Organic Poultry Growers Face High Feed Costs, Low Supply

7/21/2012 7:00 AM
By Andrew Jenner Virginia Correspondent

At nearly $8 per bushel, farmers stand to make good money this year on conventionally grown corn. That’s good news for conventional corn farmers, and bad news for the organic poultry industry in the Mid-Atlantic, which faces declining supply and rising prices for the organic corn it needs for feed.

“The organic industry’s getting crimped really bad,” said Scott Sechler, owner of Bell & Evans, a Pennsylvania poultry integrator with a line of organic-certified chicken. “It’s easy to grow conventional corn and sell it at today’s prices ... (and) that’s using up acreage that could be going to organic.”

Sechler said he recently paid nearly $20 per bushel for organic corn for his feed mill, translating to a $200,000 increase in his feed costs.

Catherine Greene, an agricultural economist with the USDA’s Economic Research Service, said that the three-year transition period and significant paperwork required for organic crop production mean fewer farmers will transition to organic, or continue to maintain a certification, when prices for conventional corn are high.

“We’ve had (organic) feed grain supply shortage issues for half a dozen years now, and it appears to have gotten worse,” she said.

Greene added that the National Agriculture Statistics Service will be publishing data on nationwide organic grain acreage later this year. For the time being, however, anecdotal evidence suggests that organic corn acreage total has fallen in the U.S. over the past several years.

The high prices of organic feed ingredients has already had dramatic consequences for some Pennsylvania poultry growers, who have had their feed bins run empty for up to days at a time. One organic poultry grower in central Pennsylvania said he has run out of feed several times, beginning this spring. Each time, the shortage has lasted for hours.

“We can’t raise fat chickens without feed, and we live on weight,” the grower said, adding that his hungry chickens sometimes die of heart attacks caused by overeating when they finally get feed.

The birds also fight over feed when they’re hungry, resulting in more scratched birds that will be condemned before processing. The grower said, and several others familiar with the industry confirmed, that the problem is widespread within his company, and that other growers have sat with empty feed bins for up to 48 hours. The grower said he’s also disturbed by the cruel conditions this creates for the birds, a particular irony given the fact that their meat eventually will be marketed as a healthy, humanely-raised organic product.

The grower also expressed frustration that the company chooses to let its organic growers wait with empty feed bins instead of sending conventional feed. Because sending a load of conventional feed would disqualify a flock as organic, he speculated, the company would rather hold out and try to recoup its investment in the flock.

“They don’t want to lose the sales, and then they end up in this pickle,” he said.

Officials with the company did not respond to a message seeking comment.

Supply difficulties aside, consumer demand for organic poultry remains strong. Sechler said he has seen steady growth in organic sales over the past several years. He also just increased his organic production by 25,000 birds, and will likely do so again before the end of the year. (He also said his growers have never run out of feed.)

Wenger Feeds, a Rheems, Pa.-based feed manufacturer, just entered the organic feed business earlier this year by purchasing a plant with an organic line. The company now converted a second line at that plant to organic feed production, according to Cher Rineer, its corporate communications coordinator.

And according to the Organic Trade Association, national sales of organic poultry grew by 12.5 percent in 2011, totaling $331 million. In its report however, the Organic Trade Association noted that much of that growth is due to price, rather than volume, increases.

And with feed prices increasing so dramatically, consumers are likely to see the price of organic feed continue to rise.

“We may be losing customers because of the high price hike,” said Kevin Fletcher, owner of Countryside Organics, a Waynesboro, Va., feed mill that produces bagged organic feed for independent poultry growers.

Corn in particular, Fletcher said, has “gotten outrageous.”

Sechler, of Bell & Evans, and Fletcher placed much of the blame at the feet of the ethanol industry, and federal production mandates that artificially inflate the cost of conventional corn, thereby driving down supply of organic corn.

“It’s really the ethanol industry that’s competing with organic (food),” Sechler said, adding that dry weather across much of the country has pushed harvest estimates lower and prices up even higher.

“Here we are, not sure that we have enough (organic) corn and soybeans to get us through the harvest, and when harvest gets here, we have no idea how that’s going to turn out,” he said. “There’s going to be severe shortages of organic meat and animal products, no question.”

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