American Vegetable Grower: Gambling on organics

Some of the country's largest acreage growers aren't letting the organics boom pass them by, but they're moving in cautiously.

THE consumer trend toward organic vegetables may have started on the West Coast, but there's strong evidence it has taken root in the heartland - and some of the nation's largest growers are jumping on the bandwagon. The number of U.S. farm acres used to produce organic vegetables and other organic ag products doubled from 1995 to 1997 to about 1.37 million acres, according to USDA, with sales of organic products amounting to about $6 billion.

"We don't see organic as a niche market any more," says Patty Boman, marketing manager at Grimmway Farms, Bakersfield, CA. "Organics have become an established part of our business."

Grimmway, the nation's largest carrot producer, got its feet wet in organics five years ago with the purchase of an existing organic operation. Since then, it has converted 6500 acres to organic production on land the company owns in the Bakersfield area and leases an additional 1000 acres for organic growing.

"It's a huge commitment for us, but we believe organics are here to stay," Boman says. "We're in it for the long haul. We've made a commitment to our customers. As sales go up, we'll acquire more land and expand in organics."

In addition to organic carrots, Grimmway produces organic garlic, romaine hearts, spring mix, tomatoes, and potatoes. Some of these crops are used in rotation with the carrots.

WORM THE RISK

"Moving into organics was somewhat of a risk for our company, but we could see the consumer trends," Boman says. "The heaviest concentration of organic consumers is still on the West Coast, but the trend toward organics is nationwide."

While she says costs for producing organically are generally higher, those costs have come down as Grimmway's growers have become more knowledgeable.

"There is a tremendous amount of information available on organic growing," Boman says. "The longer we're in it, the better we become. We see organics as a very profitable part of our business both in the short-term and long-term."

Meanwhile, another large California vegetable operation, Tanimura & Antle, is also getting into organics. The company bought a one-third interest in Natural Selections last fall and now has 500 acres in organics in the Salinas area. Another 1000 acres are being converted to organic production in Yuma, AZ.

"It's a niche market for us, but we see more growth there in sales," says Gary Tanimura, vice president of production. "Conventional farming has become very tough the last few years. The box lettuce business has shrunk each year. When Natural Selections approached us about converting some of our good farmland to organics, it seemed like a fairly good fit. It seemed like the opportunity we'd been looking for."

CLIMBING THE LEARNING CURVE

Tanimura is banking on the fact that some major supermarket chains are stocking 30 to 50 organic items in their produce departments and are looking for consistent supply week after week. He expects T&A's organic growers to be able to meet that demand once the transitional period is over. The company is already producing baby greens including spinach, lettuce, and romaine on its transitional acreage. Even though organic methods are being used, the crop has to be sold conventionally until the land is certified organic.

"We're in a learning mode right now," he says. "I'm learning something new every week. My Uncle George was farming since the 1920s and used some organic techniques such as cover crops and good crop rotation before World War II.

"But I'm trying some things I never heard of, like fish fertilizers, guano, chicken pellets, and strips of beneficial insects to control aphids."

Tanimura says his input costs are higher to grow organically.

"It can cost $500 to $1000 an acre for weed control for organics, whereas herbicides might cost $50 an acre," he says. "We're just hoping that the returns will be there."

Randy Hartung, a processing vegetable grower in Arena, WI, has been involved with organics for eight years - the first five years working with other growers and the last three farming himself on leased certified organic land.

"We saw the processors looking at organics and thought that with our experience in managing processing vegetables, we could do a better job than some other growers who went bankrupt trying to grow organically," he says.

Hartung now produces peas, snap beans, sweet corn, and squash organically on 350 acres still a drop in the bucket compared to the more than 17,000 acres of conventionally grown vegetables for Hartung Brothers.

Net returns are "iffy," Hartung says, because a blight or other pest can cut yields and profits.

"One year we harvested 31/2 tons of organic snap beans and the next year the yield was just 11/2 ton due to a blight that could have been avoided if we'd used conventional inputs," he says.

AN END TO THE TREND?

Clearly, Hartung sees organics as a niche market - one that is profitable right now, but may not stay that way.

"I see it as expanding, but for how long?" he asks. "Some say the trend toward organics may be peaking. There's also a chance that the processor we sell to might certify additional acreage it owns as organic. If that happens, the company may not need us."

He also worries that expanding organic production on the West Coast could "kill the golden goose."

"Overproduction could be a problem in the future," he says. "If massive acreage is converted to organics, prices will drop. As it is, the return for organics just barely covers the risk. Some years you can do very well. Other years, not so well. Right now, it's worthwhile to grow organically, but the potential for losses is huge - especially when you consider we have to rotate the vegetables with an alfalfa crop which doesn't bring much return."

Despite the uncertainties, Hartung believes there is still room in organics for smaller producers with access to the fresh market.

"These people often can sell directly to consumers at farmers markets and can get premium prices," he says. "There's not as good of a premium in selling organic vegetables to processors but then I don't have the marketing hassle those fresh market growers might have."

Hartung says that if conditions are right, his company could expand its organic production. But it could just as easily pull back if profitability dips.

"If the organic processing market increases, we're ready to grow with it," he says. "But if prices drop, I don't need any more headaches. Right now, we're in a wait and see mode."