With Guidance from Pipeline Foods, Rabobank Launches First Organic Transition Loan Offering
Rabobank AgriFinance has launched a new loan product designed to financially support farmers transitioning to organic certification on either all or part of their farming operations.
The USDA has required a three-year transition period for farmers looking to certify their crops as being organic. This gap often poses a financial risk for these operations. With guidance from Pipeline Foods, a specialty grain supply chain company, Rabobank has built a financial framework that will enable farmers to gain access to the capital needed to fund upfront costs connected with a shift to organic production practices.
The U.S. has been importing up to 12 million bushels of organic corn, and up to 16 million bushels of organic soybeans per year, according to the U.S. Department of Commerce, reflecting a rate of demand that is exceeding domestic production. This growth is expected to continue, with Rabo AgriFinance teams estimating that price premiums for organic corn range from 120 percent yo 150 percent over convention prices, and premiums for organic soybeans ranging from 110 percent to 130 percent. Now, this collaboration between Rabo AgriFinance and Pipeline will give U.S. farmers the funding and supply chain needed to fetch these premiums.