The Squeeze on Organic: Comparing Profitability Trends in U.S. Grain Markets

Recent reports indicate a significant downturn in the U.S. organic grain market, with profitability for organic corn, soybean, and wheat farmers reaching record lows. For the 2023-24 marketing year, the combined net returns for these three crops fell to just $42 per acre. The outlook for 2024-25 is even more concerning, with potential negative returns ranging from -$213 to -$277 per acre if current price and cost trends persist. This decline is primarily attributed to plummeting organic commodity prices, with organic soy, corn, and wheat prices down 38-42% from their recent peaks.

The profitability squeeze is particularly severe for organic farmers compared to their conventional counterparts. While both sectors face rising production costs and increased global competition, organic producers are experiencing a “double whammy” of higher costs and lower prices relative to pre-2021 baselines. Conventional grain prices, though down from recent highs, still exceed cost increases when compared to the 2016-2021 period. In contrast, organic corn prices have fallen below historic baselines while production costs have increased. This trend threatens the traditionally higher net returns of organic corn and soybean farming, which have outperformed conventional returns by $12 to $485 per acre over the past eight years.

The declining profitability of organic grain farming raises concerns about farmer retention and the future of organic agriculture in the U.S. It’s estimated that there has been a 5% decrease in the number of organic farmers in 2024 compared to the previous year. Some farmers are considering switching to more profitable organic crops or even reverting to conventional farming. This situation poses a significant challenge to the organic industry and could potentially impact the environmental benefits associated with organic farming practices, including improved water quality and soil health.

Sources include:

Argus Media. “Shrinking profitability of organic farming.” Argus AgriMarkets Organic and Non-GMO service, November 2024.

Grow Well Consulting. “Is the profitability plunge in U.S. organic actually worse than corrections happening in conventional?” October 28, 2024.