Category : Economics

Interviewed by Chris Martenson

We’ve been getting a lot of great feedback on Craig’s recent interview with Chris Martenson of Peak Prosperity, which is available here as both a Podcast and a transcript.  From emails it is clear that listeners have gotten some “a ha” moments out of it, such as:

  • Seeing how Farmland LP helps young farmers get started by providing access to high quality land they don’t have the capital to buy themselves.
  • Appreciating the integration of livestock and crop rotation, which begins with a Joel Salatin-like livestock model then adds organic vegetables and grains to the mix as the soil fertility allows.
  • The potential to scale this agronomic model over significant area, simultaneously benefiting multiple stakeholders–investors, farmers and eaters–and the environment.

Thanks to Chris for giving us the time to share what we do and why we are so passionate and committed to it.  We’re big fans of his, as he has a way of clarifying complex economic, environmental and energy topics. His interview certainly did that for a number of people.

 

Interviewed by Clean Currents

Thanks to fellow B-Corp Clean Currents for interviewing me.  It was a pleasure meeting them and other B-Corp leaders recently.  Here’s a cross-post from their blog.

Written by Megan Barrett
Tuesday, 20 November 2012 10:41
Back at the B-Corp Champions Retreat, we met Jason Bradford of Farmland LP. After chatting about sustainable food and the future of US farmland, we were hooked on the mission of Farmland LP. We sat down with Jason to learn more about Farmland LP and their unique model that cultivates farmland sustainability.

Jason Bradford Farmland LP                      Jason Bradford with Mac Stewart of Vitality Farms.
Vitality Farms leases Farmland LP land in Oregon to raise sheep and cattle.

Clean Currents: What does Farmland LP do and why is it important?

Jason Bradford: Farmland LP buys farmland and converts it to certified Organic, sustainably managed farmland as an investment fund, similar to a REIT.  We specialize in sustainable agriculture and integrating crop and pastured livestock rotations.  Our goal is to play a role in the transformation of the food system while benefiting the environment, supporting quality jobs, producing healthy food, and returning a financial profit for our investors.

Organic food sales in the U.S. have been growing between 15-20% per year since 1990 and yet the rate of conversion of U.S. farmland is lagging far behind.  Organic food is therefore more likely to be imported, and yet people also want local food.

Meanwhile, the American Farmland Trust estimates 50% of all U.S. farmland will change ownership over the next 15 years, representing about $75 billion dollars of farmland sales each year.  Now is the opportunity to alter how the land will be managed for the next generation and beyond.   We need to give already established Organic farmers room for expansion, encourage conventional farmers to adopt Organic practices, and we need places to start for a young generation of farmers who haven’t inherited land.

Clean Currents: What motivated you to start this company?

Jason: When I was a research biologist I had the good fortune to travel the world and see first-hand how humans had a fundamentally dysfunctional relationship with the natural world.  Agricultural is intimately connected to the environment in ways people can understand directly.  So if I can help build a healthier system of farming it would go a long way towards promoting a shift in the cultural mindset.  The best civilizations don’t dismiss and dominate nature, but find their place and peace within it.

Having a more synergistic rather than conflictive relationship with nature also translates into better financial performance.  The conventional farming practices of today come from an out-of-date “get rich quick” mindset that doesn’t account for what we have learned over the past fifty years in the fields of ecology, genetics and complexity, and doesn’t reflect the current facts of high input and energy costs and a changing climate.  So when our fund has demonstrated greater profitability due to our practices at scale, the broader agricultural industry will take notice.

Clean Currents: Do you think it’s more important to shop locally or to shop organically?

Jason: The best thing you can do is shop seasonally within your locale, always favoring Organic producers or producers you know first-hand are using good practices.  If it is out of season locally, it gets more complicated.  First, it’s beneficial to purchase unprocessed or only moderately processed and packaged whole foods.  An Organic TV dinner or soft drink is really not much better for you or the environment than a non-organic version.

Health-wise, Organic and ideally pasture-based, is the way to go.  Energy-wise, the shipping of grains and meats is typically only around 10% of the energy cost in life cycle analyses of food.  Yet for off-season fruits and vegetables, local production using greenhouses can be very energy intensive.  In short, good Organic or pasture-based producers are saving a lot on fertilizer inputs ( typically 30% of the energy cost of food production) and should be rewarded no matter where they are.

Clean Currents: What can our readers do to support the development of organic agriculture in the US?

