By
Jim Steffen
Without successful farmer-owned retail brands, only a few local consumers can support locally owned farms and food processing operations. And without extensive consumer support, smaller landowners and farmers cannot pass profitable farms on to the next generation. In fact USDA research points to continued loses among small farmers who depend on commodity markets and off-farm income.
However, research from Iowa State University shows clearly that farm profits are better when farmers own retail food brands. According to the Organic Trade Association, consumer demand for specialty and organic foods is in place and increasing at rates that consistently exceed conventionally produced foods.
But so far, small farmers and landowners have not reached consumers in numbers. The fact the small farmers often do not own land is not main problem. Nor is a lack of financing directly responsible.
It’s the Business Model
The single biggest barrier to living wages from farming is the prevailing small farm business model. All of us, consumers and farmers alike, assume that small farmers should grow, process, and deliver their own produce to consumers. This idea is a throwback to pre-industrial ages when the unit costs of production and the food security needs of big cities where not considered.
To be clear, I enjoy farmers markets and local food restaurants as much as the next person. My dad delivered certified organic and Biodynamic produce to white tablecloth and casual dinning restaurants in Omaha for over 20 years. But these venues never worked as profit centers for Dad or other small producers, in spite of the best efforts of small farm advocates, local cooperatives, and aggregators. My dad could afford to subsidize the local food system because he retired with benefits from a long career as a farm manager and because of my mother’s investments.
In contrast to the prevailing small farm business model, low unit costs are essential to major retailers like Walmart, Costco, Kroger, and smaller specialty grocers. These low costs are often the expense of land and labor.
To help hold down costs, national and multi-national food companies rely on a well-established network of conventional and specialty commodity suppliers and food manufacturers. In turn, these intermediate firms are supported by networks of real estate firms, equipment dealers, seed companies, and banks as well as non-profits and government agencies, among many others. This system is unlikely to change without new forms of competition.
Farmland Leasing and Farm Management Companies
This competition can start with small landowners and farmers who work together to build new economies-of-scale using local farmland leasing companies controlled by landowners.
We also need farmer-controlled companies that manage farming operations and handle marketing for landowner-controlled leasing companies.
Formal leases between one farmer and a group of contiguous or nearby landowners, in combination with the landowner requirements outlined below, offer landowners a practical way to rebuild their soils and pass profitable farms on to the next generation – without new debt and without selling land.
As explained on pages two and three of this website, our regenerative production units will use beef cattle in rotations with specialty and organic field crops. In time, these rotations will include fresh fruit and vegetables. We will also work with landowners, farmers, and local investors, in the same room, to fund capital and operating requirements.
Until farmer-owned brands are in place, return on investments will come from reduced operating costs and new income from conventional , specialty, and organic commodities. These contracts can include crops, livestock and fresh produce.
Farm Management with Marketing Companies
This business model requires farm managers with proven business and marketing skills and a commitment to regenerative and organic agriculture. These producers will work with our business partners and contractors to implement business plans approved by production unit landowners. These plans will include detailed production estimates with costs and income projections from commodities, and in time. from farmer-owned direct sales and retail food brands.
Business Planning
As described on page 2 of this website, our company will use publicly available data along with landowner cost and income estimates to prepare preliminary business plans. With our help, these plans will be refined by landowners and farmers for use in public information programs designed to attract local investors.
Landowner Requirements
Before discussing incorporation and legal issues surrounding the proposed companies, I am asking farmland owners to consider a tentative list of requirements for participation, including:
• The ability to retain ownership for five-to-seven years
• Negotiate individual operator leases with profit sharing
• Participate in:
– Farm-level enterprise accounting systems
– Farm and production unit business planning
– Public and investor information programs
– Market strategy meetings
• Incorporate farms
• Enter legally binding farmland succession agreements
Because local investors will be asked to help cover new capital and operating costs, owners cannot sell or otherwise transfer control of their land for at least five years. In return, landowners will receive competitive lease rates with profit sharing options from lower capital and operating costs and better commodity contracts. Our farm and production unit business plans will include costs and income projections for converting conventional farms to regenerative methods.
Benefits to Landowners
Farmers’ ability to pass land from generation to generation within families and communities is essential to financing local farm economies that can support health care, schools, and roads while rebuilding soil, water, and wildlife resources. Production unit farm leases can provide competitive returns without potential tax issues and loss of family control associated with outright sales and land trusts.
Please contact me to learn about our demonstration projects.
Thank you.
Jim Steffen, President
Massena Corporation
402-317-2639
jim@massenafarms.com
Posted 6-12-25