This publication provides information on making plans to transition to organic crop production. It helps outline the need for a transition crop plan, the importance of individual crop budgets, and evaluating results.
Midwest
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2020
Evaluating Organic Transitions
at the Field Level
This publication is a companion piece to the
Microsoft Excel workbook available on the Iowa
State University Extension and Outreach Ag
Decision Maker website (extension.iastate.edu/agdm/
crops/xls/a1-96organictransition10year.xlsx). For
background information on organic transitioning,
developing organic budgets, and other topics related
to organic production, see the list of resources at the
end of this document.
The companion Excel workbook contains three
primary components: the crop plan, the summary
of results, and a series of individual crop budgets.
A producer contemplating transitioning their farm
from a conventional to an organic cropping system
should start with the development of the crop plan.
Transition crop plan
The crop plan outlines the cropping sequence
(i.e., crop rotation) during the organic transitioning
period as well as the period when the producer is
selling organically certifed crops. Year 0 indicates
the crop that is currently on the feld to be
transitioned. Year 1 refers to the frst transitionyear crop and Year 2 refers to the second transitionyear crop.
Organic certifcation requires, among other things,
that no prohibitive substances may be applied to the
land for 36 continuous months. However, if timed
correctly, the 36-month period may be covered while
producing only two transition crops. For example,
assume the last prohibitive substance was applied
in August 2019 on a soybean crop. The following
year, oat were co-planted with alfalfa (transition
year 1) and then alfalfa was harvested during 2021
(transition year 2). For more information see the Iowa
State Organic Program website (http://extension.agron.
iastate.edu/organicag), and the United States Department
of Agricultural-Agricultural Marketing Service (USDAAMS) National Organic program website (www.ams.
usda.gov/about-ams/programs-offces/national-organicprogram).
In 2022, corn was planted, and as of August 2022 no
prohibitive substances had been applied and the land
became eligible for organic certifcation. The corn crop
harvested in October 2022 (assuming all the paperwork
was completed) can be sold as organically certifed.
Only two transition crops (oat and alfalfa) were needed
to complete the 36-month transition period; the thirdyear crop (corn) could be sold as organically certifed.
Years 4-10 of the crop plan continue the organic
rotation as designed. The sample rotation starts with a
conventional soybean crop and then transitions with
oat and alfalfa, followed by an organic corn-soybeanoat/alfalfa-alfalfa rotation. A two-year transition followed
by a four-crop rotation allows the organic rotation to be
completed twice within the 10-year period.
The crop plan indicates the transition starts with oat
and alfalfa seeded together, with the oat harvested in
the seeding year along with one cutting of alfalfa. Oat
is selected to control weeds and begin the process
of developing soil tilth. Oat is followed by alfalfa to
provide corn with a nitrogen source. Weed management
is the primary concern during the transition period,
which is why transitions do not typically start with a
row crop such as corn or soybean. In addition, nutrient
management is a secondary concern, and having
enough available nitrogen for a crop like corn would
likely be problematic.
FFED 0031 | May 2020
Individual crop budgets
Twelve completed crop budgets and four blank budgets
are provided in the workbook. Each budget is linked
back to the results summary page. Changing any
individual budget item will also change the transition
or organic proftability summary. Each individual
budget has six sections: receipts/revenues, pre-harvest
machinery, crop inputs (seed, fertilizer, etc.), harvest
machinery expense, labor, and land.
Cash receipts are simply yields multiplied by the sales
price per unit. Yields and prices can vary signifcantly
by geographic region. It is important to replace the
numbers currently in the budgets with numbers
representative of the region where the farm is located.
Pre-harvest machinery expenses represent fxed and
variable cost components for the feld operations
conducted. Changing feld operations within the
budget will change the cost of growing a specifc crop.
For estimates of fxed and variable components of
machinery see ISU Extension and Outreach publication
Estimated Costs of Crop Production in Iowa – 2020 (FM
1712) (store.extension.iastate.edu/Product/1793). If
the feld operation conducted is not on the list, choose
one from the list that would be similar in tractor
horsepower needed and feld speed of the operation.
Crop inputs consist primarily of seed and fertilizer
costs (plus chemical costs for the conventional
budgets). The actual seeding rate and cost per unit
for the transitioning farm should be used rather than
the estimates represented in the budgets. Additional
lines are available for cover crops or companion crops
seeded with the primary crop. If the additional seeding
was conducted separately from the primary seeding
operation, a feld operation and the associated costs for
that operation should be added to the budget.