Jason: People most care about sustainable agriculture producing healthy food.  The Organic label is important, but there are other ways of producing great food.  And, in the end, people have to know where their food comes from.  People can work on public policy to remove or reduce the subsidies that promote monocultures of a few annual grains, and support policies that encourage healthy crop rotations and land conservation.  When shopping, chose Organic food, especially when it is in season and local, to help maintain the economic incentives for converting land in your area and elsewhere.  And look at opportunities to make your savings and investments, such as retirement accounts, align with your values by investing in or supporting Organic and sustainable companies.

Clean Currents: What’s your favorite organic fruit or veggie?

Jason: Undoubtedly my favorite veggie is a ripe tomato from my own back yard.  Buying a conventional tomato is a complete waste of money since they are nearly flavorless.  I also buy local, organic, heirloom tomatoes from farmers who have hoop houses and can get their tomatoes to market three months ahead of me!

Clean Currents: Is there anything else you’d like to add?

Jason: I want people to be numerically literate and to be able to think at a proper scale when contemplating the unprecedented transition that is going to happen in farmland ownership and management over the next couple of decades.  Hundreds of millions of acres of U.S. farmland will be sold over the next 15 years, representing a present day value of over $1 trillion.

If enough capital is deployed buying farmland with the intention of managing it in perpetuity using agroecological, Organic methods, we will reap a host of other benefits such as cleaning up rivers and estuaries, sequestering carbon dioxide, replenishing topsoil, slowing the evolution of antibiotic resistance, reducing hormone-disrupting pollutants, rebuilding a strong population of bees and other pollinators, and having healthier people in our families and communities.

When evaluating the cost-benefits of systems of production in agriculture it is critical to account for more than just dollars.  Organic farms are generally more profitable, and they tend to externalize benefits, rather than costs, to the broader society.  This is what I am spending the rest of my life working for.

The Many Benefits of Multi-Year Crop Rotations

Farmland LP’s agricultural practices are based on good science and agronomic principles, and a 9-year research project from America’s heartland continues to support what we do.  “Increasing Cropping System Diversity Balances Productivity, Profitability and Environmental Health” is the title of a research paper by scientists from Iowa State University, University of Minnesota and the USDA published earlier this month in the journal PLOS One.

Mark Bittman in the New York Times called this report “the most important agricultural study this year,” saying, “It’s becoming clear that we can grow all the food we need, and profitably, with far fewer chemicals.”  In addition, the report has been covered by WiredGrist, and the Union of Concerned Scientists.  We summarized the work leading to this publication over two years ago, including how it relates to Farmland LP.  The Union of Concerned Scientists blog has a good overview (copied portion below):

  • More complex systems enhanced yields and profits. Over the course of the experiment, average corn yields were 4 percent higher, and average soybean yields 9 percent higher, in the longer rotations compared to the conventional system. Furthermore, the researchers found that the longer rotations were just as profitable as corn-soy alone.
  • Conventional corn-soy rotations require more chemical fertilizer and energy inputs. Fertilizer use was higher in the 2-year rotation than in the more complex systems. And this difference increased over the course of the experiment, with the 3- and 4-year rotations requiring even less of these inputs in the later years, probably due to cumulative improvements in soil quality over time.
  • Diversification controls weeds while slashing herbicide applications. The longer rotations reduced herbicide use by a whopping 88 percent compared with the conventional system, with little difference in weediness. Furthermore, the ecotoxicity of the systems (as measured by the freshwater toxicity of the herbicides used) was 200 times less in the longer rotations. Given everything we know about weed resistance and rising herbicide use on U.S. farms (including this new estimate), strategies that help farmers control weeds with less herbicide are critically needed.
  • Longer rotations substitute labor for other inputs. Some people will no doubt see this as a strike against crop diversification. But with energy costs on the rise and unemployment stuck just under 8 percent, that’s starting to seem like seriously fuzzy logic.

Relevance to Farmland LP

At Farmland LP we describe what we do as converting conventional farmland to Organic, sustainably-managed farmland.  While getting the land certified Organic is helpful for marketing, the broader benefits are in our land-use rotation practices.  Since our full cycle crop rotation can easily span 10 years—five to seven years in pasture or perennial forage crops followed by three to five years in vegetables and grains—it makes it a challenge to scientifically benchmark our soil-biology-driven practices vs. current chemistry-driven practices.

The irony is that our rotation style was the norm for centuries.  Farmers rotated by necessity for thousands of years to maintain soil fertility and lower disease risk.  Agronomy advanced by increasing the number of crops in a rotation, such as the innovation in the 16th century of adding legumes to European crop rotations.  In the mid-20th century U.S. farms averaged five commodities per farm, including crops and livestock.  Only in the past 60 years have farmers had the tools (i.e., synthetic fertilizers and pesticides to deal with the problems of reduced diversity) not to rotate, and now farms are highly specialized with low diversity of about 1.2 commodities per farm (see graph below).  Some see this as modern progress, but at Farmland LP we view this multi-decade chemical binge as an abandonment of centuries of wisdom that is causing both ecological and economic damage.

