Organic Production and Sustainable Enterprises for Kentucky Lee Meyer, Dept of Ag Economics Followed by Adam Watson, Ky Dept. of Ag the 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

Overview Background 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 management Gulf of Mexico dead zone Erosion – even in no-till Chemical residues – surface and ground water Weed 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 Market

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 Market

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 Market

◦ 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 Market SocioEconomic 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 grassfed Issues: ◦ Processing ◦ Organic feeds

Market Opportunities - Hort Focus 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 Enterprise Substitute tillage for chemical weed control Rotations for weed control and fertility Cost of production typically much lower Yields – 50% to 90% in long run Market – primarily as livestock feed and Kentucky is a deficit state Fewer outlets and risk management options

Market Opportunities – Corn Demand as a livestock feed Price – 1.5 to 2 x conventional feed corn

– Madison, IN August, 2013 Organic Corn – Madison, IN August, 2013