The fertility section of the budget refects the costs
associated with the amount of nutrients the crop
will receive. The sample transitional corn budget, for
example, indicates that 60-30-50 units of nitrogenphosphorus-potassium (N-P-K) were applied to the
corn crop. The units could be achieved through a
variety of composts or manures. The amount applied
of the various sources would vary by the nutrient value
per ton or pound of the material. For example, the
60-30-50 could be achieved by applying dry chicken
manure, dry beef or dairy manure, liquid swine
manure, or composted manure. The delivery method
would vary by the chosen manure source along with
the associated cost of application.
The sample budget indicates a dry manure application
feld operation (e.g., bulk dry fertilizer spreader). The
amount of chicken manure applied in this case was
accomplished with one feld operation per acre. If
the farm instead applied 12 tons of dry beef manure,
multiple trips would be required and an additional
feld operation (and associated costs) should be added.
Other input costs include estimates for crop insurance
(for the specifc crop, not whole-farm), miscellaneous
expenses, and interest on pre-harvest expenses. The
interest is calculated as the number of months an
operating loan would likely be needed at the market
rate of interest. As with other expenses, these estimates
should be replaced with the actual expenses incurred
by the transitioning farm.
Harvest expenses are those associated with combining
(or other harvest operations), drying (in the case of
corn), hauling, and handling. These estimated peracre or per-unit expenses can be found in FM 1712.
Labor expenses are simply an estimated wage rate
multiplied by the number of hours needed to conduct
the particular feld operations (including harvest and
hauling). Hours needed for various feld operations
can be found in ISU Extension and Outreach
publication Estimating Field Capacity of Farm Machines
(PM 696) (store.extension.iastate.edu/Product/4032).
Note the times listed are acres per hour. These
numbers should be transformed into hours per acre.
These times do not take into consideration irregular
felds, time to and from felds, or downtime for repairs.
Adjustments to these times should be made to refect
the transitioning farm. However, the adjustments to
each of the individual crops within the transitioning
farm incur similar adjustments (e.g., it will take the
same amount of time to go to and from the feld
whether the crop is corn or oat).
Land charges can be estimated one of two ways. For
Iowa State University budgets, a cash rent equivalent
is often used. The equivalent would refect the rental
rate paid to a landlord or the amount an owner could
receive renting the land to another farmer. The idea
is that even if the land is owned, it should provide
an economic return for its use. The second way
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FFED 0031 | Evaluating Organic Transitions at the Field Level
land charges can be entered is to summarize all land
expenses such as property taxes, interest on land loans,
and any land improvement expenses. Then divide the
total by the number of acres to which those expenses
apply, in order to determine a per-acre land expense.
Once all sections are complete total variable and fxed
costs are calculated, as well as a per-unit variable and
fxed cost, by using the yield given in the revenue
section.
Results summary
In the Summary tab of the workbook, located under
the previously discussed crop plan, is a series of tables.
The Annual Return by Crop (dollars per acre) section
highlights fnancial indicators for each of the 16
individual crop budgets. Receipts (total revenue), total
costs, return over total costs (also referred to as return
to management), break-even price, and break-even
yield are linked from the crop budgets. Changing any
input in any of the crop budgets will alter the summary
results. Break-even price and yield are calculated
for crop budgets that include only one crop sold in a
single year.
The second section of the results summary indicates
the fnancial summary for each year within the
two-crop year transition period and eight-year
certifcation period. Average returns for the transition
and certifcation periods also are included. Changing
individual line items within budgets will affect the
economic performance for those budgets. Changing
rotations will affect the returns for each individual year
of the crop rotation summary, as well as any averages
using the individual cropping year budgets.
The third section illustrates transitional and certifed
organic two- and eight-year averages, respectively, and
a sensitivity analysis using a pre-selected percentage
change. The sample illustration uses a 10% higher
and lower calculation on receipts. The assumption is
that most costs (land, labor, pre-harvest machinery,
crop inputs, etc.) are sunk costs by harvest time
and therefore will not vary signifcantly. However,
yields and prices could change signifcantly from the
beginning of the crop year to the end and therefore
have a larger impact on return to management.
