Home Financial Record ‘It’s a Madhouse’: US Organic Soy Prices Hit Record High, Fueling Food Inflation

‘It’s a Madhouse’: US Organic Soy Prices Hit Record High, Fueling Food Inflation

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CHICAGO – U.S. prices for organic soybeans used to feed livestock and make soy milk have reached record highs as imports that make up most of the country’s supply fell, triggering higher food prices, including chicken from organic farming.

Expensive soybeans and more expensive organics are fueling food inflation at a time when consumers are keen to eat better and focus on health during the COVID-19 pandemic. America’s $ 56 billion organic food industry is also grappling with a shortage of shipping containers and a tight labor market as global food prices hit a 10-year high.

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Food companies and chicken farmers are feeling a bigger shock from the prices of organic soybeans, which are shipped in containers, than for conventional crops shipped in bulk. Regular soybean prices are around a seven-year high, rather than an all-time high.

Organic chicken farmers are cutting company expenses to offset high feed costs and are scrambling to source crops produced in the United States rather than overseas. The United States imports about 70% of its organic soybeans, according to industry estimates, and US organic production has not increased enough to keep pace with growing demand.

Bell & Evans, a 127-year-old chicken farmer based in Pennsylvania, feeds 500,000 to 600,000 American organically grown chickens each week and must compete for soybeans with other buyers who previously relied on imports, owner Scott said. Sechler. The company raised all prices for chicken in July and will likely have to raise prices for organic products again, he said.

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“We are going through the most difficult times since the beginning of the organic world when it comes to feeding animals and selling organic animal protein,” Sechler said. “It’s a madhouse now.”

U.S. imports of organic soybeans from September 2020 to August 2021 fell 18% to about 240,585 tonnes, according to data from the U.S. Department of Agriculture. Shipments fell 30% from Argentina, the largest supplier to the United States.

Imports from India fell 34%, extending a pre-existing drop after the United States in January tightened its requirements to certify Indian crops as organic.

While the United States is the world’s second-largest exporter of conventional soybeans, farmers have been slower to adopt organic products, put off by the high initial investment and long conversion time to achieve organic certification. Now, with profits to be reaped from conventional farming amid a low global soybean supply, some growers have said the switch to organic is not worth the extra money and work.

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“There isn’t enough of it in America to replace all of the imported organic grains,” Sechler said.

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Shortages of container ships used to import organic crops and congestion at U.S. ports during a time of high consumer spending are pushing freight costs to record highs.

“The consumer goods market pays premiums for any available containers it can find,” said John Sheppard, president of US organic soybean grinder Sheppard Grain. “Farm products just can’t compete. “

Prices for organic soybeans shipped to the U.S. Midwest in September hit around $ 33 a bushel, breaking the previous high of around $ 25 a bushel from 2014 to 2015, commodities data company Mercaris said.

Prices for organic feed, which accounts for 65% of the cost of raising a chicken, have climbed nearly 20% in 2021, said Debarshi Sengupta, chief financial officer of chicken producer Farmer Focus. He predicts that they will increase by almost 40% by the end of the year if current price trends persist.

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Sales of organic food in the United States jumped 12.8% last year to $ 56.5 billion, from a 4.6% increase in 2019, according to the Organic Trade Association. In 2020, organic products accounted for 5.8% of food sales, as the pandemic prompted consumers to eat more meals at home and focus on products perceived to be healthy, the industry group said.

Chicken farmer Perdue Farms expects customers to see higher prices in part because of rising organic feed costs and is looking to bolster its domestic supply of organic grains to avoid future price fluctuations, spokeswoman Andrea Staub said.

Food companies and feed users are negotiating to buy high-priced American organic soybeans from this year’s fall harvest to last until next year’s harvest. Domestic supplies will remain limited, managers said.

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U.S. farmers harvested about 170,074 acres of organic soybeans in 2019, up 37% from 2016, according to the USDA. The total soybean crop, which is mostly genetically modified, covers 86.4 million acres this year.

Farmers must grow crops for three years without using banned substances, such as genetically modified seeds and synthetic pesticides, in order to be certified fully organic.

“It’s not an industry that can change overnight,” said Nicole Atchison, managing director of ingredient supplier PURIS Holdings, which buys US organic soybeans. (Reporting by Tom Polansek in Chicago Editing by Caroline Stauffer and Matthew Lewis)

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