Organic Broadcaster

Carmen Fernholz (second from right) explains why he markets his grain through OFARM. Fernholz was part of a producer panel at the 2019 Organic & Non-GMO Forum in Minneapolis last fall. Lauren Langworthy (left), Executive Director of MOSES, moderated the panel, which also included Carolyn Olson and Peter Schwagerl. Photo by HighQuest

Farmers tell buyers their concerns, vision for organic marketplace

By Audrey Alwell

At the Organic & Non-GMO Forum in Minneapolis in October, a panel of organic grain producers shared their stories to help the grain buyers and food manufacturers at the event understand why organic farmers have a multi-crop rotation and need a market for everything they grow, not just corn and soybeans. Lauren Langworthy, MOSES Executive Director, moderated the panel, which featured Minnesota farmers Carolyn Olson of Olson Organics, Carmen Fernholz of A-Frame Farm, and Peter Schwagerl of Prairie Point Farm.

Olson and her husband, Jonathan, have 1,100 acres of organic row crops and small grains. They just added an alfalfa mix to make more of an “ideal” rotation, but are concerned because there’s not a market in their area for alfalfa since there are so few dairy farms now, she explained. They are growing alfalfa largely as a cover crop to improve soil health, she added. Olson offered a digestible explanation of their six-year rotation, adding it’s not all one crop one year and another crop the next.

“One-third of our acres is going to be corn, one-third will be soybeans, and one-third will be a small grain and the alfalfa mix,” Olson said. Within their various fields, the crops grown change each year, except for the alfalfa, which they leave in for two to three years.

“We have a lot of different varieties that we grow, which is why we don’t say we just grow wheat. We grow a lot of seed for Albert Lee Seed. That’s been a really great relationship for us. We’ve been in the seed growing business since the late 1930s on our farm. And, that kind of dictates what varieties of soybeans and small grains we grow. And then our corn, we market to Prairie Organic for vodka.”

As soon as the small grain comes off, they plant cover crops and then corn will go in that field. The next year, soybeans will follow the corn, and the following year, it might be alfalfa or a small grain mix again.

“It’s called a six-year rotation, but each field will have either the corn, the soy, or the small grain every third year,” she explained. “It’s a three-year system, but it’s six crops.”

Fernholz has been following a similar rotation for the last 20 years.

“When I introduced alfalfa into the rotation, it changed the farm,” he said. “I didn’t have any livestock, but alfalfa changed the operation. Alfalfa serves not only as a soil-building crop, but is a terrific weed-management tool, and this is of primary importance in an organic system.” He said he tried growing field peas years ago, but there wasn’t a market for them. Now, Puris Foods is renovating a plant in nearby Dawson, so he expects to be growing field peas once again. He also mentioned he has been participating in research to breed out a perennial wheat, called Kernza. (See the story in the November Organic Broadcaster .)

He said his rotation has always been a bit of a work-in-progress. “It has continually evolved and when I look at the potential again for peas and Kernza, I think we’ve got a whole new story on this rotation,” he added.

Schwagerl runs an 800-acre split operation, with half in non-GMO soybeans, which are “far and away the best marketing opportunity for us,” he explained. On their organic acres, they run a four-year rotation with corn, field peas, soybeans, and a small grain. He said he’ll be planting a long-term crop, either alfalfa or Kernza, for weed control and building soil health.

“We’re going to be playing around with those perennial crops as a base that we can strip till and plant our row crops into that living cover,” he said.

Schwagerl, who transitioned to organic within the last seven years, explained some of the barriers they needed to overcome.

“We went through a particularly difficult time to transition just because the conventional margins right now are so incredibly tight,” he explained. “Farmers are being pretty risk-averse. They can see that in the end, once they can get to certification, there is financial benefit to their farm. But it can be a very risky transition period. That’s why for us, we’ve had to rely more on the [non-GMO] soybeans.”

He also said that it can be tough to go organic if all the neighbors are non-organic. “You can’t just go to the nearest co-op and find answers to your agronomy or marketing questions,” he said. “You have to find a completely new network of suppliers and markets, and that can be very intimidating, I think, for a lot of people who are trying to transition.”

Fernholz, who also serves on the MOSES Organic Specialist team and handles organic grain calls on the Organic Answer Line, said he frequently gets calls from farmers asking about transition and the organic market. The main question he hears is, “How do I deal with weeds?” He said most younger conventional farmers have “probably never sat on a cultivator or probably never used a rotary hole or a tine weeder. So, it’s a whole new system for them.” He added that the conversations always include questions about mechanical equipment, what to use and when.

“Today’s transition is probably not as big of a challenge as it was 10 or 15 or 20 years ago because there are a lot more experienced people out there that can tell you some of the shortcuts you can take. So, consequently, there isn’t really the yield hit either during transitioning,” Fernholz explained, especially when you can learn from what others have done before you.

