- Center for Rural Affairs, January 2008
Straight to the Source
Most production today is marketed as generic grain or livestock, where the only way to compete is to produce for less. These short-term gains are quickly lost as others learn these skills or adopt the new technology.
The one practice that has kept many farms solvent is an increase in production. But steadily increasing production means greater investment, an option not available to most wanting to get into agriculture. Is it possible the "get bigger or get out" philosophy is making it impossible for young people to get in?
To get a foot-hold in agriculture today, young farmers should look at getting more per acre. Instead of focusing on the generic market, they could produce for a premium market. Finding markets and support systems for new products is difficult and risky, but an established market already exists that pays a premium, not for what you produce, but how you produce it.
The organic market is growing at a rate of 20 percent per year. Iowa State Ag Economist, Dr. Craig Chase, calculates a $254 annual per acre return to management (after deducting labor and production expenses) for a four-year organic crop rotation of corn, soybeans, oats, and alfalfa. At that rate, only 171 acres are needed to generate $45,000 in net income, while a non-organic corn/soybean rotation farm with a profit of $52/acre needs 865 acres to make the same money.
Organic farming practices can cut production costs as well, according to Dr. Chase. Even after compensating for an additional nine-hour per acre labor expense, the organic rotation showed a savings of $66/acre in input expenses. At an average of $250/acre machinery expense, the smaller farm saves $93,500 in machinery investment over the conventionally managed farm.
Erin Berryman, a livestock feed buyer with West Plains Grain (firstname.lastname@example.org) quotes the following prices for new crop (2008) organic livestock feed grain: Yellow Corn, $8.00 - 9.00; Soybeans, $16.00; Wheat, $11.00; Barley, $6.50. These prices are attainable from commonly grown crops, grown in an uncommon way. With organic prices at this level, returning to the days when a quarter section of land could support a family seems possible again.
Learning the organic production rules and practices is a challenge, but, once mastered, these practices will continue to provide savings and premiums far into the future. The young farmers of tomorrow will meet that challenge. We need to give them the opportunity to try.
Contact: Martin Kleinschmit, email@example.com or 402.254.6893 for more information.