Grain Shortage Won't Boost Prices -
Organic Producers Are Starting to Meet Some Resistance From Buyers in the Asian Market

Tuesday, June 14, 2005

BY JEFF CARTER, SPECIAL TO ONTARIO FARMER

Supplies of organic spelt and wheat are extremely short but that's not expected to translate into dramatically higher prices, according to a marketer and shareholder with Great Lakes Organic Inc.

Roger Rivest says there is growing resistance from buyers, especially in the Asian market, and prices have already risen by about 20 per cent for the two crops over the past two years.

Organic spelt is selling for around $450 a tonne and organic wheat for about $280 a tonne, Rivest says. Farmers typically harvest a tonne and a quarter of spelt per acre but higher yields are not uncommon.

"We're already losing sales and the price is so high it's stifling growth in the overall organic industry," Rivest says.

The high cost of organic feed is keeping new farmers out of organic livestock production, Rivest explains. His company had to import organic feed from Brazil and China for three months last year and same situation is occurring this year.

The short crop in spelt and winter wheat was caused by excessively wet conditions last fall in Indiana, Illinois and Ohio. There was also considerable winterkill in Michigan and Ontario. Rivest says overall production in the Great Lakes region for the two crops is down about 50 per cent.

With the short crop, it is expected growth at Great Lakes Organic will slow..That's not entirely a bad thing. Slower growth this year will give thecompany shareholders some breathing room to access the company's position and plan for the future, Rivest says. The company has been increasing business by 300 per cent a year since it was launched in November of 1999.

Driving the organic industry's expansion in North America has been the growing acceptance of organically produced foods by major grocery retailers, Rivest says. In addition, many of these retailers have switched to stocking organic products next to their conventional counterparts rather than locating them in a separate aisle. That's improved sales by as much as six or seven times, Rivest says.

The company, using facilities owned by individual shareholders, handles and conditions wheat, corn, spelt, soybeans, soybean meal, and other commodities. There are now two facilities in Ontario, three in Michigan and one in Ohio.

THE MOST recent addition to Great Lakes Organic has been the outright purchase of a small flour mill with a partner, Michigan-based Organic Bean and Grain. A subsidiary, Heritage Mills, was created for the transaction.

Operations at the facility, which has a capacity of about two tonnes per hour, began seven weeks ago. It's located in Caro, Michigan.

Rivest says the mill was purchased for a reasonable price and there's been significant upgrades. Supporting the effort was a grant for about $80,000 secured in the United States.

Rivest says there has been more government recognition in the United States and in Quebec for the importance of value-added enterprises, and organic production, as compared to Ontario.

The company's brand name, The Daily Grind, was purchased with the idea of eventually using it for retail sales. Currently, much of the flour is being wholesaled to bakeries.

"We're going to do as much high volume spelt as we can and run the plant 24 hours a day."

Rivest says there's a need for more organic production in the Great Lakes region. Much of the current expansion is from established organic growers who are simply increasing their acreage.

That's the case for Rivest and his son, Jeff, near Staples in Essex County. They're now farming 900 acres and Rivest says his son has plans for further expansion.

© Copyright 2005, Ontario Farmer

The Organic Agriculture Centre of Canada (OACC) wishes to thank Ontario Farmer for permission to reproduce this article on our website.