My children and I own two small farms in the Omaha area. Like millions of other small farms, ours have been losing money for years because we lack the resources to compete in nearby food service and grocery markets.
We are not alone. According to the USDA, 93 percent of small farms bring in less than $1m per year. Together they earn just 36 percent of the U.S. total gross cash farm income. The biggest farms, the other 7 percent, earn over 64 percent of the total (ERS Charts 7 and 8).
As small farmers we cannot compete against non-local food brands in high volume local markets because we lack financial backing required to scale up production, processing, and marketing. Marketing is the most important of these elements.
Farmers markets, the Internet, and other local venues are good places to test consumer demand. However, small farmers cannot afford to use these venues to build enough lasting consumers relationships to stay in business. Government agencies can certainly help local growers build consumers demand. Most state and local government help fund public markets and some offer grants, tax incentives, and budget items for educational programs. However, state and local governments cannot become directly involved in the private sector food business.
The responsibility to lead on local and regional consumer market development rests with retired farmland owners and working farmers. To do this job, we need effective business and marketing services that we help design, fund, and manage.
To meet this need, we are inviting retired and working farmers to incorporate two types of companies. We are starting with affordable local “regenerative production units.” A larger regional farm management and marketing company is described below.
Regenerative Production Units
These units include contiguous and neaby farms leased for five to seven years to one operator by the owners. These larger more efficient farms will not carry new debt because they are leased, not owned. The owners will receive competitive lease rate adjusted for inflation. Our two Omaha area farms are past of production unit demonstrations.
These are primarily marketing companies controlled by landowners and managed by farmers selected by the owners. Their work includes organizing farmland with and food processing for local market research, business planning, and community education projects.
A Regional Farm Management and Marketing Company
We also need regional business services to organize crops and livestock for commodity buyers and for farmer-owned retail food brands that can supply nearby cities. Once several production units are in operation, we will incorporate a producer-controlled farm management and marketing company. This company will,
1. Manage product and market research for commodities and farmer-owned retail food brands
2. Manage accounting and audit trails for crops and livestock
3. Prepare periodic financial reports for key food system shareholders and stakeholders
4. Educate farmland landowners, farmers, and local elected official on benefits of planned farmland succession
This regional service company will probably be organized as a non-profit or pass-through LLC. It will not own or manage farms, commodities, or food brands. Nor will it lend money, manage, or recommend food system investments. Its work will be controlled by the voting members of local production units.
This two-tiered service model (local and regional) will put well prepared groups of farmland owners and working farmers in direct control of high-volume and high-value local commodity contracts, and most importantly, set the stage for product and market research for new farmer-owned retail food brands.
Local Investors
Scaling up production, processing, and marketing for local retail markets requires lasting relationships with trusted local investors. With the production unit business model, investors will sit at the same table with landowners, farmers, food processing, and local retail managers and owners.
To reach these investors in large numbers requires carefully planned cooperation among local landowners and farmers. Although city and county governments cannot fund new farms and food processing operations, I am asking local elected officials in the Omaha area to host educational programs led by production unit landowners and farmers.
Massena Farms
Until the first production unit is incorporated, my family farm corporation (the Massena Corporation registered in Nebraska) will handle market research and planning. I am inviting neighbors near our two Omaha area farms to organize the first production unit. If there is sufficient interest, my business partners and I will start work on preliminary business plan to test the economic viability of the proposed units.
Draft One: Preliminary Business Plan
Farm and production unit business plans will go through several drafts in order to reach local consumers with the right products and price points. With letters of agreements in hand from landowners, planning starts by inviting experienced farmers to consider managing the proposed production unit.
Our company will advertize for unit managers and answer questions before information meetings are scheduled. Landowners will host these meeting. Thes meeting will conclude by asking interested farmers to call me or one of my partners to schedule farms visits.
These visits will allow potential operators to learn more about our company and understand how different farm sizes, soils, terranes, and distances between farms will affect capital and operating costs and income. These differences require separate leases for each farm.
As the confidential agent for each landowner, we will use the bidders’ lease terms to draft a business plan for each farm and a separate plan for the unit as a whole. This partial draft will include capital, operating costs, and income estimates using publicly available crop and livestock data.
