It’s been an interesting week.
Coming at organics as a broker and consumer (I only grow on a small scale), I think my primary thought on marketing organic crops is that the market rules.
I say this because time and again over the weeks I am approached for a price float on a given organic product but what the producer has in mind is the price spikes of the past few years on their crop. This isn’t unique to organic producers but does seem to be more common. In my opinion the COVID price spikes were an anomaly and will not be repeated. Nor is there any point in planting according to last year’s or two year’s ago prices in the hope of a similar return this year. The market is flat or falling for nearly all products, except organic pulse. There are sudden one-off high price buys but these are the exception, not the rule, and holding out for them is a game of dice. Buyers are contracting into the spring already and prices are not rising. It is my thought that increased costs on the reseller and consumer end of organics is leading to a general price stall because organics are a luxury consumer item and when pressed for cost consumers are forced to shop cheaper. In commodities substitutions reign King.
For maximum price, know what it is you’re selling and have it ready. Have lab reports on hand and know what you’ve got precisely. You will not get good, or many bids, if you can’t tell them what they’re trying to buy. Buyers (any of them) want speed and certainty. The best prices are reliably going not to the best crop, though that helps, but to the grower with the fastest and most professional information on their crop. While an elevator report helps, at best it’s considered a guesstimate.
We need to remember that there is not a century of status quo on organics. Each deal is unique, each field is unique, each crop is unique. The opportunities are great but so is the potential for loss. Balance is needed. They say the markets are dictated by fear and greed but I have yet to see either quality make for a sensible decision.
I do have some thoughts on specific crops.
The milling wheat market is being largely driven by specialty millers who must have perfect product. This is not a matter of buyers being whiny or trying to chisel you down, this is a chemical fact. Single source whole wheat flour can be extremely difficult to bake with and the grain that produces it must adhere to defined specs in order to bake a loaf of bread that isn’t a brick (or a massive sponge). Millers want perfect wheat. Buyers pay for perfect wheat. Conventional can hide behind less than perfect because they blend dozens of loads into one; organic can’t do that.
There is a ton of organic rye on the market. Most sellers are holding out for a given price. My comment is, take what you can get – you’ll likely get a better price than everybody behind you.
There are a ton of organic oats on the market. Take what you can get. It is an opportunity for a grower to create a reliable basic cash flow as the buyers are established and strong but those buyers also name the price.
Bread wheats are holding steady in the $21 +/- range. You might get $23 for cleaned product. You might get a premium for Red Fife or named heritage wheat. Take what you can get. If you want to camp out for a price you may be camping out for a lower price.
Barley is rare-ish and shows massive price variance. Shop around.
Organic pulse is rare and sought for but remember that the other end needs to make a profit and that the product must be quality.
If you want a good price and fast transaction for organic mustard sell it cleaned and have spec on hand. Nobody wants to ship dockage. Expect to dicker on prices.
Organic flax is strong. If you’re not happy with the price hang tough.
For forage and associated specialty seed there’s demand but that market is particularly finicky on purity.
Feed grade and screenings have a market as well but the buyers are looking for a deal. It can be a great way to rescue a bad day. Come with fair expectations.
To conclude, look at your ROI for each crop and calculate individually and as an aggregate. Don’t sell on wishes sell on reality. The only thing more lame than a low price in January is that same low price in May. Cost of carrying is more real than ever. Bring buyers firm third party information on the crop and have it ready on demand, or better yet present it all up front. Good sellers (as well as good buyers) rise to the top.
There is far more room for competitive advantage in organics than in conventional. Much of that advantage simply comes from being willing to take fair prices and offer clear, concise, fast information on what it is you are trying to sell. I might also add that buyers prefer to deal with sellers who are game to sell and not simply floating prices or holding out for the highest bidder. An offer, often as not, doesn’t last the week. Dumping a contract -- which, fortunately, is rare -- in order to hold out for a few more cents is a great way to get cut entirely.
To summarize: the best business and best prices are going to good but not necessarily the best product provided by sellers who are willing to sell at a fair price and who provide the information and product the buyer wants quickly and thoroughly. No luck, no unicorn hunts, no kinda-sorta.
Those are one man’s thoughts.
Organic Broker, Three Hills AB
Reed McDonald - Owner and chief blogger at Quality Grain Marketing. With all the noise and click bate headlines this agricultural based blog will highlight what current events I am following. Be sure to check in regularly for updated musings