This page explains financial barriers and outlines solutions for organizing farmer-owned organic production units that can be supported by high-value commodity markets and farmer-owned retail food brands. We are using beef cow-calf operations to demonstrate how to increase profits by reducing energy, water, and chemical costs and developing farmer-owned retail food brands in cooperation with local feeders, packers, and investors.
Financial Conditions for Key Groups
Consumer support for farmer owned brands can be developed much more quickly with the active support of four key groups: working farmers, retired farmland owners, locally owned food processors, and qualified local investors. To earn their support, planners should focus on the short-term needs of each group.
Working Farmers
This group needs organizational support and risk capital (not loans) for fence, wells, cattle, etc. Most farmers combine income from off-farm jobs and commodities with borrowed money to fund their households and farming operations. Since all three income sources are inherently unstable, the vast majority of these producers never build enough personal wealth from farming to retire and pass profitable farms to the next generation (ERS, USDA).
Nevertheless, working producers are in daily contact with the land and are in the best position to adopt farm and ranch level regenerative practices. Further, because of their knowledge of the land and production practices, working farmer are in the best position to lead regional food system development projects.
Retired Landowners
To realize the investment potential of land, the owners need risk capital. Although many still live on family land that is largely debt free, like working farmers, this group also lacks free cash and the business services needed to convert their farms to profitable regenerative methods (CARD, ISU).
Food Industry Business Owners
As explained on page 3 of this website, the owners of local feedlots, locker plants, and packing houses will play important roles in reaching consumers and qualified local investors. However, they must have consistent cash flows based on sound contracts with producers.
Qualified Local Investors
Most of these couples and individuals are retired and live on income from social security and investments. Many live in or near farm and ranch communities and still maintain relationships with farm friends and relatives, some of whom are very interested in regenerative agriculture.
But unlike the “top one percent” this group lacks the personal wealth required to buy land for conversion to regenerative methods. Further, there are no organizations with the resources to connect large numbers of local investors with nearby landowners who want to supply farmer-owned retail food brands.
This group needs fiduciary services to evaluate risks, aggregate investments, and provide financial reports.
New Business Relationships
The four groups described above do not have working business relationships within and across their respective groups. Landowners and farmers who want to organize pasture-based organic farms and retail brands need locally controlled companies that can build relationships across the social, geographic, and economic barriers that separate the members from one another.
I propose to use local landowner-controlled non-profit companies and farmer-controlled cooperatives to build the required business relationships. Before organizing these companies, I am inviting landowners and farmers to join one of two local demonstration projects.
Demonstration Projects
These projects will bring together selected members of the key groups described above. Our family farm corporation (Massena Corp. registered in Nebraska) will host the demonstrations.
I am inviting farm and food industry organizations along with state and local economic development groups to fund these demonstration projects.
The demonstration projects will begin with public meetings with retired landowners and working farmers from Bennington, Nebraska and Massena, Iowa where we own farms. Brief presentations will focus on industry demand for specialty beef, consumer demand for locally grown organic foods, and investors relations. These presentations will be followed by discussion and invitations to join a local demonstration project.
Project Work Plans
Project partners and contractors will be responsible for work plan tasks, as outlined below. This work includes obtaining preliminary demand estimates (price, volume, quality and delivery dates) from established feeders and packers, hay and grain buyers, and local cow-calf producers who operate direct-to-consumer marketing programs.
Non-profit bylaws will be discussed and drafted during the demonstrations. Topics of interest include land ownership with farmland succession. Long-term land tenure by working regenerative farmers is important to earning consumer support for systematic reductions in energy, water, and chemical inputs.
The demand estimate will underpin preliminary business plans for local farms and production units, beef processing, and most important, brand development for local direct sellers.
1. Farm and Production Unit Work Plan Summary
- Meetings with cow-calf farmers and landowners
- Private discussions on farmland succession
- Preliminary forward contracts with organic and specialty buyers
- Preliminary business plans for cow-calf producers and landowners
- Preliminary lease/purchase agreements with succession plans
- Public and investor education programs
- Contingent on investors participation, complete lease/purchase negotiations
- Finalize forward contracts for beef, grain, hay, and alfalfa
- Incorporate local non-profit production unit
- Sign forward contracts and lease/purchase agreements
- Track sales, income, and costs for periodic financial reports
2. Direct Sales and Retail Brand Development Work Plan Summary
- Meet with cow-calf producers who manage direct-sales brands
- Review sources and demand for each product
- Evaluate barriers to entry, competition, and risks for each product
- Estimate costs for inputs, processing, distribution, finance, and marketing
- Explain finance and marketing strategies, plans, and budgets
- Prepare preliminary business plans for each brand development product
- Conduct public and investor education programs
- Contingent on investors participation, complete business plans and finalize contracts with farmers, processors, distributors, and marketers
- Incorporate brand development cooperative
- Finalize contracts with investors
- Track sales, income, and costs for periodic financial reports
Please contact me for more information.
Jim Steffen
402-317-2639
js@raisedfree.org
Revised: 09-20-2023