A new ‘Ag of the Middle’ program helps small producers scale up so that they can compete in a food system designed to benefit larger farms.
A new ‘Ag of the Middle’ program helps small producers scale up so that they can compete in a food system designed to benefit larger farms.
June 11, 2019
Four years ago, Christina and Zach Menchini started Campfire Farms, 30 miles south of Portland, Oregon. They decided to raise pigs on pasture to support animal welfare and replenish the soil after decades of pesticide-heavy Christmas tree farming.
They slowly ramped up production—from 20 to 40 to 60 pigs—over their first few seasons, selling the pork exclusively at three different farmers’ markets. While Christina loves the customer connections that retail markets provide, and the Menchinis were able to charge a premium for the meat they sold, they soon realized they needed to take a hard look at the financial sustainability of their business. Growing the business was daunting. The couple apprenticed together at an operation based on the farmers’ market model, and the wholesale market was uncharted terrain. “It was hard to imagine what that would look like,” she says.
The Menchinis are far from alone in this challenge. The hollowing-out of the agricultural middle has been taking place for several decades, as American farms have grown and consolidated at a rapid pace. The 2017 Agriculture Census data recently out confirmed the continuing decline of medium-sized family farms, as the overall number of farms dropped by 3 percent and the only categories that saw any growth were very large and very small operations.
“If we don’t invest in beginning farmers and the advancement of our family farms, and if we don’t put checks on increasing consolidation in agriculture, we’re going to be at risk of losing the ag of the middle entirely,” said Juli Obudzinski, National Sustainable Agriculture Coalition Interim Policy Director, in a recent statement. “Seventy-five percent of all agricultural sales are now coming from just 5 percent of operations.”
Over the years, a number of experts have written books and formed think tanks to address agriculture’s shrinking middle, but as many of the men and women running the remaining mid-sized farms are looking toward retirement, the most important question may be how to best help farmers like the Menchinis grow to take their place.
The Ag of the Middle Accelerator Program from Portland-based nonprofit Ecotrust aims to do just that. The two-year program helps smaller farms, ranches, and fishermen grow to gross between $100,000 to $3 million. And it hopes to build a model that can be borrowed and reproduced all around the country.
While there are no hard and fast rules dictating farm size, mid-size operations tend to be regional, somewhat diverse operations that negotiate prices with their customers in restaurant, retail, or at institutions, while large farms are typically less diverse, operate globally, and make millions selling to processors, brokers, or distributors for a price that is set by the market.
“One of the main differentiating factors between small and [mid-size] producers is that they are moving beyond direct-to-consumer models and selling via wholesale, retail and institutional channels,” says Ag of the Middle program manager Maia Hardy. When a farm makes that transition, they must make a series of quantum leaps—producing more food, hiring more labor, securing more land—and they have to do it all at once. “It’s really difficult to navigate all those pieces while running a profitable business,” says Hardy.
To help smaller producers make their operations cost-effective, Ecotrust also created a food hub, complete with 2,000 square feet of cold storage, food preparation space, office space, and B-line, a bicycle-based distribution system to help small producers efficiently store and transport their wares within Oregon’s biggest city. But the Menchinis, who were among the first participants in the program when it launched in 2017, have found its business boot camp most beneficial.
This year, Campfire Farms will raise 100 pigs and several flocks of chickens and ducks, as they expand their wholesale business to match their retail offerings. “We’re already a lot bigger than I was capable of imagining pre-Ag of the Middle. It seems possible to keep our values of small farming and to grow, given the infrastructure in place here,” says Christina Menchini. A number of Portland-area restaurants are eager to buy local pasture-raised pork, yet there are not enough farmers who can provide it. “We hope to figure it out,” she adds.
Before the program, Menchini says she believed “if I invested money and worked my ass off, I’d start making a profit and everything would be fine.” But she learned just how expensive it is to start a business and that it is normal to need access to outside funds as it grows. Previously, Menchini took out loans to help pay business costs; now she plans to apply for a value-added producer grant from the U.S. Department of Agriculture (USDA).
Last year, Ecotrust helped nine producers apply for similar grants. Five of those were awarded, for a total of over $1 million. And that’s just one metric of success. So far, 30 participants have gone through the program—17 farmers and ranchers as well as 13 fishermen. Preliminary data for the first cohort of 13 showed they had increased their collective gross sales by $97,841, and created 53 new jobs.
Most of the limited funding and resources that exist to help farmers are focused on beginners, says Poppy Davis, an Ag of the Middle instructor and a food and farm business advisor. The USDA spends about $17 million each year on beginning farming and ranching programs—and most of that money funds farmers in their first three years, says Davis. (Participants in Ecotrust’s program have typically been in business for three to 10 years.) It’s no wonder the greatest focus is on attracting beginning farmers, given that the average age of farmers continues to rise—in Oregon, it is 60—and a massive handover of farmlands is expected in the next 20 years—64 percent of lands in Oregon, explains Hardy.
“It takes little effort to go from zero knowledge to some knowledge,” says Davis. “It’s much harder to focus on advanced beginners.” For example, people who have been farming for three to five years typically need to overhaul their accounting systems without interrupting their operations. “It’s really hard to get in there while the car is still moving and rebuild the engine,” she says. There are also regulatory and labor issues to take into consideration to reach the middle.
