If you’ve got a field of certified organic brown or golden flax, you may hit the jackpot this year.
Relatively speaking, of course.
Prices for other organic grains have fallen from the stratospheric highs witnessed in the spring of 2008, but this year the crop may yet turn out to be one of the organic farmer’s best bets for a healthy return.
Mike Buhr, operations manager of Advanced Grain Systems at Gladstone, said most of last year’s crop has been sold for around $30 per bushel, leaving current supplies very tight, as they often are shortly before the new crop is harvested.
“I would say there’s a fairly good chance that they’ll do well on it, just because of the weird weather,” he said. “It could be a very good year to have flax, if you can get it off.”
The focus now is on how much of this year’s crop makes it into the bin. This late in the growing season, there is always a risk of frost damage or other downgrading factors, but on the other hand, the lack of extreme heat is setting the stage for excellent oil profiles.
New-crop prices are rumoured to have dipped to $25-$29 per bushel, and farmers may opt to hold off selling until it hits the historical norm of around $30 per bushel, he said.
“If there does end up being a shortage because of the weird year we’ve had, certainly $30 a bushel will end up being a bargain,” said Buhr.
Many farmers with golden flax are hoping for $40/bu., he added, but Buhr wonders if that’s going to be realistic this year. However, most of it is still out in the field, so the situation could change quickly if the weather turns nasty.
Many buyers got swept up in the frantic search for supplies in the spring of 2008, when prices soared to as high as $80-$90 per bushel, he said, adding that many of his customers were buying up golden flax at $60-$65/bu. without even blinking.
“Then the price got too high and it kind of bit producers in the backside, because many buyers switched to brown flax and now they don’t want to switch back,” he added.
The market for organic flax tends to follow steep peaks and valleys, industry sources say.
Because flax is a poor weed competitor, only the most careful farmers are able to grow a clean crop without herbicides.
“It could be a very good year to have flax, if you can get it off.”
– MIKE BUHR
When prices are high, more growers are willing to rise to the challenge. But when prices dip, fewer step up. The problem is compounded by the limited market for organic flax, which tends to result in more extreme price swings than for other crops.
Grain buyers and handlers typically choose to deal in conventional or organic, and many have given up trying to do both simply because of the downtime required to clean out their facilities. Dockage is a problem, because food-grade buyers demand 99.9 per cent purity.
Tom Cowell, manager of Winnipeg-based Growers International Organic Sales, said organic flax supplies could end up short, depending on the weather.
“We’re going in with virtually no carry-out – there’s zero in the cupboards,” he said. “Right now a farmer could get somewhere around $23-$24 a bushel.”
Old crop went as high as $36 recently, but trade was very thin, he added.
Donna Youngdahl, organic marketing manager for the Canadian Wheat Board, said that sales of organic wheat have been “sluggish” in recent months as buyers and sellers hold off to see which way prices are heading.
“Right now there’s not a lot of business moving,” she said, adding that a lot of processors of organic wheat are still holding large carry-over stocks.
“When prices went really high last spring, a lot of people were in a rush to buy up stocks to ensure that they had supplies of product. There was a fear that there wasn’t going to be enough to match growth in the industry,” said Youngdahl.
Spring of 2008 saw organic wheat peak at $30/bu., but the economic crisis last fall crushed that optimism, and prices are currently ranging from as high as $12/bu. for Hard Red Spring wheat to as low as $8.
It’s hard to tell which way the market will go, she added, because buyers are holding back in the hope that prices will fall further, while farmers are waiting to see if prices will climb a bit higher.
“So it’s in a bit of stalemate,” she said. “It’ll be interesting to see how harvest shapes up.” [email protected]