Why the Milk Train Stopped

My dad used to ride the local “milk train” from college at Creighton University in Omaha to his family farm near Fordyce in Cedar County, Nebraska. I don’t know when that train stopped running, but the reasons for its demise can be traced to a disastrous set of public policies that encouraged systematic disinvestment in owner-operated diversified farms.

Diversified?

Diversified farmers raised several types of crops and livestock. They milked cows that grazed on open pastures. They fed very little grain and did not use expensive chemicals and equipment. Chickens were raised for meat and eggs and butcher hogs consumed the excess milk and grain. The hogs were trucked to livestock markets in Omaha and Sioux City and the milk and eggs rode the train to Omaha. Although by no means perfect, this farming system operated throughout the Midwest and Plains States.

Public Policy, Disinvestment and Economic Decline

But starting after the Second World War, local bankers and diversified farmers faced competition from big city banks and government agencies. The USDA played a leading role in convincing farmers to borrow ever-larger amounts of money to finance the application of petroleum-based fertilizers, herbicides and pesticides on corn, soybeans and alfalfa. These crops were (and are) trucked to dairy cows, hogs and chickens housed in closed confinement barns and beef cattle held in large feedlots.

Over time, these policy and investment decisions produced a steady decline in the number of diversified farms as well as the processing plants that once supplied near-by Missouri Valley cities, and export markets. The processors have moved south and west in search of cheap commodities, water and labor.

As a result, Missouri Valley residents now spend billions each year on non-local (read imported) meat and dairy products. For example, we estimate that Kansas City and Omaha area residents spend a combined 300 million dollars a year on imported organic food (USDA, OTA and Census data). Fresh vegetables are the biggest organic import.

A Sustainable Economic Development Strategy

We can compete on price, quality and availability with most imported fresh vegetables by building locally financed, four-season greenhouses near big cities. These modern high capacity facilities can create new jobs while reducing water and energy consumption. They can also eliminate harmful chemicals and fertilizers in our food chain by using soil mixtures based on well-composted livestock and poultry manure from efficient diversified organic farms.

On economic development, its not hard to imagine large and efficient sustainable farms and gardens around every big Missouri Valley city. There are no good reasons why these farms and gardens should not be locally owned and operated by the folks who do the work. Further, sound economic development policy demands that near-by processing plants be owned by entrepreneurs (including workers) who earn reasonable profits and living wages. This is no pipe dream!

Farmer-owned Food Brands

We know smart conventional, natural and organic farmers, ranchers and feeders who are already marketing specialty meats and poultry through established commodity channels. In order to by-pass volatile commodity markets, some of these producers want to own retail brands, and yes, contract with locally-owned food processors and distributors to supply high-end Missouri Valley grocery and food service outlets.

You can help us get started by considering an investment in a new farmer-controlled marketing company. We are using Slow Money principals to guide the organizational process. To learn more about farmer-controlled marketing and local financing, please go to Raised Free.

Finally, we are planning to develop our two Omaha area farms to showcase the latest in efficient organic farming technologies and marketing methods. We would be delighted to discuss our plans with qualified investors and experienced organic farmers and gardeners.

Thank you.

Jim Steffen
President, Massena Corporation
402-317-2639
jim@massenafarms.com
Jeff Durski
Raised Free Partner Relations
402-321-7852
durski1@outlook.com

 

You Can Help Sustainable Farmers Break Down Grocery Store Barriers

Our readers know that organic and natural (sustainable) farmers and ranchers around Omaha and Kansas City are locked out of high-end grocery stores like Whole Foods Market, Trader Joe’s and Sprouts. These companies buy the vast majority of their organic and natural products from outside of our trade area.

Please see Pickups vs Semi Trucks for more.

As long as this money leaves the Missouri Valley, we cannot afford modern farming technology that can drive down the rates of fossil fuel and pumped water consumption, along with confinement feeding. With the right buildings and equipment (and financing), we can produce a full range of seasonal grains, fruit, vegetables, meat, and even fish!

You Can Help!

If you or someone you know works in any of the industries or disciplines listed below, please let us know. We are interested in discussing partnerships to design, finance and market facilities and equipment for pasture-based agriculture.

