Organic corn and feed grade wheat markets have reached record low prices this year, with organic soybeans at a three-year low price for the start of the 2024-25 crop year, according to the latest update from Argus. Despite improved crop yields and generally lower operating costs, low organic commodity prices have shrunk net returns for farmers, which Argus says poses a risk to organic farmer retention.
While organic farm net returns have historically displayed some volatility, for the five marketing years prior to 2021-22, they averaged $305/acre and remained within the range of $214-436/acre, according to Argus estimates. Starting with the 2020 global outbreak of Covid-19, an onslaught of policy and market factors created unprecedented gains in organic commodity prices over the next two years.
In 2021-22, organic farm net returns reached a record $1,153/acre, nearly three times higher than the average of the prior five years. However, since reaching their peak in 2022, prices for feed-grade organic corn and soybeans have trended back towards their pre-2022 levels. In 2023-24, the average price for organic feed-grade corn fell by -$2.95/bu to the lowest marketing year average on record at $7.78/bu. While organic feed-grade soybean prices remained above preCovid levels, the 2023-24 MY average price still fell by -$7.77/bu to a three-year low of $20.07/bu
The organic farm cost of production was also generally lower for the 2023-24 MY, but the extent of the decline was much lower than that of commodity prices. The operating cost per acre of organic corn and wheat fell by -12% and -32%, respectively, pulled down primarily by declining fertilizer prices. Organic soybeans saw production costs increase slightly (less than +1%) from the prior year. As a result, Argus calculates that organic farm net returns declined to the lowest on record over 2023-24, at $42/acre.
Given that the 2024-25 MY has begun with lower prices than the prior year, Argus calls the outlook for farm net returns over the year ahead a “significant point of risk.” At August price levels, with operating costs and yield holding constant with 2023-24, organic corn would produce a negative return of -$66/acre. Similarly, organic soybean values would produce the second-lowest return on record at $99/acre. Combined with wheat at -$245/acre, the three crops would produce a total net return of -$213/acre.
According to Argus, in order for organic producers to realize breakeven returns in 2025, corn would need to average $7.20/bu over the 2024-25 MY, and organic wheat would need to reach an MY average of $12.23/bu. While $12.23/bu seems unlikely for organic feed-grade wheat, organic corn has historically remained above this level. Organic soybeans could decline further to $17.26/bu before reaching breakeven net returns because of their lower production cost relative to corn and price premium relative to wheat. You can get the full report from Argus HERE.
