Though it isn’t good news for many older women, Minnesota flax growers are noticeably happier since new scientific evidence emerged that hormone replacement therapy carries more dangers than originally thought. Meanwhile, economists are taking note of a significant “demand shift.”
In the past 25 years, millions of post-menopausal women in the United States have taken synthetic hormones for a variety of health reasons. In July, a large study of the overall health effects of one specific formulation of these hormones was stopped because women taking the drug experienced higher rates of certain cancers and heart problems. This touched off widespread debate about the value of hormone therapy and the effectiveness of past testing for efficacy and side effects.
The news also has boosted demand for flaxseed, especially that grown by certified organic growers. My friend Rich is such a grower, and last week when I borrowed his tractor to mow between some newly planted trees on our farm, he was optimistic about the prospects for his small flax crop.
Just weeks ago, he was down in the dumps. Flax, an oilseed grown much like grains such as wheat or barley, is a tough crop for an organic farmer. It is shorter than other small grains and does not compete well with weeds. Rich’s flax field had a serious pigeon grass infestation, and the drought in Murray County had taken its toll. He was unsure whether to even harvest the crop.
But as millions of women abandoned hormone therapy, thousands headed to their health food and supplement stores to buy flaxseed and flaxseed oil. Nutritional supplement providers claim that these products relieve many of the same symptoms that hormone therapy does, and there reportedly is growing evidence from scientific tests that this is true.
The seed now sells for $4 per pound in health food stores; some analysts predict that the farm level price for the organic product will reach $2 per pound. That is what we got for a bushel the last time we raised it on our farm, some 35 years ago. Like most other Corn Belt farmers, we found this ancient oilseed could not compete financially with soybeans or other grains.
Very little flax is grown in Minnesota, but nearly all of it is in the extreme northwestern part of the state near the Canadian border. Most is still grown for crushing to produce linseed oil just as soybeans are crushed for soybean oil. With both crops the meal left over after the oil is extracted is used as a high-protein livestock feed.
Flax straw, the source of linen fibers for linen cloth and fine papers including cigarette paper, also has commercial value. The metamorphosis of Rich’s flax crop — from one that was nearly abandoned, to potentially the most profitable one on the farm — is a classic example of new information shifting demand for a good or service.
Economists talk of a demand “shift” because graphically it is a move in the entire demand curve to either the right (greater quantities demanded at each possible price) or to the left (smaller quantities at each possible price). A shift results in a change in the quantity demanded as a result of a change in some outside factor, not the price of the product itself. But a “shift” does cause price changes, in this instance an increase.
That is happy news for farmers who grow flax. In the 1980s, apple producers experienced a shift in the other direction. A scare about the possible health effects of Alar, a synthetic growth regulator used on apples, caused a sharp drop in apple sales and tanked apple prices at the farm level.
Shifts in apple or flax prices caused by medical news tend to be abrupt. But changes in tastes and preferences can shift demand too. This is usually a slower process.
When I was a Minnesota farm boy, the only pasta we ate was noodles (in hot dish with tuna, peas and canned mushroom soup) or elbow macaroni (in hot dish with hamburger and canned tomato soup.) I didn’t eat spaghetti until I was 16 and my college-age sister took me to Sammy D’s, the Dinkytown eatery.
In 1967, per capita consumption of pasta in the United States was less than 3 pounds. It was an ethnic food. Most was eaten by people to the northeast of a line from Chicago to Washington, D.C. Now per capita consumption is more than 24 pounds and still rising as pasta has become a common food for most people. But we eat far fewer fresh potatoes.
Pasta is made from durum, a specialty wheat distinct from the spring or winter wheat used for bread and other bakery products. U.S. production of durum has had to increase tremendously as pasta consumption has grown, and the price of durum relative to other types of wheat has increased.
Such shifts are not limited to foods. Herpes and AIDS multiplied condom sales many fold. Scares about international flying boost business for northern Minnesota resorts. Insecurity in the wake of Sept. 11 reportedly has helped microwave popcorn sales and video rentals as families cocoon in the safety of their homes.
Will Minnesota flax farmers get rich? In the short run, prices will increase. But there are few barriers to entry in growing flax. A high price this year motivates greater planting next year or even in the next Southern Hemisphere planting, which will start in weeks.
Existing organic growers have an advantage, as the organic certification process can take a few years. But if flax seed consumption grows from health food fans to the general populace, not all new consumers will insist on an organic source.
The irony is that flax has been buffeted by demand shifts before. For much of the time, it was grown for fiber. Linen was the non-scratch alternative to wool when all fibers were natural fibers. Socrates and Caesar both wore linen robes. The perfection of the cotton gin by Eli Whitney and others dealt flax a blow. Cotton didn’t scratch, and with the new invention, cotton fiber was much easier to separate than linen fiber from flax stalks.
A second blow came with the invention of latex paints a half-century ago. Linseed oil from flax was the principal ingredient in most oil-based paint. Latex paint cut demand for linseed oil tremendously. It happened at the same time Americans were shifting from butter to margarine, but linseed oil was not considered attractive cooking oil. Soybean, corn and sunflower oil production all boomed as health-conscious consumers gave up butter, but use of oil from flax stagnated.
If the health benefits of flax are substantiated, the market may be substantial. Let’s see, there are 280 million people in the nation, half of them women. If one-third of them are post-menopausal, that would be about 47 million potential consumers. If even half of them ate 1 teaspoon of flaxseed a day, and there are 48 teaspoons per cup, 4 cups per quart, 8 quarts per peck, 4 pecks per bushel…. OK, you figure it out, but I’ll bet it is a lot of flax.
© 2002 Edward Lotterman
Chanarambie Consulting, Inc.