A Farmer-Controlled Business Model for Regenerative Agriculture

This page explains the business climate for sustainable farmers in the Missouri Valley and describes our producer-controlled marketing partnership for regenerative agriculture.

Business Climate

Most Missouri Valley 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. Nor can they fund retirement accounts and successions plans for young farmers. Further, direct sales strategies have also failed to measurably increase farm income and profits because they do not earn enough to build local economies-of-scale (see previous page).

We need  new business models in local sustainable agriculture that work within the existing food system(s) to incentivize better marketing, local profits and far more production. It is important to work within the established system because its various members control both the grocery and food service markets at the national and international levels.

Since these systems are constantly subject to technological, social and climate changes, the locations of farms, food processing plants and consumers also change and reshape food supply chains. Over time, new technologies like irrigation, railroads, interstate highways and computers (to name just a few) have steadily increased the physical distance from link to link in the U.S. and world food chains. Closer to home, as rural banks, meat and dairy processing plants and commodity markets closed in the Missouri Valley, food production and processing moved west and south toward inexpensive land, water and labor. Please see Why the Milk Train Stopped for more on this subject.

The main links in the food chain are still in place, although often invisible to farmers and consumers. They include: 1) Farm input manufacturers, 2) Farmers, 3) Food manufacturers, 4) Food retailers, 5) Labor associated with the four previous links, and 6) Passive, non-local investors, investment groups and large banks that finance all food chain operations.

Of the six links, large food retailers have an outsized influence on local food systems for two reasons. They control food sales in all major metropolitan areas, and they influence commodity prices across the country. Since farmers are price takers in specialty and conventional commodity markets, they can stay in business only by continually reducing unit production costs.

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 we must reduce our unit costs and improve profit margins, without taking on debt. Stated differently, we are in serious need of new business models that can attract qualified investors to farmer-owned food brands capable of competing with imported (non-local) brands in near-by urban markets.

Producer-Controlled Marketing Partnerships

In response to the above issues. we are developing a partnership marketing model grounded in local control of land and financial resources. The ultimate goal is to cement lasting relationships with large numbers of urban consumers in nearby cities. In effect, we are placing a new link in the food chain, one that will reduce food miles and costs for food retailers and consumers while rebuilding soil, water and wildlife resources for future generations.

Slow Money Principles  including one vote-one member decision making will govern partnership business relationships.

The next page describes a demonstration project.  Please call or e-mail for more information.

Thank you.

Jim Steffen

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