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Farming, direct marketing, and keeping disagreements tamped down

House subcommittee hears how producers are using direct marketing. Kinks in system identified.

Consumer interest in food and producer interest in new sales can find a happy juncture in direct marketing. On Feb. 2, the House Subcommittee on Biotechnology, Horticulture and Research held a hearing to look into such marketing.

“Through direct marketing, America’s farmers and ranchers are able to have an open and honest dialogue with consumers about where their food comes from,” said Illinois Rep. Rodney Davis, subcommittee chairman following the hearing. “Several members of the committee, myself included, have learned that building a relationship of trust with consumers is key to achieving transparency. Today, we heard first-hand how these farmers and ranchers are building those relationships. Consumers want factual and easy to understand information about their food; through direct dialogues, farmers are better able to fulfill that desire and build consumer trust and confidence in today’s food systems.”

There remain plenty of kinks in the system, though. Lawmakers heard from Josh Eilers, owner of Ranger Cattle in Austin, Texas, who specializes in direct marketing of wagyu beef. Eilers, former Army Ranger, left the military and began studying at the University of Texas. While there, he began investing in cattle.

“That was mostly by accident as I didn’t know any better. The more I learned and the more business classes I took, the more I realized, ‘hey, it doesn’t take a lot to realize cutting out the middle man means, all of the sudden, that carcass is worth a whole lot more and margins increase drastically.’”

Eilers began his work as a cattleman through a traditional approach. “We were a cow/calf operation and each year we’d sell our cattle to a feedlot in Nebraska and then they’d go to a packer. Those steaks would end up in D.C. or New York or Boston – some fancy steakhouse. … But why not feed the great people of Texas?”

It turns out the direct marketing beef is no easy task. And the largest challenge for Eilers comes from what are normally perceived as extremely friendly farmers markets.

“The USDA has policies that stimulate farmers markets and opening of new ones. But we need to be opening new good ones. What I mean by that is ones that don’t exclude vendors.

“By way of example, I raise beef cattle within Austin city limits. Yet, I can’t sell my beef inside city limits. The Austin farmers markets are controlled by an organization and it wants only one beef vendor there. Well, that beef vendor is shipping in from west Texas. That excludes me from that market altogether.

“I know the American population doesn’t understand that. I’m not sure the USDA does either.”

Cattlemen also need more USDA-inspected facilities. “We drive over 100 miles to harvest our beef. The restaurants we supply want to see that USDA stamp of approval.”

The subcommittee also heard from Michael McCloskey, who co-founded Fair Oaks Farms in Indiana. The extremely successful agri-tourism operation has 15,000 milking cows, a 3,000-sow swine operation and various attractions for visitors. In 2015, Fair Oaks had nearly 500,000 people tour the facilities.

“What we have found over the last 12 years and millions of visitors is that the average consumer simply wants to know that we, as farmers, are doing our best and looking to be better every day,” said McCloskey. “Yes, they are amazed by our manure digesters that produce electricity and a renewable fuel that replaces two million gallons of diesel fuel annually. … But, in our minds, our biggest satisfaction and accomplishment is visitors walk away trusting that we are doing right by our animals, our land, our employees and by our communities.”

Regulation pushback

No fan of government regulations, Florida Rep. Ted Yoho asked if Fair Oaks Farms had placed the digesters under oversight pressure.

“We like to get ahead of regulation,” said McCloskey. “We look for ways to solve regulatory problems by getting ahead of them creating a market value to what we’re doing. Within that – recovering nitrogen, phosphorus and ammonia to create ammonium sulfate – our concept is that everyone within the watershed should participate. We have a very serious problem with ‘dead zones’ in the country and around the world. Agriculture is a part of that, it can’t be denied. But so are golf courses, septic tanks and small industry.

“Our belief is that within a watershed we need to get away from point sources and non-point sources and allow everyone to participate in a market-driven value, which will allow us all to become innovative with technology like we have at Fair Oaks Farms.”

And McCloskey argued there should be a monetary recognition of that.

“It takes a farm with the technology we have $5 per pound to extract N. If you go to a waste treatment municipality plant and try to extract one pound of nitrogen, it will take you $50. It’s always better to work at the source. The system isn’t incentivized to be able to get golf course or lawn people to think differently, to design new septic tanks that don’t have leakage.”

And incorporating new technologies on farms makes them more attractive to younger generations.

“The advancements on the farm today are so tremendous and there’s such demand for great knowledge coming back to the farm. The level of technology is very attractive for young professionals to be drawn back to the farm from a nutritional point of view, from biology, chemistry, from the mechanical side of the business. It continues to evolve…

“I started with 200 cows. Sometimes you feel as though you’re punished for being successful and reinvesting in a business, growing it and making it more efficient.”

McCloskey pointed to the concept of “scale for good.”

“The technology we’ve invested in is R&D money coming out of our dairy. … As we developed that technology two things happen. One is you become more efficient as you use it and the second is driving the cost out. Those two things make the technology more and more affordable for smaller farms. Scale is good. It helps raise all boats in the farming community.”

And those who deride GMOs should know how they help agriculture.

“I listen to the consumer because we want to deliver what they want,” said McCloskey. “But the consumer must understand that may come at a cost. If they want something like GMO-free products then they should know that taking GMOs out of farming is taking (away) a tremendous advantage that’s truly sustainable. (GMOs) increase productivity, decrease water use, decreases chemical use, decreases pesticides and herbicides.”

Divisions between agricultural factions – whether involving GMOs or something else – was a concern Washington Rep. Dan Newhouse. “We can’t afford to have conflicts between ourselves in the agricultural industry. One side can’t be vilifying the other. I’ve seen that happen and it helps no one.”

McCloskey wasn’t encouraging. “Unfortunately, it’s worse than ever. The consumer is more confused than ever as (they are influenced by) social media and who they trust, or don’t. We have to rebuild that trust. Farmers are still very trusted in consumers’ eyes so when farmers are talking against each other it’s putting the nail in the coffin.

“It goes back to the basic principles of the core values that farmers have. … There’s space for everyone and we have to come together as an agricultural community.

“We just have to speak with the proven science – that’s very important for the environment. We must embrace technology, we can’t be anti-technology. But we must make sure that technology is safe, that it’s proven and we can communicate why to the consumer. Unfortunately, a lot of this comes down to competitive marketing.”

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