Maybe the poor margin on commodities is causing you to farm away your equity.
The frayed rope of geopolitics might worry you.
Or perhaps you’re looking for a new revenue stream to bring in the next generation.
Whatever the motivation, U.S. farmers are looking to increase financial opportunity and build resilience into their operations.
For Harold Wilken, farm succession pushed him toward organic farming when son Ross was only 12.
“We’re living proof that organics can feed the world,” the elder Wilken says. “It you want to talk about something that can’t happen, or hardly happens, it’s hard to bring that next generation in and pay them a living wage. There’s a lot of next-gen farmers that live as paupers.”
But the going wasn’t necessarily an economic bonanza early on.
“It was an interesting conversation with my banker. In today’s world, with the banking regulations, I don’t know that we could do it,” Wilken says. “It takes a few years to get where it’s profitable.”
For farmers with an eye toward change, Kate Lambert, senior vice president of marketing for Farm Credit Services Financial, offers tips for diversification beyond cattle and crops, such as direct-to-consumer businesses, agritourism and farm lodging, to name a few.
For her Missouri family, an open-to-the-public pumpkin patch offered a new income stream from an enterprise that worked around the time constraints of their primary farming operations.
However, Lambert warns: “Don’t hear me say this is easy.”
The whys and why nots
Lambert sees four primary reasons for adding a new enterprise to an existing farm:
- different market opportunities
- greater margin opportunity
- expanding stakeholder skills
- encouraging an entrepreneur’s mindset in the next generation
The list of challenges is longer: finding time, dealing with seasonality and weather, managing with clear financials, finding resources, and establishing financing.
Lambert especially encourages setting goals and using a budget.
Different market opportunities and greatly improved margins drove Wilken and led to the success of Janie’s Organics, with Ross and his cousin Tim Vaske at the helm.
Wilken took a new path after a neighbor offered a lease on 30 acres if organic production was used. Coming on the heels of being accidentally doused with pesticide and after losing his teen daughter in a car accident, Wilken was ready to do something different when that offer was made. Organic production was the first step. Milling was the second.
Working through pandemic
Since opening the mill in 2017 with five products, Janie’s Organics now offers 44 products and is developing even more.
About 80% of the grains come from the 4,200-acre farm, and the rest is raised in areas with better climates for specific grains, including Michigan, Ohio, Nebraska and Montana.
The mill manager is the daughter of the landowner who started Wilken down this path. They first sold large bags at wholesale. Those fell off when the pandemic hit. So the operation moved to small bags and saw sales soar as a result of more people baking at home.
The wholesale market picked up again post-pandemic, and Janie’s continues to be an economic driver in their tiny town of Danforth, Ill., where they have 32 “really dedicated” employees.
Find a void, then fill it
Labor needs are the void Daniels Produce hopes to fill in Nebraska.
With changing weather patterns, marked by flooding and frequent hail, the produce business that the family built is growing riskier each season. So, the family is raising its FLAG, for Farm Labor Ag Group.
This will be the second turn on the family’s path to generational success. Kelly Daniels-Jackson starts the family’s farm story with the great-grandfather who grew corn and soybeans.
Extreme flooding drove the next generation to vegetables in 1996. She and brother Jason Daniels came back to the farm in 2006, and the farm expanded and turned to H-2A labor in 2009.
“Now the vegetables aren’t cash-flowing with the H-2A costs,” Daniels-Jackson says. And weather challenges increase the risk in raising produce.
So, they’re continuing to grow some produce and developing FLAG, a labor-contracting business focused on providing services to seed producers and other farmers in their area. Among other things, they offer rogueing and detasseling, two of the most labor-intensive tasks. All of their employees are legally in the country and have work visas.
The new business offers economic growth and provides work for the employees who have given so much to their operation, they say.
“We want to move forward and do something that’s more financially secure,” Daniels-Jackson says. “Love for doing what you do can only take you so far.”
And she’s hoping this new venture will take the family business far enough to carry it into the next generation.
“I honestly at this point would not want my children to come back to the farm,” she says, “but if we get this going … .”
When that other something gets going is the reward for the risk and the work.
“Dad knew we didn’t have enough for me to come into the farm and him be able to stay on the farm,” Ross Wilken says. “With this, there’s more money per acre, and there’s no question about it.”
His dad laughs as he jokes about the days when he farmed six months a year and complained about the markets the rest of the year. He doesn’t miss his commodity crop days.
“If it doesn’t pay the farmer,” Harold Wilken says, “he doesn’t need to be there.”