Ag building and equipment manufacturing
Solar and wind energy
Animal husbandry
Soil science
Pasture management
Water conservation
Wildlife habitat

Our Raised Free website explains how marketing, finance and technology work together to build sustainable farms and food businesses.

Thank you.

Jim Steffen
President, Massena Corporation
402-317-2639
jim@massenafarms.com
Jeff Durski
Raised Free Partner Relations
402-321-7852
durski1@outlook.com

 

A Consumer-Driven Strategy for Local Food and Farms

Rethinking the Future of Sustainable Agriculture in the Missouri Valley

By
Jim Steffen

According to the USDA, farm incomes are down. This means that small farmers and ranchers who depend on outside (non-farm) income must work more just to stay even. Further, many if not most field hands and packinghouse workers cannot earn living wages. In sharp contrast, the Organic Trade Association says that organic food represents the fastest growing sector in the food industry. This chart tracks the sector’s growth. Nevertheless, the most experienced organic and natural farmers and ranchers in the Missouri Valley are locked out of high-end grocery stores like Whole Foods Market, Trader Joe’s and Sprouts because these companies source the vast majority of their organic products from outside of the Valley.

The costs to our rural and urban economies, communities and natural environments are significant. For example, the Omaha and Kansas City areas alone lose roughly 300 million dollars each year to imported (non-local) organic food (OTA, ERS and Census data). In other words, imported high-value foods, foods that could be grown and processed in the area, are helping drive income inequality and ever larger food deserts.

Retailers Want Local Organic, But…..

As a result of many conversations with the owners and managers of grocery stores that supply Omaha, Des Moines and Kansas City, it is clear that they want more locally grown and processed organic foods and products. But without major investments in local and regional production and processing, these products will not be available in amounts and at prices that can compete with the imports.

So, why hasn’t 300 million dollars in local demand changed the face of sustainable agriculture in any measurable way around Omaha and Kansas City?

There Are Barriers

I see three main barriers. This first two are labeled “Tax Policy” and “Farm Policy” respectively and the third is “Marketing”. Change is painfully slow because the dominate players in each of these disciplines use outdated, winner-take-all business models that push labor, government and environmental costs off the books. Remind me to tell you an old story about healthcare in a packinghouse town in central Nebraska.

On taxes, Wall Street still believes in the old mega farm and industrial-strength food processing model because it generates big fees on the front-end of each project. The food companies also do well since the interest on corporate bonds is deductible. Further, their construction costs are often reduced when states and localities divert tax revenue from food plants to pay for roads, water and wastewater systems that serve these plants. These tax increment-financing schemes can be particularly hard on schools, libraries and other public services because as their operating costs increase with inflation, income stays flat. Anyone for higher sales and property taxes? It will be interesting to see how the Costco chicken plant in Fremont affects local school budgets.

Congress has focused farm policy on various price supports, crop insurance program and subsidies that help stabilize volatile farm income so that farmers can deliver crops as promised to food, and energy companies (think ethanol). A good way to reduce the size of the federal government is to shift the costs of essential price support programs to the food and energy industries and ultimately to consumers. We will pay one way or another. Personally, I would like to know the real costs of my food. Even better, some of the savings could be used in pilot programs to scale up sustainable food systems that measurably reduce urban and rural food deserts.

On marketing, there is much to be said about the health benefits of eating right and avoiding farm chemicals and food additives. Although the industry markets the health benefits of organic and many other foods, it will resist all efforts to highlight brands that pay living wages and a fair share of state and local taxes.

Citizen-Consumers

Unless there is crisis like the Depression or the massive 2008 recession, consumers have not shown much interest in recent years in complex farm policy and corporate tax legislation. However, income inequality and distrust of government and Wall Street might be harnessed to create new interest in sustainable foods as an economic, social and environmental development tool.

I would like to test this idea over the summer by visiting leaders of neighborhood associations, community gardens, food hubs and local business incubators. With economics in mind, its not hard to imagine ROI’s that beat Wall Street. Keep in mind that USDA says that per capita annual food expenditure are over $4,000 dollars (home and away) (2014, ERS, Table 13). I believe that Missouri Valley cities and farm communities can work together in dynamic systematic ways to capture measurable slices of this very large pie.

