When Are Non-GMO Crops Worth It?
By Mike Preiner, Cofounder and VP Product Management
Growing weed resistance, a need to reduce seed costs, and the increasing demand for non-GMO crops from consumer markets are making non-GMO crops a serious consideration for many farmers. Given that profitability can vary quite significantly between the two types of crops, the decision about what to plant can make the difference between a crop year being profitable or not. Based on our experience working with farmers, we have found there are five key areas for consideration when making this important planning decision.
- Higher premiums for non-GMO crops: In 2015 premiums often ranged from $1 - $4/bu for non-GMO soybeans and $0.2 – $0.4/bu for non-GMO corn primarily due to increased demand. This rising demand, however, is being met by an increased supply, so premiums are likely to stabilize or go down.
- Lower cost of non-GMO seeds: Savings from low germplasm costs can range from $10 - $15/acre for soybeans and $40 - $60/acre for corn.
- Operational costs. Growing and selling non-GMO crops requires special handling and procedures. Cleaning out planters and harvesters, and keeping grain bins segregated imply higher operational costs, not to mention higher risks of making mistakes can wipe out potential gains. Based on our customers’ experiences, the extra time and costs can often range between $15 - $30/acre.
- Input costs. Additionally, non-GMO crops typically require more sophisticated pest management programs. These additional expenses will vary by location, but in general non-GMO input costs are often more than $10/acre for soybeans and more than $20/acre for corn.
Yield potential. The most debatable aspect behind this decision is the potential yield differences between GMO and non-GMO programs. Yield differences between GMO and non-GMO seed will vary from farm to farm due to local pest pressure, management practices and other environmental factors. Quantifying these differences is difficult. As with most agronomic decisions, it is important to have good data and properly account for confounding effects. It is usually not good enough to just compare the yield differences between all GMO and non-GMO fields across a farm.
Costs and Benefits of non-GMO production compared to GMO production*
*This model assumes an average yield of 50 bu/acre for soybeans and an GMO price of $9.50/bu. For corn, our model assumes an average yield of 170 bu/acre for corn and an GMO price of $3.50/bu. All other expenses (not shown) are held equal.
Will non-GMO crops be more profitable for everyone? Of course not, especially given the recent downward trend of premiums. Should growers be considering the profitability of all of their cropping options right now? Absolutely, but doing so correctly takes a systematic, comprehensive approach that relies on effective data collection, management and analysis. To learn how Granular’s team of data scientists can help you make the right decisions this planting season, visit www.granular.ag .
