So,
you want to be a full-time farmer but can’t find enough land. If you are
resigned to working off the farm to supplement your farm income, I’ve got news
for you. According to Iowa
State University
farm income figures for October of 2007, a 177-acre organic farm can generate
$45,000 in net profits – that’s $40,000 for living expenses and an additional
$5,000 for land payments or savings.
Agriculture
Economist Craig Chase compared commodity (corn and soybean) production to organic
(corn, soybean, oats, alfalfa) to learn the organic farm was five times more
profitable. The commodity farm was earning $52/acre and needed 865 acres to
generate net income of $45,000.
With
a price of $3,500/acre, this farm needs $3 million in land investment compared
to only $650,000 for the organic farm. With average machinery costs of
$250/acre, the commodity farm needs $216,000 compared to only $44,000 for the
organic farm. If time is your concern, the same Iowa State
data shows the organic farm needed 320 hours of labor compared to 865 for the
commodity farm.
What
makes all this possible is the premium prices and lower input costs such as
technology fees, fertilizer, and pesticides. Management skills and crop
rotation compensate for the lack of fertilizer and pesticides.
As
we know, commodity grain prices have been anything but stable in the past eight
months, but organic prices have increased to maintain a 100 percent premium. I
cannot predict what harvest prices will be, but it is possible today to
contract organic feed-grade yellow corn at $9-10; soybeans are $16-20; wheat is
$10-12. These prices, courtesy of West Plains Company (www.westplainsco.com)
are FOB the farm (picked up on the farm). Food-grade prices are normally priced
10-20 percent higher.
These
are some of the issues that spurred Woodbury
County, Iowa, to
offer a real estate tax rebate to farmers transitioning to organic production. Nebraska’s Natural
Resources Conservation Service (NRCS) offers transition incentives of up to $75/acre
to transition cropland to organic status through the EQIP program.
For
details on the National Organic Program (NOP) rules, visit the USDA’s home
page: www.usda.gov, click on “Agriculture,” then Organic Certification. For
more information on the NRCS EQIP Program, contact your local NRCS office.
Or contact, Martin Kleinschmit at
the Center for Rural Affairs, martink@cfra.org, 402.254.6893 (our Hartington
office).