Now, please bear with me as I take a short side trip to the land of corporate agriculture. Readers should keep in mind that the conventional food industry is not the enemy. In spite of the corporate subsidies, it still pays a lot of bills up and down the Valley, including the taxes and some of the upkeep on our two small farms. Yes it’s big, clumsy and expensive, but until we can come up with environmentally and socially efficient sustainable food systems, we are stuck with inefficient exports of meat, grain and ethanol, and the losses associated with imported organic and natural foods.

Strategy of Change

During my summer conversations, I will be asking for ideas on how to garner consumer support for my proposed sustainable food economic development agenda. First, some ideas on strategies for that agenda.

I think we need to work across geographic and income divides to engage urban consumers and near-by farmers and ranchers in discussions about potential shared visions of food system sustainability. For example, low-income urban communities could form partnerships with rural communities that want to expand production and processing of high-value foods for local and regional markets. In other words, grow organic commodities near Omaha and Kansas City and do the processing and distribution in these cities.

In fact, farmer-labor alliances have quite a history in the Midwest. They could be organized once again to promote new production and processing of local brands designed for local and regional urban markets. These projects could be financed by building three-way partnerships that include local high net worth investors, rural communities and urban neighborhoods. If there is sufficient interest shown over the summer, I intend to ask local food leaders in Omaha and Kansas City to help me find a larger audience by organizing public meeting at schools, churches and civic clubs.

A Wide Screen Look at Sustainable Agriculture

As noted, citizen-consumers are not interested in mind numbing tax and farm policy. What’s needed are new and interesting ways to look at food systems from the ground up and from the 30 thousand foot level. A few numbers are OK, but they must be mixed in with lots of pictures, discussion, good food and community. This video by Creighton University students is the way to go.

My vote for the best way to start these discussions goes to Kate Raworth. Her new book, Doughnut Economics (Chelsea Green) suggests starting with broadly defined narratives that center on best practices for the earth and society. In addition to using systems economics, she favors expressing new ideas in words, art and food so that citizen-consumers can begin to visualize potential areas of agreement.

Raworth deals with these complexities by avoiding conventional winner-take-all economic thinking. She embeds all human activities within the regenerative capacities of our atmosphere, soils, water and wildlife, as shown in the following diagram. For more, please see George Monbiot’s recent review of the Doughnut Economy in the Guardian.

Again, with regeneration and systems thinking in mind, I will be spending the next few months talking with local food leaders in the Omaha and Kansas City areas about strategies to attract a larger audience.

Please help me by passing this e-mail to organizations and individuals with the money and skills needed to help us all take a new look at food and community.

For more information, please contact me at 402-317-2639 or jim@massenafarms.com.

Thank you!

Posted Summer of 2017

How To Fix Sustainable Agriculture in the Missouri Valley

Our most experienced natural and organic (sustainable) farmers and ranchers are aging out of agriculture in the Missouri Valley. Why?

Because we cannot make enough money selling organic commodities to food manufacturers and/or selling value-added products at farmers markets, local restaurants and CSA’s.

Without steady profits, these skilled producers will never make enough money to buy conventionally managed land for conversion to sustainable methods, however defined. This means that we cannot begin the long process of rebuilding our depleted soil and water resources, wildlife habitat and rural communities.

Although organic food sales are increasing at high rates in Omaha, Kansas City and the nation, sustainable farmers in the Missouri Valley continue to struggle without an effective business model.

Raised Free – A New Business Model for Farmland Succession

Our business goal is to return a measurable and fair share of the retail food dollar to working sustainable farmers and ranchers. The first step is to bring qualified local investors, as minority partners, to the table with experienced producers.

These investors will fund local marketing partnerships (LLC’s) controlled by an experienced producer who serves as the partnership general manager. The local “brand partnerships” will handle marketing, processing and distribution of farmer-controlled sustainable food brands destined for Omaha and Kansas City retail markets.

Consumer Demand

Omaha area residents spend roughly 100 million dollar annually on non-local (imported) organic foods while Kansas City area consumers spend over 180 million (Census, USDA, OTA). There is no doubt that we can produce, process and sell most of these products in Missouri Valley. Therefore, we intend to compete on price, quality and availability directly with non-local organic brands and other specialty foods.

Massena Farms

To begin, we will demonstrate the Raised Free business model using our own Massena Farms brand. To learn more, please go to www.RaisedFree.org, or contact me directly at 402-317-2639.