From defenders of the status quo I can hear the following argument:  “Yields of today are so high that adopting historic practices will put farms out of business and not feed the world.”  To those who understand the research study, this argument is silly.  Current yields are not a result of simplification and won’t be undone by diversification.  We can still use modern crop breeds and modern equipment while adopting soil practices that dramatically lower external inputs and avoid the externalization of costs, such as pollution.  A more diverse system will be a net benefit for the farmer while making the food production system more resilient and environmentally positive.  This has been the position of Farmland LP since our inception, and was a strong impetus for our business.  Our goal is to be a successful model of more diversified, sustainable farming practices that re-integrate crop and livestock production.

A single chart from the paper (shown below) does an excellent job of telling the whole story.  It shows that key production metrics that farmers care about, including profits, yields and weed pressures, are the same or better than conventional in longer rotations, while the longer rotations prevent most pollution and lower the need for synthetic inputs such as fertilizers and pesticides.  Labor costs are higher in more complex rotations, which we view as providing opportunities for meaningful work. Profitability is the same due to reduced expenses for synthetic fertilizers, herbicides and fuel. That’s a good trade that will get better as inputs costs keep increasing.

 One of my favorite paragraphs from the paper is:

Reintegration of crop and livestock production, as represented by the forage legumes and manure applications present in the more diverse systems, is not simply another aspect of cropping system diversification. Instead, it embodies an important principle in sustainable agriculture: system boundaries should be drawn to minimize externalities. Animal manure is produced regardless of whether feed grains are shipped to centralized concentrated animal feeding operations, or produced within integrated crop-livestock farming operations. In the former case, the manure may become a waste product and water pollutant if quantities exceed available land area for field application [33], whereas in the latter case, it contributes directly to crop nutrient requirements, improves soil quality, and reduces fossil fuel subsidies associated with grain transport and external N fertilizer inputs [14].

How Farmland LP’s Rotations Improve On The Research

While the research design and conclusions here are very relevant to what we do at Farmland LP, there are some differences.  Here are a few points of how our systems further improve upon the system presented in the research paper:

  • Certified Organic Price Premiums.  Some synthetic fertilizers and pesticides were used in all rotations, but they were just not needed much in the longer ones.  Taking it just a little bit further would have enabled them to get the Organic price premium in the 4th year and beyond. Even with the potentially higher costs of Organic versions of external inputs when available, the net returns would be higher in a Certified Organic system.
  • Livestock Grazing on Cropland.  The forage crops were mechanically harvested, not grazed.  Farmland LP puts a lot of our land in diverse pasture and  grazes livestock intensively, whereas the research system harvested alfalfa as hay which was then transported to livestock.  The manure of livestock was then brought back to the research plot for fertilizer.  So we differ by having even more plant diversity than the study (better for the soil) and by getting the benefits of direct grazing, such as further reductions in fuel use.
  • More Complex, Longer Rotations.  The study was made feasible by its relatively short rotations of 2, 3 and 4 years.  Our rotations are more complex and reflect more natural economic and biological rotations and durations.  For example, an alfalfa-orchard grass stand should last five years or longer, same as pasture.  Many crop options were not included in the study, such as vegetables.  With our program the environmental benefits should be even greater than shown in the study, including significant carbon sequestration.

We applaud the scientists who carried out the work and the USDA for lending support too.  We certainly hope it leads to more sophisticated discussions among stakeholders in the food system, whether policy-makers, farmers, and eaters of food.  And we thank those who’ve supported us at Farmland LP for your role in fostering much needed change.

 

Google Earth, Rotational Grazing and Mineralization, Part 2

Or, What You See from Space (and What You Don’t)

Part 2 of 2

In the first post of this series, I explained how rotational grazing quickly builds soil organic matter (SOM).  In this second part I discuss the importance of SOM for organic farming.

Mineralization for Organic Farming

Mineralization is the process by which SOM, which consists of large and complex organic molecules, breaks down or decomposes into simpler, i.e., mineral, forms.  These simpler forms are called Plant Available Nutrients, or PAN, and standard soil tests measure PAN levels of various minerals and nutrients.  In conventional agriculture fertilizer is applied to compensate for any measured deficits.  In organic farming systems we can make up for deficits with approved inputs, such as pulverized rocks high in certain minerals and animal manures, but we also rely more on the mineralization process for release of nutrients from the soil organic matter.  In the agronomic system used by Farmland LP, deep-rooted, perennial plants and associated fungi are sown to both increase SOM and access minerals from well below the soil surface and bring them up to enrich the topsoil.

