Organic Agriculture in Iowa: Economics in the Era of Ethanol

Delate, Kathleen
Chase, Craig
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Organic agriculture continues to remain a viable alternative for Iowa farmers. Consumer demand has propelled the organic industry to a $20 billion enterprise in 2007 (Organic Trade Assn., 2008). Organic acreage in Iowa has increased from 21,733 acres in 1996 to over 100,000 acres in 2007, taking Iowa to a Number 4 position in the number of organic farmers in the U.S. (USDA-ERS, 2005). Current prices for organic corn, soybean and wheat on November 5, 2008, were listed as $10/bushel, $23/bushel, and $9.46/bushel, respectively (USDA-AMS, 2008a). Certified organic production requires a farm plan that includes a minimum three-crop rotation (typically com-soybean-oats/alfalfa), organic sources for fertilization, such as composted manure, and complete records for separating planting, harvesting and storage operations to prevent contact with conventional crops (Delate, 2003; USDA-AMS, 2008b). Organic crops can compete with conventional crops both in yield and in grain quality (Delate and Cambardella, 2004). Organic corn yields in 2007 at the ISU Neely-Kinyon (NK) Research Farm in Greenfield, Iowa (Figure 1), for example, reached 209 bu/acre in the com-soybean-oat/alfalfa-alfalfa rotation, with organic soybeans yielding 65 bu/acre. Even during the two years in transition when organic premiums are not received, organic farmers can obtain a premium for non-transgenic foodgrade soybeans, for example (Delate et al., 2006). With the significant increase in organic price premiums over conventional crop prices, we were asked to conduct a cost of production analysis to determine economic returns in a typical organic farming operation in Iowa.