Fall 2016 Logan County
Farm Outlook Magazine

Growing alternative crops for more profit
If not corn or soybeans... what then?
By Nila Smith with contributions by Jan Youngquist

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[November 05, 2016]  You may be familiar with a couple of the catch phrases: 'Field to Table,' or 'Buy Fresh, Buy Local.'

A whole host of experts and representatives in agriculture, finances, marketing, government and health fields are working today to bring about change in our food system and the way we eat - how food is grown - making fresh foods available locally - educating Americans in how to buy, cook and eat quality fresh foods.

The “Eat like you matter” movement spurred by a national health crisis is just setting its roots.

Dr. Nicole Florence of Abraham Lincoln Memorial Hospital, Memorial Health Systems said if obesity could be eliminated, diabetes would no longer exist. Doing away with this one disease that is a $150 billion cost in the healthcare industry would have an enormous impact on medical costs, insurance costs and more, for all Americans.

What this multi-industries consolidated movement offers those in agriculture is alternatives in production, whether converting a portion of your operation from conventional to value added organic field crops or carving out a few acres for niche fruit, vegetable or ornamental crops that go to local market.

Both organic and local food farming have expanding support systems that offer training, mentoring, finance options to start or shift an operation, and shared marketing opportunities for those who might be willing to do something a little different, work a little harder for something more profitable.

Though Richard Ritter from the Gridley Branch of Flanagan State Bank had a farming background, three years ago he began to research more about sustainable farming. He found that information was sadly lacking. He decided it was his “calling” to take up this subject and provide better information.

Ritter offers some income comparisons between conventional versus organic crops.

Conventional farming in 2015, yields were higher, but prices were down and input costs up. While an organic farmer will pay more for organic fertilizers and labor, the increased selling price offsets these costs.

2015 conventional soybeans saw high yields of 60 to 80 bushels, but the clear or net income was only about half of that from an organic field yields at 36 to 80 bushels per acre.

Ritter said another good thing to point out is that for so long, it appeared that organic crop yields were much lower than the yields of conventional crops. He said this is no longer the case. Organic field yields are coming in within 75 percent of the comparable conventional crop.

The future of organic farming is strong. He said there are a number of reasons for this, but perhaps the best reason is the consumer. He said that consumers are looking for organic and are willing to pay the premium for it.

He noted that eggs are selling for about $4.00 in the organic market, compared to less than a dollar or $1.50 in the conventional market (August 2016 prices), yet there continues to be a high demand for organic eggs.

This trend is continuing throughout the food market, with people looking for healthy and safe choices where they have no worries about the use of chemicals or genetically modified (GMO) products. There are statistics that show that 73 percent of all Americans are consuming some organically grown products.

Ritter said the other good news for organic farming is that landowners are looking for producers who will go organic on their land. The demand for the organic producer is growing among the landlord community. He said the reason for this was not just organic farming practices, but also profitability.

Sustainable and/or organic agriculture practices over time build soil organic matter, which keeps more nutrients available for crops, protects soil from erosion, and it reduces the need of other chemical additives.

Ritter said landlords see that there are greater returns in organic production than in conventional farming.

Ritter said another benefit to transitioning away from conventional farming, is the income potential that will allow multiple generations to live off the family farm. The lack of stable income in conventional farming is causing young people to leave the farm for other careers. But, with the potential in food farming to yield as much as $15,000 per acre, even a small farm can support a family.

So what is the downside to organic farming?

Ritter said, it is hard work. He noted some young folks just aren’t going to work as hard as they need to make organic farming profitable.

Ritter predicted that as low profits of the traditional farm continue, at the end of this season there would be 10 percent fewer farmers. With that, land costs would drop.

To stay afloat, farmers may want to look at alternatives.

There are a number of opportunities, particularly for young farmers wanting to break into farming if they are willing to participate in sustainable practices. Choices and support range in special training, writing a business plan, financial backing, assistance setting up marketing and extended support.

PrairiErth Farm owned by Dave Bishop of rural Atlanta, is best known for organic foods, specifically vegetables, but also beef, pork and poultry. However, the garden style portion of the farm is only a percentage of all the farm produces. The farm also raises conventional crops such as corn and soybeans following sustainable agriculture guidelines which add value at market.

Bishop's aim is to make wise use of the land to grow premium crops and foods at a profit and to get others to join him in these practices that offer quality of life value.

Bishop said that first the system used to establish sustainable farming needs to be a plan that can be used not just for the immediate season, but for the future. In other words, it needs to be a long-term plan that requires little adaption to work year-after-year.

Secondly, Bishop said that to be successful, a program has to be profitable. In contrast to conventional farming practices, Bishop said one key is to control the output, to not over-produce, because larger supplies will create lower prices. He said the goal is to avoid what is going on today in conventional farming where supplies are larger than the demand. Prices fall to make the abundant supply more marketable.

Barbara Barcal of All Star Trading works with organic producers to market their products. She is follows markets for imports and exports of organic and non-GMO grains, and pricing for organically grown products.

Barcal said demand is growing for organic products. The majority of those products are being imported from foreign countries.

She said demand for organic chicken and eggs are on a steady rise. To produce these products, these birds need to be fed organic grains. She said corn, to her understanding was a major component of poultry feeds.

She noted that in 2012, she paid $16.25 per bushel for organic corn. (point of reference, at the elevator cash corn on October 9th, 2012 was selling at $7.29-$7.39) Barcal said she noted to many producers that year, that the extremely high price for corn could not continue because livestock producers could not afford to pay that kind of price.

She was right about this prediction. Organic corn mid-September this year was at $8.00 per bushel, which is still a premium compared to the cash price for conventionally grown corn at $3.00 - $3.09/bushel. Barcal said even though this is less than 50 percent of the 2012 price, producers are pleased with this price, and they are making money

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So, what are the concerns? Imports.