Sincerely,

Jim Steffen
jim@massenafarms.com

 

Sustinable Farmers Are Going Out of Business in the Missouri Valley

Will this child grow up to own this land?

Ours is an old story, but it’s still not easy for me to tell. My wife and I are 74 years old and live in the Kansas City area. When I was a child my grandfather helped my parents buy an 80-acre farm near Omaha. This farm is now certified organic. Later on, they bought a half-section of pasture near Massena, Iowa.

But today, these farms are too small to make money in organic and conventional markets. In other words, there is not enough profit to bankroll a young farmer(s) who would own and operate our farms This means that when we pass, our farms will be sold, probably to a large farmer/landowner or non-local corporation. Either way, these farms will most likely go back to non-organic corn and beans that will be fed to livestock, exported to Mexico or turned into ethanol. And most important, the little kid shown above will do the farm work, but never own the land.

No Black Hats

Before I go further, keep in mind that there are no black hats here. We (farmers, investors, lenders and consumers) are all in this together. Next, while farmers understand this story in detail, big city consumers do not have a clue.

The Prevailing Land Ownership Story

Consumers do not understand how current land ownership trends affect the environment as well as food prices and quality in big cities and small towns. This land ownership story has four chapters:

  • Technology (machines and livestock confinement)
  • Markets (commodities)
  • Environment (water, soil, wildlife)
  • Money (non-local)

A New Story

Once consumers begin to understand the old story, we can work together to write a new one. The new story line will feature skilled farmers, ranchers and gardeners who own land and pass it on to the next generation in the same community!

We want to share proven, practical ways to build strong local food economies, based on farmer-owned land and local food brands. If you belong to a church, civic organization, PTA or business group, please contact me to arrange an informal presentation, at no cost.

Sincerely,
Jim Steffen
www.RaisedFree.org
jim@massenafarms.com
402-317-2639

 

Pickups vs Semi-Trucks: Why Organic Farms Fail in the Missouri Valley

I have written often about the amount of money Omaha and Kansas City area residents spend on imported (non-local) organic foods and food products. Using Organic Trade Association and USDA data, my ballpark estimate for both areas combined is 290 million dollars per year. So why can’t more of these foods be grown and processed in the Missouri Valley? There is nothing wrong with our climate, soils, farmers and workers. So what’s the problem?

The Commodity Mentality

Based on recent discussions with nationally recognized farm managers, area ag lenders and USDA officials, it is clear that the conventional ag financing and commodity marketing systems are not designed for sustainable food production and processing. As it is now, the organic production base in the Missouri Valley depends almost entirely on exporting relatively small amounts of organic commodities like alfalfa and corn. Because of the small production base and the absence of efficient local and regional processing, there is not enough free cash at the farm level to start new organic (sustainable) farms, ranches and gardens.

Pickups vs Semi Trucks

Sustainable food systems will continue as attractive dreams in the Missouri Valley as long as farmers, investors and lenders limit themselves to small volume CSA’s, farmers markets and restaurants. The real money in the food business originates in big city grocery stores, especially the upscale retailers like Whole Foods and Trader Joes, etc. Over-the-road diesels pulling 40 foot refrigerated trailers supply their stores.

These trailers may look empty when they pull out of town, but in effect, they are loaded with our money – money that we could use to build efficient local food systems that compete with the imports. As an aside, our tax-funded schools, universities, hospitals and military bases are also part of this same problem. I will write about local food purchasing requirements in the near future.

None of this will change until farmers, landowners and investors team up to build farmer-controlled food brands that can compete in up-scale grocery stores. This requires new business models for sustainable agriculture.

New Business Models

In our view, these models should: 1) Allow sustainable producers to control their own food brands and cash flows, 2) Support demand-driven marketing, production and processing systems that supply a wide variety of shelf-stable products, and 3) Allow for a systematic transition to pasture-based production systems. These systems must include enough hay and grain to support efficient meat, dairy and fresh produce production and processing in close proximity to big cities.

If you are not yet convinced, ask yourself a very basic question. Why do Organic Valley and Horizon ship milk to Kansas City? Answer; there is no competition. The same question and answer works just as well for meat, poultry, fruit and vegetables.

