This page explains how we intend to expand organic production and food processing for Omaha area grocery stores, restaurants and institutions. Our business model depends on farmer-owned food brands, modern leasing programs and local investors. The following section explains the need for a new business model in sustainable agriculture.
The vast majority of small and medium-income cattle farmers and ranchers who raise organic, non-GMO and other types of high-value specialty crops and livestock are losing ground – literally. They cannot earn enough through existing specialty commodity markets to care for our soils, water and wildlife, fund their retirement accounts and work on succession plans with young farmers. Further, direct sales through farmers markets, CSA’s, restaurants and the Internet have failed to increase farm income and profits in any measurable way. Farmer-owned food brands are needed to increase farm profits.
As shown in this USDA report, larger owner-operators have been able to reduce costs and improve margins by taking on debt to purchase more land and new technology. As indicated in this same report, small and medium-income producers are already in financial trouble. More debt is out of the question.
It is clear that sustainable farmers must reduce unit costs and improve profit margins, without taking on debt. Stated differently, we are in serious need of a new business model that can attract qualified investors to local and regional organic food production and processing.
Massena Farms Business Model
Our business model starts with a local marketing partnership. This farmer-controlled company will operate under the Massena Farms banner. We will develop our local supplies lines by negotiating forward contracts with established commodity buyers. Direct sales, retail grocery and food service markets will be developed once our local pasture, hay and grain stocks are sufficient.
Our main goal for this partnership is to increase farm profits by capturing a measurable share of local and regional organic commodity and retail food sales. Consumer demand is strong. Omaha and Kansas City area consumers spend a combined 300 million dollars a year on imported (non-local) organic food (USDA, Census and OTA).
Investor Continuum with Farmland Leases
With management by the partnership, we intend to combine funds from an “investor continuum” that includes risk capital, market rate lenders, government and private guarantors and foundations. This spreads risks while attracting new money to commercial scale farms and ranches.
We are also using long term leases that provide steady income to landowners who convert to organic methods, or expand existing organic farms. In time, the income from commodity and retail sales will be combined with additional funds from the investment continuum to help young farmers take over from older producers and landowners. Please go to chapter 2 in this report by the St. Louis Federal Reserve for more on the investment continuum concept.
Our partnership will manage marketing, production and processing in a tightly defined geographic area. This reduces operating costs and offers investors and landowners a close-up view of organic operations and the financial results.
Other Lease Types
In addition to standard farmland leases, we will work with established firms to develop leasing programs for buildings, equipment and livestock. Again, this spreads capital and operating risks while allowing young farmers to move toward ownership. Leasing also offers tax advantages to investors while improving current ratios and cash positions for producers.
Slow Money Principles will govern partnership business relationships and operations.
The next page describes our demonstration project. Please call or e-mail for more information.