To an organic farmer this means one of the most critical parts of a soil test is the level of organic matter.  Prior to the wide-spread availability of synthetic nitrogen and other fertilizers, farmers essentially used accumulated stores of SOM to grow crops.  The following is a quote and graph from the 1938 USDA Yearbook and was written by University of Missouri professor William Albrecht:

In addition to carrying nitrogen, the nutrient demanded in largest amount by plants, soil organic matter either supplies a major portion of the mineral elements from its own composition, or it functions to move them out of their insoluble, useless forms in the rock minerals into active forms within the colloidal clay. Organic matter itself is predominantly of a colloidal form resembling that of clay, which is the main chemically active fraction of the soil. But it is about five times as effective as the clay in nutrient exchanges. Nitrogen, as the largest single item in plant growth, has been found to control crop-production levels, so that in the Corn Belt crop yields roughly parallel the content of organic matter in the soil (184). On a Missouri soil with less nitrogen than that corresponding to 2 percent of organic matter (40,000 pounds of organic matter per acre of plowed surface soil) an average yield of 20 bushels of corn per acre can hardly be expected. For yields approaching 40 bushels, roughly double the amount of organic matter is required. With declining organic matter go declining corn yields and therefore lower earnings on the farmers investment. Thus the stock of organic matter in the soil, particularly as measured by nitrogen, is a rough index of land value when applied to soils under comparable conditions. According to studies in Missouri, for example, the lower the content of organic matter of upland soil, the lower the average market value of the land.

Original caption:  Decrease of organic-matter content in a fallow, untreated soil in contrast to the gain in soil treated with 2 1/2 tons of red clover annually, representing over 500 pounds annual increase in organic matter per acre.

If you have the time and interest, the entire Albrecht article is very interesting as it gives an historic perspective from one of the most important soil scientists of the 20th century.  Many of his views and insights are still valid today.

SOM values thus have very practical applications, including planning for fertilizer needs.  The linked chart (from an agronomy handbook sent to me by soil testing company Midwest Laboratories, Inc.) shows the relationship between SOM and nitrogen availability.  Here’s the math behind that chart.

Stabilized SOM has a ratio of carbon to nitrogen atoms of 12:1.  As explained by Albrecht, this nitrogen becomes available to plants as soil organic molecules are broken into parts.  The top 6 inches of soil is typically considered to have a mass of 2 million pounds, and so 5% SOM is 100,000 lbs.  The nitrogen is usually about 5-6% of the SOM mass (other parts include C, P, K, S, etc.) and 6% of 100,000 lbs is 6000 lbs of N.  If 2% of this N mineralizes, then 120 lbs is available for plant growth, which is a good amount for most crop types.  The nitrogen has an economic value in that it is a form of fertilizer that farmers don’t need to purchase, giving us an additional source of value from the diverse pasture aside from just the revenue from grazing ruminants.

What Farmland LP does during the conversion of conventional farmland to certified organic farmland is place most of our acres into perennial pasture and/or forage crops that are rich in legumes.  These perennial crops are growing year-round, not just for a season or two like an annual plant, and become very effective givers of organic matter to the soil.  As I’ve explained before and touched upon in the first post in this series, the livestock actually increase plant productivity by grazing enough to foster renewed plant growth 5-7 times per year while depositing manures that activate the soil microbes and speed the nutrient cycle.  Rotational grazing not only leads to 25-50% greater plant productivity than set stocking, but results in perhaps 10 tons of dead organic matter added yearly:  on the surface as manure, trampled leaves and stems, and via the sloughing of roots.  Some fraction of this, about 15-20%, is converted to SOM and thereby enhancing the value of the farmland we manage.

Measuring SOM

We measure soil organic matter in two ways.  The first is through standard agronomic sampling, which is done every 2-3 years and on a broad scale using “Smart Sampling” guidelines to help us plan for fertility inputs and to see how our soils are doing from field to field.  This sampling method gives us a picture of SOM over a wide area, but a shallow depth (6-8”).  For this kind of testing we may sample at a scale of one per every 2-6 acres at a cost of about $20 per sample.  A farm service company manages this sampling, gathering the soil at specific locations that are predetermined with geo-coordinates and so are moderately replicable.  Below is an image of the mapped SOM for our Wattenpaugh Farm as an example.  The area shown is about 90 acres.