“The newly-released Ag census data shows the disappearance of mid-sized farms—15 percent decline overall since 1992—which just solidifies the importance of our work,” says Hardy. Unfortunately, Ecotrust’s program is one of only a few such preventive maintenance stations that exist nationwide. Others, such as California Farm Link or The Carrot Project in the northeastern U.S., also aim to share the financial skills necessary to help farmers create profitable operations. “The need is out there… but there are not many organizations geared to that work,” says Davis.
Why invest in mid-sized farms? Ecotrust’s research found that these operations may be pivotal to helping regional regenerative agriculture reach a meaningful scale. The Ag of the Middle program focuses on value-added operations because they have the greatest likelihood of being sustainable—environmentally and socially.
In 2016, Ecotrust published “Organizing to Rebuild Agriculture of the Middle” to increase regional farming resilience. Mid-sized producers interviewed for the report farmed in ways they considered sustainable—to support the environment, animal welfare, and labor force. While 13 of the 18 producers interviewed had organic certification on at least part of their operation, most reported spending money and time to adopt practices stricter than the National Organic Program. And those producers who could pay their workers more than minimum wage did so and offered other worker benefits—even if it meant a cut in short-term profits.
By contrast, “most beginning farmers may make a living, but they are working way too hard with no end in sight,” says Davis. The key, she says, is to get into something specialized and high-value—be it Chinese medicinal herbs, flowers, nursery starts, mushrooms, or meat production. “The easiest way to get into farming is growing straight-up vegetables, but that’s where all the competition is,” she says, making it challenging to support a full-time salary over the long-term.
Taking this advice to heart, Tyson Fehrman and Jon Steiger, owners of By George Creamery in Jacksonville, Oregon, make artisan cheese rather than selling their milk. They are slowly growing their operation: The duo started in 2008 with one milk cow; now they have 20 cows, 20 ewes, and a flock of 100 ducks to satisfy rising demand for their eggs. “You have to go that extra step to charge more,” says Fehrman, who is looking to expand. “We need to grow enough to buy the 85-acre farm we’re on—and that means we need[ed] to hire people,” says Fehrman.
The Ag of the Middle graduates were awarded a $250,000 value-added producer grant, which allowed them to hire a cheesemaker and salesperson. Fehrman, like many producers, prefers farming to poring over balance sheets—but it’s a necessary evil. “You can have all the passion and a great product, but if you are not making a budget or paying attention to marketing, you are going to fail,” he laments.
And there are so many ways to fail, especially as businesses grow. “If I can get to someone early and give them the right information about paying laborers as contractors versus employees, filing property taxes, or handling environmental issues, I can help prevent them from getting slapped with a giant fine,” says Davis. “In California and Oregon, there are significant labor violations that would put you out of business or close to it,” she says.
Davis also finds that small farmers don’t always see the value of investing in major equipment, such as tractors. However, “$500 spent on a tractor has a longer life than spending money on seeds,” she says. “Farmers can’t simply make a living off their physical skills anymore; they have to be highly analytical and strategic.”
Land-based farmers have distinct advantages, however. Land appreciates over time and the markets for meat and produce are relatively close by. Seafood producers must navigate rougher economic waters—from boats that lose their value as years tick by to highly perishable products from remote locations. In Alaska, for example, bigger boat size often translates into bigger profits. Boats between 100 and 200 feet in size can expect to make between $3 and $14 million, on average, selling their catches to big distributors, while 30- to 50-foot vessels reel in $60,000 to $100,000.
A number of seafood producers want to sell direct to customers and get a better price—but it’s more work, says Tyson Rasor, Ecotrust’s fisheries and food systems program manager. Still, “there is plenty of room for growth to get into [direct-to-customer] markets,” he says.
Even though customers want stewardship and traceability in the fish they eat, fishermen struggle to connect with customers. “All small, direct seafood producers run into the same issues—how to distribute their product, especially if we’re not or don’t want to be, part of big distribution networks,” says Malena Marvin, who with husband Eric Grundberg started Schoolhouse Fish Co. with their 42-foot vessel, the Happytime, in Petersburg, Alaska, in 2015.
At the time, the price of Coho salmon was super low. Fishermen had to catch so many to make a living that it put unnecessary pressure on the fishery. Given that shifts in global market forces can translate into erratic dock prices, she recalls thinking, “How do we create a more predictable and consistent business?”—especially when a producer has the expense of shipping what is essentially a small freezer. To be as economical as possible, Marvin created fish clubs and shipped salmon in bulk via Alaska Airlines cargo to friends who could pick it up and distribute to their friends. “We’re part of a shift in Alaska towards getting more value for less fish,” she says. They sold 5,000 pounds direct to eaters last year, compared to 500 pounds their first year.
Drifters Fish, another company run by an Alaska-based husband-wife duo, took a different approach. Michael and Nelly Hand launched the business in 2014 with a 31-foot boat called The Pelican to bring in year-round fishing income, rather than succumb to the summer boom-bust cycle. They sell fresh salmon during the season, pre-sell frozen salmon to deliver in the fall, and smoke salmon to sell throughout the year. It’s not hugely profitable yet, but Michael Hand is optimistic. “There will still be bad years, but when we have smaller salmon returns we can add value, versus just taking the wholesale price at the dock,” he says.
Competing against large companies isn’t easy, however. “It’s expensive to put fish in a can and smoke it,” says Hand.
Fortunately, some customers want to know where their food is coming from and who’s behind it. Figuring out a way to make these connections part of the larger food system is key—and it will take all different sizes of operations to make that happen, says Hand.
That size diversity is what Ag of the Middle aims to bolster. “This program is important and should be replicated in every hub where there is a farming movement,” says Menchini.
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