Cereal manufacturer Nature’s Path told FoodNavigator-USA.com it has bought 2,240 acres of organic farm land for sourcing cereal grains as part of its strategy to ensure that supply keeps pace with growth.
It has partnered with two organic farmers, both located on separate farms in Western Saskatchewan, Canada, to expand their farms and grow more organic crops.
Dag Falck, organic program manager at Nature’s Path, said: “As the organic market is growing at 20-30 percent and the land-base transition to organic is about five percent, we felt that we had to get involved directly to correct the transition rate to organic.
“Our hope is to match our rate of growth (about 25 percent annually) with this new sourcing stream, but we are just starting so cannot expect to be there yet.
“At this early stage of our added strategy for sourcing cereal grains we are not gaining significant percentage of our grain needs for production. This is because most of our newly acquired land is not yet certified organic but we have put it into transition.”
He said they require organic certification for all their inputs and the transition period would be one to three years. But on the areas of land that are already certified organic, they are currently growing white wheat and Kamut this year.
This will only make up a very small percentage of overall usage, but Flack said: “Our hope is to match our rate of growth (about 25 percent annually) with this new sourcing stream, but we are just starting so cannot expect to be there yet.”
An estimated three percent of all foods sold in the US is organic, yet just 0.5 percent of all farmland is organic acreage with the difference made up from imports, according to a Packaged Facts report called Natural and Organic Food and Beverage Trends in the US.
Bob Scowcroft, executive director of the Organic Farm Research Foundation, who was quoted in the report, said that current trends such as the cost of energy and the push for farms to produce fuel not food is “likely to shrink organic supply in coming years and result in greater need for imports”.
However, analysts said that imports will be impacted by growing demand in the country they come from such as China.
So “efforts among manufacturers at developing long-term relationships with growers will become increasingly essential if they want to sustain supply”, the report added.
Partnership agreement
Nature’s Path has purchased seven quarter sections (1,120 acres) adjacent to each of the two farms, adding size and allowing them to remain sustainable.
It owns the land and a portion of the value of the crop while the farmer purchases the seeds, farms the land and owns the majority of the value of the crop. Nature’s Path is able to utilize the crops grown on their land if they are used in their products.
Where possible the farmers will grow crops Nature’s Path can use and they will be paid competitively to the current organic market price. Other crops grown will be sold at the discretion of the farmer with Nature’s Path receiving one third of the value of the crop.
Falck said: "We are not bypassing any part of the supply chain as our current brokers, mills and buyers are still buying the crops and dealing with them as before i.e. cleaning, milling, bagging and shipping."
The privately held, family-owned company, which produces organic breakfast foods sold in specialty foods stores, is also working to encourage non-organic farmers into the organic management system but said this takes longer.