The absence of effective competition in the Missouri Valley has left the door wide open for Big Food. According to the New York Times, “organic food has become a wildly lucrative business for Big Food and a premium-price-means-premium-profit section of the grocery store.”  The high profit margins explain why big companies like Walmart and Whole Foods Market have been buying organic food manufacturers and/or contracting with big organic growers and manufacturers as fast as they can.

Although strong consumer demand is in place, investors and lenders still think of conventional and organic agriculture as commodity businesses. This strategic industry failure represents an important business opportunity for farmers, landowners, investors and lenders who can work together to build new business models.

We believe the best sustainable food business models will combine: 1) Organic and Biodynamic production methods, 2) Professional marketing for high-value, farmer-controlled local and regional food brands, and 3) First-rate market information and financial reporting services for qualified local investors and financial advisors. We are organizing the Raised Free Investment Group to meet this need.

Demonstration Farms

We plan to start in Omaha since we own two farms in that area. These farms will serve as demonstration sites for innovative, farmer-managed “brand partnerships”.

To learn more, please go to www.RaisedFree.org and then contact me to arrange a meeting for your civic group, church, business organization or economic development agency.

Thank you.

Re-posted 03/27/17

Livestock and Pasture: The Foundation of Sustainable Agriculture and Healthy Soils

These photos and drawings show an organic crop sequence (rotation) that includes livestock, pasture, hay, grain and fresh vegetables. A typical rotation includes some “permanent” pasture that is never turned under. Photo No. 2 shows permanent pasture that has been in continuous production for over 60 years without the addition of petroleum-based fertilizers, GMO seed or chemical weed sprays.

No. 1
Milk cows on pasture, no animal confinement and no year-around manure accumulation. 1951 photo courtesy of the Boys Town Hall of History.

No. 2
High protein pasture with NRCS damn as water source, owned by Massena Farms, South of Massena, IA, 2006 photo.

 

No. 3
This concept drawing shows mobile pasture coups for poultry. Confinement buildings are not required and manure does not accumulate. Drawing by Bruce Arndt, 2013.

No 4.
Spring compost being made with livestock manure collected from winter shelters at the former Boys Town dairy farm. Photo by Bob Steffen, circa 1970.

 

No. 5
Well-cured compost for fresh vegetable production at Massena Farms near Bennington, NE. Photo by Jim Steffen, circa 2000.

 

No. 6
Vegetables fertilized with well-aged compost at Massena’s Bennington farm. No petroleum- based chemicals are required. Photo by Jim Steffen, 2004.

 

No. 7
Old alfalfa with new frost-seeded grass on Massena’s Bennington farm. Photo by Jim Steffen, 2008.

 

No 8.
Combine on oats over new alfalfa at Massena’s Bennington farm. Non-GMO oats and other small grains feed people and livestock while protecting new hay without farm chemicals or irrigation. Photo by Jim Steffen, circa 2000.

Posted 01-17-2017

 

Investing in Sustainable Agriculture

Courtesy Boys Town Hall of History

Sustainable (natural and organic) agriculture in the Missouri Valley will begin to thrive once qualified local investors understand the profit potential of farmer-controlled food brands along with efficient local food economies. To develop new farms and food brands, Raised Free offers market information and market management services in the Omaha and Kansas City areas. We are a market management company specializing in building relationships with urban consumers who want sustainable foods from local farmers and food businesses.

Sustainable

For us, “sustainable” describes local and regional food systems that are in transition to organic and similar methods. These farmer-controlled systems have strict origin identification procedures with planned investment programs for profitable farms and food processing designed for near-by urban and suburban residents.

Brand Partnerships

Farmer-controlled partnerships (LLC’s) will own and manage these brands. In order to produce truckload lots from tight geographic areas, each brand will contract with local partnership farmers. In return for a negotiated percentage of the brand profits, local minority investors will fund marketing, processing and distribution.

Experience

Our experiences are in marketing and management. We are not farm managers, real estate agents, bankers or investment advisors. However, we are forming working partnerships with firms and individuals with these skills.

Please call or e-mail for more information.

Jim Steffen,
402-317-2639
jim@massenafarms.com

Concept Drawings: Pasture-Based Food Systems

The first two drawings show beef and poultry on intensively managed pasture. Pastured-raised livestock and poultry are at the heart of commercially viable sustainable food systems in the Missouri Valley.

