Organic Data and Research from the ARMS Survey: Findings on Competitiveness of the Organic Soybean Sector

Abstract

Organic production has expanded rapidly in the US over the last decade, particularly for specialty crops. In 2005, USDA’s Economic Research Service (ERS) and National Agricultural Statistics (NASS) began to include targeted sub-samples of organic producers in its major annual economic survey, the Agricultural Resource Management Survey (ARMS). In this article we use data from the 2006 ARMS to examine the characteristics of producers adopting the organic production approach to soybean production, and contrast these with conventional producers. Organic soybean producers were younger, had less acreage, were less likely to work off-farm, and were more often located in northern states than conventional soybean producers. Also, differences in the costs of production for each system are derived. Results indicate that the average costs for producing soybeans were higher for producers using the organic approach in 2006 after accounting for the influence of other factors on production costs, sample selection bias, and organic transition costs, but were covered by the higher premiums that year. However, the organic price premium for soybeans has narrowed since 2006, and reduced the economic incentive for converting to or maintaining an organic system. Introduction Crop acres under organic systems have grown rapidly during the past decade in response to strong consumer demand. In 2008, US producers dedicated approximately 4.6 million acres of cropland, rangeland, and pasture to certified organic production, more than double the 1.8 million certified acres in 2000 (18). However, adoption of organic systems has been uneven across farm sectors, with rapid growth for organic specialty crops and weak growth or acreage declines for organic grains and oilseeds. Organic soybean acreage, for example, declined 7% during this period, to 126,000 acres in 2008 (0.2% of US soybean acreage), while organic apple acreage doubled to 18,000 acres (5% of US apple acreage). Producers in every sector face numerous production and marketing challenges in transitioning to organic production (2,5,7,22). For grains and oilseeds, the costly transition period and uncertainty of future returns reduce the probability of organic conversion, and organic producers may abandon organic management when returns to conventional crop production are high (4). In the early 2000s, several first-time research, conservation, and marketing assistance provisions were included in Congressional legislation to assist organic producers and handlers, including a provision to improve economic data on organic agriculture. Beginning in 2005, USDA’s Economic Research Service (ERS) and National Agricultural Statistics began including sub-samples targeting organic production of selected commodities in its major annual economic survey of producers, the Agricultural Resource Management Survey (ARMS). ARMS collects detailed farm financial information, including income, expenses, assets, and debt, as well as farm and operator characteristics. 29 April 2013 Crop Management Published June 13, 2014