Page 4: Marketing Cooperative

Retail consumer markets for  locally produced and processed organic foods are in the early development stages in the Missouri Valley.

To benefit from this demand, organic and specialty producers in the Missouri Valley must fill the legal and operational gaps between individual farms and ranches, modern food processing and nearby populations centers. A cooperative business model that integrates production, processing and marketing offers an opportunity to engage nearby consumers and investors for the benefit of the regional economy and environment.

By no means am I suggesting that we ignore established commodity markets for organic and other specialty crops. We need these markets because local and regional consumer demand is still very weak when compared to the demand for conventionally produced foods and imported (non-local) organic and other specialty foods. As explained on Page 2 of this website, we are actively engaged in building relationships with established commodity buyers.

Is Bigger Always Better?

Bigger-is-better is the prevailing business model in agriculture and food processing. This model pushes environmental, labor and health costs off the books.

Bigger-is-better requires ever-larger farms with continual investments in new equipment and other non-local inputs, including credit and risk capital. There is little doubt that this combination has produced very low unit costs for all types of farm commodities, while at the same time draining away rural populations, decreasing real average incomes and causing real environmental harm.

These losses are not restricted to rural areas. Urban wages and tax support for public schools, healthcare, roads and bridges have all suffered in Missouri Valley cities as the meat packing and dairy industries moved west and south toward low cost land, labor and water.

To make matters worse, the middle and upper income residents of Omaha, Kansas City and Des Moines are supporting the bigger-is-better model to the tune of at least 350 million dollars a year, and growing.  Think Whole Foods (Amazon), Sprouts and Natural Grocers, among others. These 2016 numbers come from the Organic Trade Association, the USDA and the Census Bureau.

Every big city in the Valley depends on the same dysfunctional food system. In almost every case, high-value organic and natural foods come from outside of Missouri Valley trade areas. We (sustainable farmers, ranchers and landowners) ship our high-value commodities to distant food manufacturers where they are packaged as branded organic, non-GMO, etc., and shipped back to Missouri Valley grocery stores.

Does this system make sense? As suggested above and elsewhere on this website, we firmly believe that Missouri Valley farmers should own their own food brands.

Why Sustainable Farms Fail

These are four basic reasons for the failure of sustainable farms in the Missouri Valley. First, from long experience in organic agriculture, I know that young sustainable farmers cannot earn enough selling specialty commodities to afford the notes on land while paying taxes and maintaining pastures, water systems, terraces, fences and buildings.

Second, although farmers markets, community supported agriculture (CSA’s), food hubs and local restaurants are more visible in recent years, these direct sales venues do not produce the free cash required to scale up local food systems for retail grocery customers.

Third, Missouri Valley cities lack affordable processing for specialty meat and fresh produce. Meat and poultry processing are particularly important because they have the potential to support large and efficient pasture-based food systems that require far less grain and eliminate the need for large-scale confinement feeding.

Fourth and most important, the Missouri Valley lacks an effective financial infrastructure for sustainable agriculture. Without adequate investments, the vast majority of organic, pasture-based and Biodynamic start-ups will fail, and in all likelihood, their land will return to conventional methods.

Overcoming the Barriers

Our local production co-ops  will help experienced sustainable farmers and ranchers work with neighboring conventional producers who are converting land to sustainable production methods. We intend to use forward contracts to consolidate individual commodity marketing programs so that several producers can scale up production with less risk.

This strategy starts with the recognition that the conventional farming model is changing. These farmers are adopting more environmentally friendly methods, including no-till planting, cover crops, integrated pest management and filter strips.

Further, and perhaps overlooked by sustainable producers is the fact that many conventional farmers and ranchers, along with their food chain partners, have direct experience with branded retail products like milk, fresh produce, meat and poultry. Sustainable producers should take note of the existing retail supply chains and begin to look for shared opportunities in retail markets that are closer to home.

And while conventional producers adopt more sustainable farming practices, a few USDA-certified organic producers are investing in land and new technology to produce low cost organic commodities. Although there is very little data, most of these investments appear to be in grain, vegetable, meat and poultry production for East and West Coasts markets, and for big cities like Chicago and Denver.

As noted elsewhere on the this website, real estate investment trusts and other non-local investment groups are promoting organic agriculture as an opportunity for passive, high net-worth investors.  This does very little for our rural and urban economies because the profits do not go to Missouri Valley owner-operators and food entrepreneurs. The Valley needs functioning investment programs focused on farmland succession and economies-of-scale in sustainable food production and processing.

Wall Street Is Not Helping

The vast majority of middle and upper income urban residents in the Missouri Valley place all of their savings and retirement funds with Wall Street firms – without considering local investment opportunities. They (we) can’t be blamed because professionally managed investment programs for sustainable agriculture are not available in the Missouri Valley. This financial outsourcing drains away essential resources from low-income rural and urban communities that need healthy food and decent jobs.

In spite of Wall Street’s continued failures, some local investors are beginning to work directly with Missouri Valley farmers and ranchers. For example, farms and supply chains associated with Baumans Cedar Valley Farms and Central Grazing Company have expanded with the help of the national Slow Money organizations. As part of this effort, Omaha, Nebraska investors are also working with local growers and food businesses.

Please contact me for more information.

Thank you.

Jim Steffen

Revised: 08/23/2020

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