We will NOT share farm-level data among participating landowners or with the farmers who might bid on unit management contracts. First drafts will show only aggregated numbers.
Draft Two: Preliminary Business Plan
If the landowners think our first draft looks promising, we will discuss the results with local commodity buyers. Depending on landowners’ desired crops and livestock combinations, we will meet with local food processors on the costs and timing to prepare new products for local consumer market tests. These informal discussions could include grain, beef, and fresh produce.
Local and Reginal Cooperative Marketing
Lasting relationships with commodity buyers are essential to building production capacity for local farmer-owned retail food brands. Once two or more units operate in the same area, we will prepare new business plans. These plans will ask commodity buyers about their interest in pooled field crops and beef cattle from nearby units. Page 2 on this website explains why beef cattle are important to regenerative production units. We will also look for volume buyers of fresh produce for local food service, restaurants, and grocery stores.
Data Collection, Analysis, and Reporting
Our company will provide market information, accounting, and audit trail services for each farm, production unit, and pool. As above, aggregated data will be held in confidence.
As it is now, unmanaged consolidation and speculation have driven up land prices and turned millions of farmers into low paid farmhands. However, big farmers and food companies are not the cause of small farm failures.
Smaller farms are unprofitable (ours included) because the owners and operators lack retail market access. Lower costs, more volume, and better commodity prices, will set the stage for profitable farmer-owned retail food brands. Without extensive local consumer support, smaller farmers will continue to go out of business.
More Young Farmers?
For those who say, “wait a minute, combining farms means fewer farms and fewer farmers.” That’s true if production unit farm managers raise only corn and beans.
But diversification within and across production units is essential to support a variety of specialty grains, fresh produce, and beef for high-valve commodity buyers and nearby urban consumers. All this will require many more farmers with specialized skills in regenerative and organic production and retail marketing.
Our production units will help experienced and young farmers increase ownership rates by increasing farm profits and household incomes from farming. This new money will come from production unit economies, regenerative and organic farming methods, and from better upstream sales.
Incorporating Smaller Farms
Farms must be incorporated to keep local ownership chains intact from generation to generation. Production units will also be incorporated.
Briefly, incorporating family farms, 1) Helps landowners decide who will run the farm, 2) Creates rules on distributing farm profits to operating and non-operating family members, and 3) Requires shareholders to decide who will represent the farm corporation on the production unit board of directors.
Production unit bylaws will govern how the unit operator is selected and define the duties of the operator and board members. The bylaws will also govern how multiple production units work together to compete in commodity and retail markets.
Our company does not offer legal or financial services. Instead, we work with landowners’ advisors by suggesting legal and financial structures that can be refined as needed. Local professional services are a critical part of maintaining family farm ownership within experienced farm families and farm communities.
Public Information and Local Risk Capital
With preliminary business plans in hand and with our support, landowners and production unit managers will host public meetings to attract trusted local investors. These meetings will be followed by private meetings with each landowner and family to evaluate the results of public meetings. The family meeting will include legal and financial advisors.
With sufficient investor interest, preliminary business plans will be refined prior to contract negotiations. These negotiations will include landowners and farmers (with their local advisors) along with commodity buyers, direct sellers, and of course, investors.
Community Economic Development
Our business strategy depends on building lasting relationships with trusted local investors. Profitable local food systems require local risk capital investors to sit at the same table with landowners and farmers. Our job is to facilitate these relationships.
Since landowner-controlled production units are a new concept in agriculture, we will not ask landowners and farmers to pay for planning services, as described above.
We will not accept fees for real estate transactions, farm planning, marketing, accounting and related services. Nor will we accept payments from vendors, lenders, and investors. Our goal is to support our services by negotiating a share of the net profits from commodity and retail sales.
In the meantime, we are asking city and county governments in the Omaha area to cover our out-of-pocket planning costs.
Page two on this website explains our marketing program in more detail.
Page 3 summarizes my qualifications, introduces my business partners, and outlines my family history in farming.
Please contact me for an appointment.
Jim Steffen, President
Massena Corporation
402-317-2639
jim@massenafarms.com
Revised: 07-01-26