×
×
homepage logo

DAVID KRUSE

By Staff | Apr 24, 2015

The organic food industry has had such success selling consumers a bill of goods that it has difficulty sourcing enough organic farm products.

It is a niche market available to consumers wealthy enough to access it, but represents a very small slice of food production overall.

I have argued that the shortage of organic food production proves that their system is unsustainable. If they can’t produce enough organic food for this small industry how many people would they starve if they scaled up?

They have a shortage of farmers willing to conform to organic standards. That happens for two reasons: First, that it is hard to farm with both hands needlessly tied behind your back limiting the scale of productivity and second, they don’t pay them enough. Yeah, they pay producers three or four times more for organic food than what it costs for traditional commodity production, but it is often not enough. The costs and risks per bushel or pound of organic production are far higher than for traditional producers. Therefore, that limits the supply.

In the case of livestock production, go online and see what they charge per pound for Niman Ranch pork. Eight, 8-oz boneless chops cost $89.95 and a bone-in 16-19-lb ham is $199.95. I think that should be enough to cover the cost of producing “natural” hogs don’t you think? Check out your weekly shopper for comparable meat prices. The problem must be in how they split that revenue with producers. It is in a different price universe than the price for commercial pork and ham.

One of my partners attempted to produce hogs for the company and said that didn’t pay enough to cover the higher costs. The reason is that when hogs get sick, which they do, animals are rejected when treated with antibiotics so the premium on those hogs is lost. His death loss was far higher than for traditional commercial hog production, resulting in a loss of profit. This is also an animal rights issue as I don’t see how higher death losses can be considered humane or sustainable.

It is a deceptive system. Someone fooled Chipotle for a while until they figured out the audits of their hog supplier was phony. Chipotle dropped pork from their menu. Much of the other meat they use is not produced the way they would like it to be, forcing them to import beef from Australia which puts them a long flight away from the audits. Chipotle made a video of what they consider to be an acceptable system of hog production to denigrate the commercial hog industry by comparison and what Chipotle actually proved was that they couldn’t produce them that way successfully commercially in real life.

It is all a sham. If there are supply interruptions in a food chain then it is not a sustainable system. People can’t wait, too long before eating and that is forcing the organic supply chain to substitute commercial food to fill in when they have these shortages or as Chipotle did, drop items from the menu. In other words, they need us more than anyone needs them.

The Wall Street Journal wrote that a Canadian cereal company grew so frustrated with sourcing organic grain that they bought 2,800 acres in Montana to grow their own. What they should find out is that it is not that easy to farm that way but that would be a good lesson for them to learn, too. These organic companies are trying to school producers into becoming suppliers, but if the system doesn’t work it doesn’t work. The Canadian company is essentially cutting out the family farmer to reduce its costs, adopting an organic corporate top down run system.

That is right. Currently, we have family farmers producing high quality, low cost food commercially using traditional commercial methods that accommodate some organic practices competing against corporate organic producers. This Nirvana food production system that they promote doesn’t exist on a large enough scale to meet their demand for several reasons. In 2014 natural organic food represented just 4 percent of total sales. Those sales exceed natural organic supply increasing organic grain prices and what the natural organic food companies are finding when they look hard enough is that some of their suppliers are lying to them and they have a huge problem policing their industry while sustaining supply.

The organic industry rejection of GMOs further limits organic producers who are thinking about allowing a new label that would include them. Genes are organic and there is nothing remotely within the realm of science that supports there being risk from GMOs. Genes are a natural way to defend plants from pests making organic food production rejection of GMOs a total rejection of biology.

The U.S. Department of Agriculture is conflicted on GMOs, purporting to support them while also validating the organic industry rejection of GMOs. Ag Secretary Tom Vilsack says, “GMOs expand productivity so that people here in the U.S. and around the world can grow sufficient amounts of food using less water and less land in a more environmentally friendly way.”

When the organic industry denigrates use of GMOs demanding labeling it is solely for their commercial gain and benefit. The more dependent we become on less productive organic systems that harvest lower yields than technologically advanced commercial production, the more food we will import.

These are trade-offs organic producers do not mention nor are they understood by consumers.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page