The second measurement method is much more detailed, and includes soil properties that should change with SOM, such as bulk density and infiltration.  We select a “representative” site at each property we manage.  A non-profit called Soil Carbon Coalition, run by Peter Donovan, does the sampling work using a protocol meant to be accurate and repeatable.  The goal is to measure change at a specific location, not give us a broad view of the farm and its various fields, and since it is measuring something that changes rather slowly the intention is to re-sample every 2-3 years also.

To see the Soil Carbon Coalition reports for our farms go to this url: and in the “Plot report for:” box type in “FR” for Fern Rd Farm and “FL” for our other properties in the area.

What You Don’t See

We love that Google Earth can take pretty pictures of our farmland, but there is so much happening beneath the surface that a satellite just can’t see, at least not directly.  But as good soil practices spread to cover thousands and millions of acres, it is our hope that Google Earth will be able to see more lush landscapes and healthier waters.

Not only are we invisibly building healthier soil beneath the ground, but we are also invisibly restoring balance to our planet’s atmosphere by creating SOM from the air we breathe.  The nitrogen in our organic system comes from the 78% of the atmosphere that is nitrogen, which is plentiful and free.  The carbon of SOM comes from the carbon dioxide in the atmosphere, which at over 390 parts per million is too high and already changing our climate.  Given the high price of fertilizers made from fossil fuels, and the rising costs to society of the pollution caused by their use, we believe in the wisdom of letting ruminants eat pasture while building wealth and health beneath their hooves.

Google Earth, Rotational Grazing and Mineralization

Or, What You See from Space (and What You Don’t)

Part 1 of 2

A key to the success of Farmland LP is having great livestock managers to make the most out of our high quality pasture.  In Oregon, Mac Stewart of Vitality Farms runs sheep on over 900 acres of Farmland LP property.  And now you can see his work from space.

New Google Earth Imagery

Google Earth recently updated the satellite imagery covering our properties in Oregon.  The resolution is so good that in the image below you can see individual sheep grazing in a paddock.

Our western property boundary is shown with a blue line.  A wheel line (for irrigation) is adjacent to the property line.  Off-white oval specs are the sheep.  They are in a paddock made by temporary electric fencing that is about 160 ft from north to south and 820 ft from west to east, about 3 acres.

To the south of the current paddock is the previous paddock.  It is less green because much of the vegetation was eaten by the flock a couple of days before.  The dark green paddock to the north was set up just prior to when this image was captured.  The sheep will be moved there later in the day.

Shepherd Mac Stewart changes the length of stay for the sheep based upon the size of the flock, the pasture quality and growth rate, the weather, and many more factors—all to encourage the pasture and lambs to grow steadily.  In two separate posts, I’ll explain a number of key concepts in pasture and flock management (Part 1) and how good management leads to an increase in the quality and value of the soil (Part 2).

Pasture Diversity and Productivity

Some people think pasture is just grass on poor quality ground, but great farmland can also be extraordinary pasture in terms of productivity and environmental and economic yields.  There is an entire science behind it.

As a simple example, our custom blended pasture mixes include a lot of plant diversity with the goal of evening out the productivity of the stand over the year, since the sheep need food for 365 days.  For our Oregon properties and their associated climate, the grasses, such as tall fescue, orchard grass and perennial rye grass, do best in the cool months.  To take advantage of growth over the summer we also sow forbs that like it warm, such as chicory and plantain.  Clover diversity, including red, white and alsike, also extends the season of legume productivity.  The chart below (from this University of Arkansas web site) shows how the growth of different forage classes is distributed during the year.  The growth curves in Oregon are not exactly the same as what is shown below, but the concept applies everywhere—add diversity to enhance and spread-out the productivity.

The picture below shows the same location as the Google Earth image above, except viewed from the ground (you can see the lone Oregon Ash tree in the background).  It was taken August 15th, about a month after the Google Earth image above (July 9th), and you can see the plant diversity in our pasture and that it is ready to graze again.  Healthy pasture makes great lamb.

Payse Smith, a student at Oregon State University, is shown above.  He is taking standardized samples of the field to determine the standing biomass.  We use this information to study the growth and recovery rates of our pasture, which ultimately determines the optimal number of animals for the field.  I’ll explain how this works with some illustrative numbers to keep it simple.

