Organic Production and Sustainable Enterprises for Kentucky

Lee Meyer, Dept of Ag Economics

Followed by Adam Watson, Ky Dept. of Agthe Organic Certification process

The Starting Point:“There has been considerable

interest in having a session on organic production and sustainable enterprises”

Why? Perhaps:

◦Consumer interest◦Economic/marketing opportunity ◦Environmental issues

OverviewBackground on “sustainable” and

“organic” market trends and opportunities

Specifics by type of ag (livestock, horticulture, row crop)

The Organic Certification process (Adam Watson, Ky Dept. of Ag.)

Issues:Nutrient managementGulf of Mexico dead zoneErosion – even in no-tillChemical residues – surface and

ground waterWeed resistance – resistant

pigweed

The three pillars:◦Environmental stewardship◦Social responsibility◦Economic viability

What is “sustainability” anyway?

The three pillars:◦Environmental stewardship◦Social responsibility◦Economic viability

We can measure it --◦Environmental – soil erosion; water

quality ◦Social – working conditions,

fatalities/injuries◦Economic – profit, land tenure

What is “sustainability” anyway?

Establish benchmarks, measure the level of sustainability, ◦Are we making progress?◦Public policy analysis◦Comparing farms – an issue!

Provide guidance to buyers

Why Measure Sustainability?

Leonardo Academy/ANSI

Keystone Institute

Stewardship Index for Specialty Crops

Cool Farm Institute

===============

Others (Walmart’s Sust. Consortium, Dairy,

Potato, National Institute for Sustainable Ag, …)

Measuring Sustainability - the Key Players:

Keystone Center- Field to Markethttp://www.fieldtomarket.org/

Fieldprint Calculator -6 resource areas:Land Use – land per unit produced, all

practices, including rotations.

Soil Loss – based on Univ. Soil Loss and Wind Erosion models; accounts for soil, tillage, etc.

Soil Carbon – function of organic matter added, field operations, soil erosion rates.

Keystone Center- Field to Markethttp://www.fieldtomarket.org/

Irrigation Water Use – adds to the crop, but also energy and GHG;

Energy Use – units of energy/production (e.g. BTU/bu. Corn); includes both direct and embedded energy in inputs;

Greenhouse Gas Emissions – both direct and embedded; (seed, fertilizer, lime, tillage, etc.)

Keystone Center- Field to Markethttp://www.fieldtomarket.org/

◦Agricultural Contribution to GDP

◦ Implied Labor Hours

◦National Fatalities

◦National Debt to Asset Ratio

◦Non-Fatality Injury

◦Real Returns Above Variable Costs

Keystone Center- Field to MarketSocioEconomic Indicators

What is “Organic”?

A USDA labeling term, for products produced under specific protocols

Requires certification Imports may be USDA certified

“organic”

Misconceptions Conventional farming –

◦Over use of pesticides◦Disregard for environment◦ etc.

Organic farming◦Benign neglect◦Poor quality◦Etc.

Misconceptions - production Conventional farming –

◦Over use of pesticides◦Disregard for environment◦ etc.

Organic farming◦Benign neglect◦Poor quality◦Etc.◦Organic spray – spinosad or

pyrethrin

The Organic Marketplace

Not true – the market slowed after the 2008 recession, but has regained its growth trajectory

Market Opportunities for Organic

Meats and Livestock◦Niche◦Mostly dairy, eggs, chicken◦Beef – but often mixed up with

grassfedIssues:

◦Processing◦Organic feeds

Market Opportunities - HortFocus on direct marketing,

including farmers markets and CSAs

Mostly urban markets – so location/ transportation cost is important

“Local” tends to trump “organic” in many Kentucky markets

Organic is becoming a commodity is some categories

Organic Corn EnterpriseSubstitute tillage for chemical

weed controlRotations for weed control and

fertilityCost of production typically much

lowerYields – 50% to 90% in long runMarket – primarily as livestock

feed and Kentucky is a deficit state

Fewer outlets and risk management options

Market Opportunities – CornDemand as a livestock feedPrice – 1.5 to 2 x conventional feed corn

http://www.ams.usda.gov/mnreports/lsbnof.pdf

Organic Corn – Madison, INAugust, 2013