US demand for organic feed is increasing as more consumers prefer to eat healthy, chemical-free foods, according to a panel at the Clearwater Farms Organic Expo this week.
Growing interest in healthy eating is boosting organic chicken sales, said Rex Marquat, grain manager at Miller Poultry, during a panel on the organic feed market. Organic production is expanding faster than conventional output, with organic now accounting for almost 50pc of the company's business. Strong organic chicken sales will lift demand for organic feed for poultry production, he said at the Clearwater Farms Organic Expo in Bay City, Michigan.
Inflation during the Covid-19 pandemic narrowed the premium for organic chicken over antibiotic free chicken, prompting some consumers to trade up. Many continued buying organic chicken after the pandemic because of its taste and lack of chemicals, Marquat said.
Quality Roasting is seeing "steady growth throughout their [soybean] meal side," said Jim Copher, organic program manager at Quality Roasting. Some of this growth is taking business from imported soybean meal (soymeal), but the company is also experiencing 5-10pc natural growth. Quality Roasting sees rising demand for organic soybean oil, which will further add to returns from organic soy crush and allows the company to bid more aggressively, Copher said.
Geopolitical risk and impacts
Rising geopolitical risk is pushing some buyers towards domestic purchasing, but imports will be necessary to meet market demand, panel participants said.
Some end-users prefer imported organic soymeal, especially those close to the coasts, Copher said. Quality Roasting competes with imports in the Corn Belt and High Plains region but struggles to sell to the west coast. Imported organic soybeans are normally more expensive for Quality Roasting than domestic soybeans, Copher said.
Many dairies on the west coast prefer imported soymeal because of access to ports. Buyers who prefer imported meal often cite risks from freight and fuel costs as their main reason to avoid domestically crushed meal from the Corn Belt, Copher said. Buyers also have fewer concerns about domestic organic commodities being fraudulent compared with imports, Clay Roberson, organic merchant at The Anderson's, said.
However, feed demand growth may push in some further imports. Marquat agreed, saying Miller Poultry already imports much of its organic soybeans. He expects organic soy imports to rise, but rising geopolitical risk may make importing difficult.
The ongoing US-Iran war has caused diesel prices to jump, which has added to organic feed costs since many organic loads are moved by truck, said Brad Johnson, director of grain procurement at feed mill Kalmbach Feeds. Carriers already raised their prices several times, which requires market participants to be flexible and efficient to not lose out in this market, Roberson said. Quality Roasting is keeping less unsold inventory and trying to be more "defensive on pricing" to deal with the geopolitical risk, Copher concurred.
Feed demand tightens wheat market
Strong organic feed demand is driving more demand for organic wheat and soybeans, but organic wheat is already hard to find, panel participants said.
Two of the panel members said they needed more organic wheat ahead of the new crop but struggled to find supply. "Supplies just don't seem like they're out there," said Brad Johnson.
Roberson agreed that it was the hardest market for them to source. A strong organic corn market has lifted organic feed wheat prices and demand from millings looking to reduce corn in their rations.
Quality Roasting is still looking for organic soybeans ahead of harvest, Copher said. There are domestic soybeans remaining on farm and Copher prefers domestic soybeans over imports, but offers are limited in the market.