Barcal said in 2012 there were no imports of organic corn. Since then, looking just at Romanian imports of corn, the U.S. demand has increased significantly:

  • In 2013, 918 bushels at $15.25/bu.
  • In 2014, 29,000 metric tons at $10.21/bu.
  • In 2015, 14,800 metric tons at $8.69/bu.
  • To June of 2016, more than 55,928 metric tons, a volume increase of more than 200 percent over the past year.

Barcal said there is not enough corn being grown organically in the U.S., though it has great market potential. She had a buyer contact her looking for Illinois-grown, non-GMO corn, and she assured him, there was none to be found.

Barcal says this is a concern that needs to be addressed locally in conversations farmer-to-farmer, to encourage greater production of non-GMO products.

Director of impact for Iroquois Valley Farms, John Steven Bianucci, explains how their sustainable agriculture farming system started as a single family farm, but has grown to more than 30 farms in eight states.

Bianucci said the goal is to assist farmers during the transition years from conventional to organic production. The firm also works with young farmers and prospective farmers in assisting them to gain access to farm ground. They also work with at risk farms to help them regain their financial stability, to become self-sufficient and profitable through a buy and sell back program.

In this program, Bianucci said Iroquois Valley would purchase a farm, and lease it back to the farmer for seven years. At the end of that time, the producer has the option to buy back the farm land, or they can continue with the lease program. The farm in question would be transitioned to an organic and environmentally aware farm, and work within the vision of Iroquois Valley to offer safe, healthy alternatives to conventional food production.

Bianucci said that the firm works with grain crops, alternative crops, dairy and other livestock, as well as vegetable farms.

What ever your choice in farming practice, Rebecca Huston of the Illinois State Treasurer’s Office says that they know that operating cash is difficult to come by some years. There is a loan guarantee program offered by the Illinois State Treasurer’s Office, AgInvest, that works through local banks to help secure loans and operating cash for area farmers.

While AgInvest has been around for a while, improvements now allow farmers to secure larger loans for longer periods of time and it now offers fixed interest rates.

AgInvest is a subsidy program with interest rates that make the borrowing more affordable for the producer. The long list of items that the state will permit in this program include money for crops, livestock, buildings or infrastructure and refinancing of debt.

Huston notes that right now, many people don't know about this program, including the bankers.

Bill Davison – University of Illinois – The Grand Prairie Grain Guild

Davison founded the Grand Prairie Grain Guild, which is now in its second year. He said the mission of the Guild was to build regional grain markets with value-added grains. The goal is to use the crops that are already being produced in scale, and being transported to Chicago and other market locations as the infrastructure for transporting other products.

As that system is established, the Grain Guild will add fruits and vegetables, making it easier and more affordable to ship Illinois-grown products to the locations where the demand exists. He said organic or not, if a farmer is going to produce in a low input system, different crops need to exist than what we have today, including corn, soybeans, other legumes, and other grains such as buckwheat.

Some of the research being done includes working with crops not typically found in Illinois. Such products include a variety of wheat, even buckwheat, and also grains such as open-pollinated corn. He said that he had been told that working with crops such as this cannot work in Illinois, but he said he’s working with farmers who are already doing it, so, apparently they didn’t know it couldn’t be done.

Davison mentioned, in particular, a farm in Iroquois County that is growing a six crop rotation, including winter wheat. He said this farm of 2,500 acres produced 55,000 bushels of organic grain. The wheat this farm is growing is being sold to markets in Chicago.

Currently, stone mills that are being established with the goal to move consumers toward a whole wheat milled flour, but right now, the consumer is accustomed to, and desires white flour. The mills being established have sifters that will refine the flour to the specifications that the commercial bakers want. Flour formulation would be adjusted annually, and bakers would be educated on the newer, better whole grain products, adjust their recipes until eventually they are working with a pure whole grain product.

He concluded that what is needed now is a demand for the organic flour and other products at institutional levels such as schools and hospitals.

One of the challenges for any farm operation is defining a market and planning for storage and transportation. Smaller farm consortiums have been forming, such as the Land Connection - Champaign area and Legacy of the Land - Bloomington area growers, have pooled their efforts for efficiency and to get more
product with greater diversity to more markets.

Right here in Logan County, the ALMH Market held May to October launched with much success this year. The all Illinois products indoor market draws a regular crowd offering numerous health conscious activities. One vendor was Bean Sprouts, a soon to be opened in Lincoln café/restaurant where the goal will be to offer as many “farm-to-table” dishes as possible.

Bishop noted that transporting small farm products can be a very costly challenge for producers. Currently, Amtrak has a pilot program transporting from the Champaign area to Chicago. Cheeses are being shipped via Amtrak in special coolers. He hopes to see Lincoln gain rail service for product shipping as well.

Resources:

USDA
Organic Certification - Technical Training and Financial Resources - Data and Research

Illinois Organic Growers

Legacy of the Land

The Land Connection

Locally Grown, Fresh Food Market
The ALMH Market

 

Read all the articles in our new
Fall 2016 Logan County
Farm Outlook Magazine

Title
CLICK ON TITLES TO GO TO PAGES
Page
Year in Review 4
Sustaining the farm 6
On-farm storage helps with profitability in 2016 10
How commodity prices and profits are affecting equipment sales 15
Agricultural science and technology:  Have we gone too far? 15
The benefits of crop rotation 22
Finding some profit:  The benefits of growing organic corn and soybeans 26
Growing alternative crops for more profit 32
Is the Illinois Nutrient Reduction Strategy counter intuitive to profits? 41

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