Marketing Crops
Langworthy asked the farmers to share how they market their crops and what they’d want buyers to consider as they negotiate with farmers.

“For us, the biggest thing is relationships—relationships matter when we’re marketing,” Olson said. She explained the importance of getting to know buyers and “what makes them tick.” Then when buyers call and name their price, her husband will call around to make sure it’s a fair price. “He’s calling around and everybody knows that. He wants to work with everybody, but he wants it to be fair for everybody as well. That has worked really well for us.”

Olson outlined how they’ve set up a unique marketing structure with one of their buyers to include both a set contract and a flex contract. “Then we’re not locked in if the price happens to be low in January. If the price of corn for us could be higher later, we do have the option to flex a part of that contract. So that has worked for us,” she explained.

She said they prefer short-term over long-term contracts. “We like to work with our buyers and get the best for all of us because we want them to stay in business. And, we want them to buy our crops, too,” she added.
Olson pointed out that contracts are important for farmers who take out crop insurance. “Sometimes you need a contract in hand to be able to insure it for a price point,” she explained. “For us this year, crop insurance has been very important.”

Schwagerl said he prefers the stability of annual production contracts, based on acreage, that are drawn up in January. Even if they could get more for their organic grain later in the year, they prefer the security of a contract set before the production year starts.

“That works well for us as beginning farmers because we might not have the resources or capital that some of the more established farmers have,” Schwagerl explained. “We’re willing to just take a set price ahead of the production season because it allows us to have some economic security and plan our cash flows for the upcoming year.”

Working on annual contracts also has given his farm the chance to work with different buyers, giving them a sense of where they’d like to establish longer-term relationships.

On his non-GMO operation, Schwagerl has found he’s limited to soybeans because he can’t find a market for specialty crops. “Part of that is just our farm’s location,” he explained. “The logistics and freight costs on those lower-value, non-GMO crops just haven’t worked.”

He’s able to grow a wider variety of crops for the farm’s organic side. “We’re very willing to try new crops—that’s just part of the fun of being a farmer,” he added. “It has been difficult for us to market some of the field peas that we wanted in our rotation for soil benefits. We’re excited about the new players that are really ramping up. So, we’re excited to get back into that realm because we think there’s a lot of benefits for our farm if the market side now is catching up to that.”

Fernholz, who has been growing organic grains for over 40 years, said he has come to understand that he’s not a good marketer—he’d rather focus on farming and leave the marketing to someone else who is better at it.
“I am too connected and too bonded with my corn or soybeans or wheat to be able to be objective about it,” he said. “So, I ask somebody else—a third party—to go to work for me on that crop. Let them be objective about it. And, they can find the markets. That person can spend 100% of their time searching out the markets and searching out where the best crops will be this year, next year, and the year after, so that I can plan my evolving rotation accordingly.”

The challenge with growing organic grains is balancing the production with the market, Fernholz said. “If one gets ahead of the other, we are in trouble.” He’s excited to see the market interest in Kernza and expects more acreage will be planted in 2020.

Fernholz likes the diversity of crops he grows—diversity that’s integral to an organic system. He finds soybeans to be the most challenging to grow, “simply because the neighbors can see quite readily how good or how bad you are in managing weeds.”

Olson, who grows out seed for Albert Lea Seed, is able to grow some unusual varieties.

“Triticale, I think, is the most fun because it looks like wheat until it looks blue—when it’s planted next to a wheat field, it has a blue cast to it. We get a ton of calls from neighbors going, ‘What is that?’”

Farmers need some flexibility when it comes to contracts with buyers, the panelists said. There can’t be a “one-contract-fits-all” mentality. Buyers, especially those with triple bottom line goals (financial, social, and environmental), should take into consideration how much organic farmers already are doing to be good environmental stewards.

“Our organic seal already covers a lot of the environmental aspects that many companies, I think, are looking at right now,” Olson said. She recently had a buyer present a contract with environmental and social justice aspects that weren’t realistic. “If we were to implement that, our farm might not be profitable and live to fight another year,” she said. “Some of the asks that are being put on farmers in these situations, without a price increase, are prohibitive.”

Fernholz agreed and suggested that if companies really “want to be green,” they should convey their reasons to their consumers so they can justify paying farmers more for the raw product.

“We, as organic producers today, have to be fully engaged in protecting the markets that we have,” Fernholz said. “That is going to determine where organics will be in the future. Because if we look at the conventional system, and we start moving down that direction, we will be in the same predicament in organic as my conventional friends are today.”

“We’re building a new paradigm here, right?” Langworthy added. “We want to create something that supports both the buyers and the consumers as well as farmers so that we can maintain rural communities and our environment.”

Audrey Alwell is the Communications Director for MOSES.

 


From the January | February 2020 Issue

 

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