Limitations
As indicated previously, the expenses listed in the
individual crop budgets are estimates. The estimates for
transitional and organic corn, soybean, oat/alfalfa, and
alfalfa budgets are based on research conducted in Iowa
for that specifc rotation. Altering the cropping sequence
so the transition/organic rotation is a corn-soybeancorn-wheat-alfalfa budget, for example, will affect the
various individual budgets. For example, the second
corn budget will likely need more fertility, as soybean
crops do not provide as many nutrients as a forage crop
like alfalfa. Additionally, a corn crop following soybean
does not need a moldboard plow as primary tillage,
and because there are now three row crops in a row,
more post-plant mechanical feld operations will likely
be needed. In other words, altering the crop rotation
into alternative crop sequences will require adaptations
to the current budgets. Review research and talk to
production experts to better understand how to adapt
the existing budgets.
The small grains budgets (oat and wheat) have a
“toggle” toward the top of the budget (i.e., if companion
crop, enter “1”, otherwise “0”). This toggle is included
to accurately allocate the costs of establishing the
small grain crop. For example, if a companion crop
was seeded with the small grain (e.g., alfalfa) and that
companion crop will be harvested the following year,
the cost of establishing the small grain/companion
needs to be allocated between the two years. If there
are no subsequent crop harvests (i.e., no companion
crop will be harvested the following year), then all costs
of establishing the small grain crop must be allocated to
that crop instead of shared between the two crops.
No adjustments are included in the workbook for
infation or time value of money. An organically
certifed corn crop in Year 3 costs the same as in Year 7.
Additionally, the yields and prices received for Year 3
and Year 7 also would be the same.
The last section indicates the average receipts and
economic returns to a conventional rotation, including
a sensitivity analysis on receipts. The conventional
rotation in this example is a two-year rotation of
corn and soybean. Changing the transition or organic
certifed budgets or crop plan will not affect the results
of the conventional rotation. Only changing one or
more of the input lines on the individual conventional
corn or soybean budgets will alter these numbers.
FFED 0031 | Evaluating Organic Transitions at the Field Level
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No adjustments are included in individual crop
budgets or rotations for regional differences. Regional
differences do occur in yields, prices received, and
some costs. Differences in usage of specifc small grain,
forage, or legume crops vary throughout the Midwest.
A transitioning farm in central Minnesota may look
at different rotations than a farm in southern Iowa.
Spending time to conduct market research on organic
contracts, seasonality of prices, transportation expenses
to various markets, and more will allow the actual
prices received to be more accurate than the current
estimates. Inputting specifc feld operations, regional
yields based on climatic and soil types differences, and
regional land costs will improve overall crop receipt,
expense and economic return estimates.
The year-by-year proftability estimates are based on
one crop planted and harvested per year as specifed in
the crop plan. Previous organic transitioning tools such
as ISU Extension and Outreach publication Making the
Transition from Conventional to Organic (FFED 0026)
(store.extension.iastate.edu/Product/12936) estimated
proftability of the whole farm, which often included
a combination of conventional, transitional, and
organically certifed crops. This specifc decision tool
estimates feld proftability completely determined by
one specifc crop planted and harvested. No estimates
of overall farm proftability are possible given the focus
on one feld within a farming operation.
Resources
Chase, Craig, Kathleen Delate, and Olivia Hanlon. 2019. Economic
Analysis of Two Iowa Crop Rotations. FFED 20. Ames: Iowa State
University Extension and Outreach.
Chase, Craig. 2019. Adapting Enterprise Budgets for Organic Crops.
FFED 23. Ames: Iowa State University Extension and Outreach.
Chase, Craig, Kathleen Delate, and Olivia Hanlon. 2019. Making the
Transition from Conventional to Organic. FFED 26. Ames: Iowa State
University Extension and Outreach.
Chase, Craig, Kathleen Delate, and Olivia Hanlon. 2019. Organic
Crop Production Enterprise Budgets. FFED 27. Ames: Iowa State
University Extension and Outreach.
ISU Organic Program website: http://extension.agron.iastate.edu/
organicag
USDA-AMS-National Organic program website: www.ams.usda.
gov/about-ams/programs-offices/national-organic-program
Acknowledgments
Written by Craig Chase, Farm, Food and Enterprise
Development program manager with ISU Extension
and Outreach.
The background research and creation of this
document and accompanying spreadsheet were funded
by Mad Agriculture, a 501(c)3 nonproft organization
whose mission is to create a world where people and
ecosystems fourish and support one another.
This institution is an equal opportunity provider. For the full non-discrimination statement or accommodation inquiries, go to www.extension.iastate.edu/diversity/ext.
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FFED 0031 | Evaluating Organic Transitions at the Field Level