by Lydia Mulvany
A group representing American farmers is partnering with an agricultural adviser to help promote more large-scale organic farms that produce corn and soybeans, the largest U.S. crops.
Farmer’s Business Network, Inc., which shares best-practices and data among thousands of growers, is investing in Arlington, Nebraska-based AgriSecure, according to a statement released Wednesday. AgriSecure specializes in helping growers transition from conventional farming to organic with more profit and less risk.
The terms of the deal aren’t being disclosed. Through the investment, FBN members will have priority access to the AgriSecure platform.
Bumper grain harvests have kept prices low for years, spurring increased interest in organic and other specialty production because of the hefty premiums consumers are willing to pay for such food. But it’s difficult for farmers to convert, and U.S. production lags far behind the growth in demand.
Fields have to be free of conventional fertilizers and chemicals for three years before any crops can be certified organic, which often results in lower yields during the transition period. In addition, record-keeping requirements are onerous, and farmers basically need to overhaul their operations with new methods and equipment.
“It’s a major investment,” J.P. Rhea, the founder and chief executive officer for AgriSecure, said in a telephone interview. For farmers that “are struggling with cash flow already, going through the organic transition is daunting.”
AgriSecure helps farmers make the transition easier with services related to crop rotation, process management and marketing. The company says growers on its platform have tripled revenues on their acres and achieved yields on par with conventional farming.
FBN, whose member farms represent almost 24 million acres in the U.S. and Canada, said it’s been working to make its members more profitable by generating demand for premium, specialty crops. AgriSecure will bring more access to that market, according to Charles Baron, the co-founder of FBN.
“If farmers can capture the changing aspect of the food system,” producing traditional commodities won’t be their only option, Baron said. “Consumers are going in the other direction, buying more specialty products and buying for environmental reasons.”
FBN aims to create an online, digital, independent farm economy where members can buy farm chemicals and seeds, obtain credit and financing as well as find buyers who want to buy directly from farmers. It also offers a data network, so members can access farm analytics and agronomic advice.
While traditional crops have been stuck in a rout, organic prices have been on the rise. Organic feed corn in Iowa is fetching about $10.90 a bushel this month, the highest since mid-2015 and more than double the price of conventional corn, U.S. Department of Agriculture data show. Organic soybean prices are near a two-year high.
Consumer demand for organic food continues to grow. U.S. retail sales climbed to a record $45.2 billion last year, up 6.4% from 2016, according to the Organic Trade Association. That compares with a 1.1% increase in the overall food market.
“If you can take the complexity and the confusion out of the transition to organic, so a farmer has more security in making the transition, you start to make organic more of a turnkey opportunity for a farm,” Baron said. “There’s a real business reason to be doing this.”
--With assistance from Megan Durisin.
To contact the reporter on this story: Lydia Mulvany in Chicago at [email protected]
To contact the editors responsible for this story: Simon Casey at [email protected]
Millie Munshi, Steve Stroth
© 2018 Bloomberg L.P