Rotational Grazing by the Numbers

A flock of sheep eats about 5% of its body mass in dry matter each day.  If we have 1000 sheep with an average weight of 90 lbs, the total biomass of sheep in the flock is 90,000 lbs.  Multiply 90,000 lbs of sheep by 5% to get 4500 lbs of dry matter per day required for the flock.  Now we don’t want the sheep to eat ALL the vegetation in the paddock, and a good rule of thumb is to only consume half the total biomass so that the pasture has leaves available for a fast recovery.  I explained this in a post from two years ago, and the relevant portion is repeated here:

Pasture experts talk about the S-curve.  This refers to changes in the rate of growth of the stand of plants.  When plants are very small, they put on only a small amount of biomass per time.  But at a certain size, the amount they add each day increases rapidly.  Of course any exponential rate of growth must end, and so growth slows and halts as the plants reach maturity.  S-curves are common in all biological growth systems.  What good pasture management does is keep animals eating much of the pasture before it reaches the mature, no growth stage, but not so much that the pasture has a very long recovery time because the plants have been eaten back to the slow-growth portion of the S-curve.

Back to our example of the flock of 1000 sheep…If the flock needs to eat 4500 lbs of dry matter in a day we need a paddock with around twice this amount, or 9000 lbs.  Since each acre has a standing dry biomass of about 3000 lbs when it’s at the top of Stage 2 in the S-curve, a 3 acre paddock will comfortably feed those 1000 sheep for a day.

This is good forage management and gives us the ability to grow high quality lambs as quickly as possible during the main months of productivity, which here in Oregon is April through October.  But it also does something else very important to the soil.  As the plants grow, are eaten just right, and regrow again—a cycle that repeats up to seven times per year—the soil organic matter (SOM) increases.  Instead of buying in tons of compost per acre, at a cost of many hundreds of dollars, our pasture produces tons of soil organic matter per acre.  SOM does many things to improve soil quality, including increasing water holding capacity and improving soil tilth, and, as I’ll explain in Part 2 of this post, it stores nutrients that become available to plant roots through a transformation termed mineralization.  So even though you can’t see it from space, what is happening below ground may be more beautiful than what is happening above.

Financial Advisor article on Farmland LP: “Organic Growth”

Financial Advisor magazine wrote a great article about Farmland LP at http://www.fa-mag.com/fa-news/11758-organic-growth.html.

FA reaches an important audience of over 90,000 advisors and investors who control over $10 trillion in client assets. According to their client survey, the advisors recommended REITs to 52% of their clients, Alternative Investments to 42% of their clients, and Socially Responsible Investments to 20% of their clients. These advisors play an important role in helping their clients get outside of the over-crowded box of the stock and bond markets, and we’re grateful that FA took the time and effort to write over 1,400 words on us. FA did a great job in communicating how owning farmland generates both land appreciation and cash flow, and how our farmland management practices enhance returns by reducing costs, increasing revenue, and adding diversification vs. chemical-dependent commodity cropping systems. From the article:

“…there has been less attention paid to the escalating cost of inputs that have become de rigueur in conventional agriculture—fertilizer, herbicides, pesticides, GMOs and fuel. According to the USDA’s Economic Research Service, yields increased 30% between l989 and 2009. Meanwhile, the cost of inputs tripled during the same 20-year period.

According to Richard Heinberg, senior fellow at the Post Carbon Institute (PCI), agriculture accounts for 16% of the U.S. annual energy budget—more than any other industry.”

It continues (with possibly the first use of the word “dung” in FA’s publishing history):

Farmland LP is taking that to the next level by incorporating closed-loop systems on diversified, multi-crop farms. The process begins by planting pasture for livestock, which will graze and restore the fertility of the land by depositing their dung.

“Animals are an essential and extraordinary part of maximizing soil fertility and the production of food from an acre of land,” Wichner says. “Rotating land with livestock is a wonderful way to enhance sustainability and investment returns.”

The model is based upon a rotation of specialist farmers around the property at management’s behest. At the firm’s Fern Road Farm in Oregon’s Willamette Valley near Corvallis, for example, there is a sheep farmer, a chicken and hog farmer, and a vegetable farmer.

The farmers lease the land in a profit-sharing arrangement with the firm and its investors, which reduces their risk and lease payments in the event of bad weather.  By having higher value crops, more intensive and diverse use of the land, and the synergies of rotating livestock and crops, Wichner estimates that the revenue per acre will be two to three times higher than it would be with commodity crops alone [cw: sentence corrected].

“We don’t grow just one giant mono-crop,” Wichner says, explaining why the fund’s volatility will be lower than that for conventional cropland. “We get a greater return than commodity cropland, and it has very low correlation to the cost of inputs used in conventional agriculture. But our system for growing is more complex. It’s more management intensive, and it takes more intellectual and physical work.”

They end with a strong big-picture finish:

Wichner’s [cw: and of course my partner Jason Bradford's] model is intriguing because it attempts to solve a host of problems at once—rising oil prices, people’s health, soil restoration and the lack of affordable land for many farmers. At the same time, he’s found a way to scale what had traditionally been a small-scale, diversified farm model into something that’s potentially attractive to investors.

