Non-GMO Soybeans: Supply and Demand
Demand for non-GMO soybeans continues to increase, but domestic supply is still a long way from meeting it. Although the pace of imports slowed last year and acreage dedicated to organic soybeans increased, domestic supply is still not growing fast enough to keep end users from sourcing organic soybeans outside the US.
The biggest driver is the need to feed organic poultry, the production of which has seen a compound annual growth rate over the past four years of 46%. Demand was so great last year that domestic organic soybeans for feed at one point sold for an average $18.72 per bushel while GM soy averaged about $9 during the same period.
One might think that premium market prices coupled with lower seed costs would make converting to organic acres an easy decision to make. According to the USDA, farmers faced their fourth drop in net income in five years in 2018, while farm costs increased 4.2%. Conventional seed was about 40% the cost of the priciest GMO seed. Grain merchandisers report more farmers interested in converting. So why doesn’t the rate of conversion of farmland to organic acreage rise to match the growth in demand?
The answer is risk. Not only do challenges like weed control and yield loss need to be managed, but the costs and time to fully convert from conventional to organic can push profitability out for 3 years or more. Experts agree, to encourage more domestic conversions, end users need to do a better job supporting producers. Offering long-term contracts and favorable off-take agreements for rotational crops can help reduce farmers’ risk during their transitions. This also conveys benefits back to the end users: by taking a partnership approach, processors can be more confident in their own products, and reduce the risk of sourcing from unknown and possibly fraudulent organic suppliers.