The next drawing is of a small on-farm processing facility for poultry, lamb and small market hogs. These low cost facilities will help estimate processing costs and test consumer preferences for various products, packaging and price combinations. The research results will be used to design commercial-scale facilities, beginning in the Omaha and Kansas City area.

The last drawing shows a large 4-season greenhouse for year-around fresh vegetable production. This drawing is based on an existing greenhouse that produced vegetable sets for early spring hoop-house production and edible flowers during the winter. It helped supply Omaha restaurants for 30 years. Many similar facilities will be needed in the Missouri Valley as demand increases for fresh, locally grown organic vegetables.

Marketing “Sustainably” Produced and Processed Foods

Photo from Jim Knopik, Fullerton, NE

Before the food industry makes a serious move toward “sustainable” practices, it needs a concrete definition of the term, along with consumer demand data that offers real profit opportunities to each member of the food system (retail, farming, food processing, etc.).

Sustainable = Local + Organic + Pasture + Profit

For us in the colder parts of the Missouri Valley, our definition combines pasture-based production of organic meat, dairy and poultry with enough grain to feed hogs and chickens, and enough hay to winter cattle and sheep. The hilly and more erodible land near the Missouri River will benefit from pasture-based agriculture, along with local economies. Further, farm profits will improve because production costs for meat and dairy (with intensive pasture management) and processing costs (with modern facilities close to population centers) will be less than the same costs in the conventional food system. Less grain, less fuel and more income from farmer-controlled food brands are the main elements in this equation.

Raised Free

By definition, animals raised on pasture require only small amounts of non-GMO grain, which makes continuous confinement feeding unnecessary and expensive. Over time, diversified food systems that integrate different food groups in close proximity to one-another will rival monoculture unit costs. For example, commercial gardens can use well-composted manure from near-by dairies while hay and small grains can be produced in continuous rotations with non-GMO corn, soybeans, alfalfa and new pasture. Further, composted commercial food wastes from near-by population centers can help rebuild soils and reduce landfill costs for institutions, restaurants and grocery stores.

Jobs and Brand Partnerships

Large and local sustainable food systems could also bring new living wage jobs with safe working conditions in fields and packinghouses, particularly if these operations are located near big cities where decent jobs are in short supply. The quality of these jobs depends on the ability of farmers, contractors and food processors to access large amounts of risk capital to finance advanced technologies that reduce labor costs and food prices. Local brand partnerships offer excellent platforms to negotiate technology investments, wages, working conditions, farm profits and food prices.

Food Miles and Food Security

As farmer-controlled sustainable food brands capture market share, they will begin to eliminate “food mile” costs from grocery stores prices. Improved food security is another important benefit. Food safety and environmental issues will not change significantly with sustainable agriculture. However, improved early detection of health and environmental threats will reduce overall regulatory costs if state and local authorities adopt cross training in multiple environmental and health disciplines.

Barriers

The main barriers to large-scale sustainable food production and processing are a lack of proven consumer demand, and start-up complexity. For example, Omaha area farmers will not produce pasture-raised chickens in any numbers without access to a USDA-inspected processing facility that can be scaled up to supply branded, certified organic products to high-end grocery stores. Investors and lenders can be forgiven if they hesitate to finance these operations without reliable demand data.

The first steps toward these data require consumers to understand the basic issues, particularly the environmental, health and economic importance of local, pasture-based food systems. They must also have access to locally grown products that are similar to imported products in quality and price. Consumer education and product development go hand in hand. Simply talking about food system sustainability is not productive. Local products must be available in amounts that can meet continually increasing demand.

Building consumer support need not be complex and expensive. It starts with three key elements: 1) Small production units with local or on-farm processing, 2) Full cost accounting, and 3) A serious investment in marketing. If you build it, they will not come if they don’t know about it. Marketing is the key. CSA’s, farmers markets, local investment clubs, churches, business groups, etc. are all great places to meet like-minded urban consumers and potential investors.

Next, if demand is good at prices close to organic imports, the local brand partners will need to start raising large amounts of money on a continuous basis to: 1) Train and equip additional producers, 2) Build USDA-inspected processing in near-by cities, and 3) Finance ever more marketing campaigns.

Posted: 01/03/2017