Successful investors and good farmers are more alike than one might think: both know the importance of long-term sustainable investments; both understand the benefits of having both their financial and intellectual capital work for them; and they both benefit from diversification, whether in their stock or crop portfolios. Financial Advisor magazine is helping show Wall Street that sustainable investments are good investments.

Profiled in Sustainable Business Oregon

Farmland LP is getting a decent amount of press lately.  The most recent was last week in Sustainable Business Oregon.

Here’s a bit from the article:

For Cody Wood, a sheep farmer near Harrisburg, the appeal is financial.

By leasing from Farmland, Wood is able to spend more on his flock.

“I’m leasing 125 acres; it’s got $40,000 or $50,000 worth of irrigation equipment on it. I wouldn’t have been able to swallow that cost,” Wood said. “And I can produce a lot of animals on this farm.”

What he pays for his time on the land will depend on what he gets paid for his sheep. Farmland LP shares the risk with farmers, betting that their land will produce higher yields.

“One way or another we have to get farmland available to younger farmers and this is one way to do it,” said Harry McCormick, a Corvallis farmer and co-founder of Oregon Tilth, who served as an adviser to Farmland. “I like that the fact that it’s money coming out of the banking sector.”

Cody and I are in the middle of setting up the irrigation equipment right now and it is indeed quite an investment.  But the payback is also very good as lambs will grow out quickly, to be ready for market in the fall and therefore not need over-winter care.

The article includes a few good pictures, including this one of a baby lamb and ewe taken on May 18th.  Healthy lambs on their mother’s milk may gain about a pound per day.  The newborns will often be walking within an hour of birth and be running around, quite agile and fast, in a couple of weeks.

Thanks to Christina Williams for writing this piece.  It is nice to get some coverage in the regional press.

 

Triple Pundit Interviews Farmland LP

The tag line for Triple Pundit, a sustainable business media outlet, is People, Planet, Profit, which makes them a natural kindred spirit with us at Farmland LP.  Triple Pundit correspondent Bill Roth met Craig Wichner at the recent Investors Circle conference in San Francisco, and today posted an article based their interview.

Embedded in the article is a short video clip of their discussion.  I highly recommend it for a quick overview of Farmland LP’s business strategy.

Inc. Magazine Features Farmland LP

Farmland LP is featured in the May issue of Inc. magazine as part of a special section on How a Business Can Change the World, which is billed as “A special report on the innovative business models social entrepreneurs are inventing.”  We at Farmland LP enjoyed the process of being interviewed by Inc. staff, we appreciate their interest in what we do, and we are pleased to be one of the companies featured in their report.  Here’s the opening paragraph of the main article:

It used to be that if you wanted to make a difference, you joined a nonprofit. And if you wanted to make money, you launched a business. These days, it’s not so simple. More nonprofits are being run like fast-growth start-ups. And more traditional companies are being built around social missions.

The details of how companies are being set up that blur traditional bounds is fascinating and I highly recommend the associated articles.

The specific piece about Farmland LP is titled “The Benefits of Going Organic – Farmland LP’s unusual approach to making money on real estate” and discusses our unique approach to farmland investing and how we advance sustainability.  We’re thrilled with the article and hope you enjoy it as well.

It is also nice to see one of my farmland pictures in print.  The image Inc. chose (shown below) was taken on Feb. 4, 2011.  We had just unloaded a group of sheep onto Fern Rd Farm and I snapped this shot with my iPhone as the animals settled down to feed, just a minute or so after exiting the trailer.  This pasture was sown on Sept. 15th, 2010.  We didn’t expect to be able to graze it so soon, but it was a very dense and tall sward by mid-January.  The flock of sheep pictured below was off the field after a couple of weeks, the pasture regrowth was fast, and we grazed it again in April.

 

Edible Seeds Making a Comeback

The Willamette Valley is famous for its grass seed production, and can even boast supplying the World Cup soccer fields in South Africa.  The dominance of grass seed began to wane with the collapse of the housing bubble a few years ago.  And while the major shift has been towards wheat, much more is going on.

I promised in a past blog post to review the regional resurgence of an edible and more diversified seed crop industry and will do so now.  Prompting comes from recent front page coverage in the Oregonian, namely an article by Eric Mortensen titled “Flax returns to the Willamette Valley in fertile land that once grew grass seed” which happened to profile the same farm I did in my January 2011 blog post titled Local Grains.  It is a good article and I encourage folks to read it.  I will also show that wheat and flax are parts of a diverse, tasty mix of culinary staples.  First, I’ll highlight a couple of quotes from the Mortensen piece:

This is a changing state that romanticizes its farms but doesn’t understand its farmers. Two-thirds of its farmers and ranchers are older than 55. Ownership of 9 million acres, more than half the state’s farmland, is projected to change hands in the next decade. The next generation has to do more than master the multiple skills farming requires: They’ll be hard-pressed to fend off development pressure while connecting with an urban population intensely, sometimes intrusively, interested in what they’re doing.

