaves and leaf undersides is essential for organic soybeans, Glogoza says, because the approved pesticides “are not that effective.”

With air-assist delivery, PyGanic cut aphid populations by 40-60%, Glogoza says. But “in hot spots, the populations never got back under the thresholds,” Askegaard says. That suggests that treatment thresholds may need to be lower for organic soybeans, Glogoza says — perhaps around 100-200 aphids/plant.

Agronomic challenges are not the only headache for organic crop farmers. “Selling organic crops takes a different mind-set than commodity marketing,” Askegaard says. “You have to sell yourself; you have to cultivate customers. It's all about develop-ing personal relationships. They want to meet you, get to know you and trust you.”

CUSTOMERS FROM JAPAN and Korea regularly walk his northwest Minnesota farm fields, looking at the quality of his operation.

Marketing involves sending out lots of soybean and wheat samples and making phone calls and personal contacts with potential buyers.

Next Page: Buyers Pay up for Organic

When Askegaard first started raising organic crops more than a decade ago, he grew mainly on contract, “to make sure I had a market.” Now, he stores the crops after harvest and sells them over the following 12-24 months. Most of his organic soybeans are export-ed to Asia to make tofu, soysauce or soymilk.

Askegaard's wheat also goes to Asia for soy sauce or to the European Union for flour. He direct markets his golden flax-seed locally, packaging and selling it through natural foods stores and supermarkets in four states and over the Internet.

Minnesota and North Dakota have quite a few organic outlets, including SunOpta, Northland Organic Foods, Richland Organics, SK Food International, Natural Way Mills, Identity Ag Processing and the North Dakota Mill.

But organic growers in other regions may find that “buyers are few and far away,” says Delate, the ISU organic crops specialist. “This means that transportation is a bigger expense than when taking the crop to the local elevator, and also means greater risk in terms of payment.”

Although organic crops' higher value and profit potential are appealing to growers, organic production “is certainly riskier, especially in terms of pest management,” Glogoza says. “It takes a lot of knowledge, and you have to be on top of things. It's a tough job. I give these growers a lot of credit.”


Organic crops command significantly higher prices than conventional crops. But costs are higher, too.

In 2008, organic farmers enrolled in the Minnesota Farm Business Management Program received a premium of nearly $11/bu. over conventional soybean prices. The average organic premium in 2007 was $8.21/bu., and in 2006 it was $7.85/bu. “Through 2008, organic prices went up along with conventional prices,” says Dale Nordquist of the University of Minnesota Farm Financial Management Center.

Demand for organic soybeans continues to be strong, and supplies are tight, according to a June 2009 report from the USDA, Emerging Issues in the U.S. Organic Industry. In the third quarter of 2009, the average price for Midwest food-grade organic soybeans was $19.52/bu. November's average price was $20.41.

Although organic growers spend less on chemicals, they spend more on fuel, repairs, labor and crop insurance. Many include a fallow year in their rotation, raising opportunity costs. Identity-preserved handling takes more time, and administrative expenses are higher due to documentation and annual certification requirements.

Before an operation is certified to sell organic, the cropland must be managed organically for 36 months. Making it through the three-year transition period is tough, says Moorhead, MN, organic grower Mark Askegaard. “You have all the risks but none of the higher prices that organics offer.”

USDA puts the operating and capital costs of converting to organic soybean production at 42¢/bu., amortized over 20 years. Cash flow during the conversion period can be a killer, Nordquist says. The federal Environmental Quality Incentives Program (EQIP) offers financial assistance during the transition.

Organic crop yields are usually lower, and not every bushel qualifies for premiums. Buffer strips between organic and conventional fields, for example, have less value.

In Minnesota, organic soybean yields in 2008 averaged 18 bu./acre, compared to 40 bu./acre for conventional beans, according to the University of Minnesota's FinBin, a database of farm financial performance. Gross revenues for organic beans averaged $538/acre, and expenses averaged $355/acre. By comparison, gross revenues on conventional beans averaged $432/acre, and expenses averaged $332/acre. Organic soybeans returned about $80/acre more than conventional beans in 2008.

As a group, Minnesota organic crop farms were quite profitable in 2008, Nordquist says, with a return on assets of more than 13%. But just as with conventional producers, he says, “There is tremendous variability in production and financial performance.”

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