What a great summary paragraph of the complex social and demographic situation in agriculture.  This is why 30 something year olds like the article’s protagonist, my friend Clint Lindsey, get so much attention:  More of them are needed if we are all going to eat 20 years from now.   And these young farmers are entering the profession during one of the most tumultuous periods in the past few decades.  Again from the article:

Lindsey and his father decoupled the farm from the international commodities market. With their partners, they plan to install a small grain mill. From now on, they intend to sell grain, seed and flour to bakeries, restaurants and specialty stores within 150 miles.

It is less a revolution than a throwback. They are at the forefront of restoring an infrastructure that grows, processes, markets and consumes food locally.

So not only are these farmers trying to grow a diversity of edible seeds—from wheat to chick peas to flax, but they are working to re-localize processing and distribution.  There are several reasons why, but mostly you will hear it is about niche marketing opportunities catering to the locavore craze, growth in the organic food industry, capturing the margins of processing and distribution, and developing strong and stable relationships with buyers to avoid the ups and downs of commodity markets.

A crowd of local eaters gathers at the edge of a flax field at A2R Farms near Corvallis, OR.  Clint and Mike pose for cameras and answer many questions.

But I also know that there’s something else going on.  Nearly all farmers by now have connected the dots between the cost of energy and the cost of their inputs.  This means a rise in food commodity prices often doesn’t improve net farm income because modern farms have their inputs priced by commodity markets too.  I wrote earlier about the tight correlation between the price of oil and the price of food.  Oil prices are also a good proxy for farm input costs.  Therefore, some farmers have decided there’s a long-term advantage in cutting the distance between themselves and their customers, and by reducing the volatility of input costs by using organic, or quasi-organic, methods.

A few months ago Clint gave me a call while in my neighborhood.  He wanted to make sure I was home so he could stop by with something.  A loaf of bread… “his” bread.  We shared a few moments of excitement and praise before Clint had to go.  Then I started making sandwiches with it and haven’t gone back.

Some people have their livelihood riding on building a regional food system and that motivation seems to be getting it done, one slice at a time.  But beyond the economic and food security issues that come up, I must say that watching this happen, and really working to do my part, is also a lot of fun.

My first loaf of Oregon Grains, by Nature Bake, which uses wheat, oats and flax from A2R Farms.

Wheat, flax and what else?

Okay, there’s been plenty of talk about wheat and flax.  Let me showcase more of the contenders for our newly appreciated regional seed crops.  Almost none of these are sold by commercial seed dealers around here.  Farmers are buying seed stock from other parts of the country (or world) and seeing what can be locally adapted.  A few seeds are even sourced directly from the bulk bins of grocery stores!

Last summer a few of the local farms gave public tours and I have pictures and notes that I am drawing from.  Also, I have attended some meetings of the Southern Willamette Valley Bean and Grain Project and have these notes.  Dan Armstrong has written well about these discussions on his web site.

While the public tours were on the larger farms, with the area being managed ranging from 900 to 9000 acres, a few small farms are also involved in the development of grains and beans and alternative edible seed crops.  The most well-known small farm is Sunbow Farm, one of the founders of the Bean and Grain Project, and newcomers such as Adaptive Seeds are trying many species and varieties.  A number of the small farm varieties won’t work on the large farms because they can’t be mechanically harvested.  Much of the discussion revolves around harvesting issues, and the big farms need plants that can be field dried, cut and combined efficiently.  For the most part, I will restrict myself to what the larger farms are doing.

I will briefly discuss three categories of edible seed crops:  grains, legumes and “others.”

Grains are grass species (family Poaceae). These are usually cool season crops, known broadly as small grains, planted in fall or spring for mid-summer harvest.  Soft white wheat is the main grain in the valley, but farmers are now growing hard red wheat (which has higher protein levels and can be used in leavened breads) hulless oats and hulless barley for human consumption (as opposed to the more common feed oats and barley varieties).  There is excitement over a six row malting barley being developed by a breeder at Oregon State University.  Cereal rye and triticale get some mentions, but the market for them is less certain.  The most common summer grown grain in the area is corn, but it is all sweet corn for processing.  Small farms are trying other types of corn but none of the big farms are.  I was surprised to learn that a couple of farms are now growing teff for sale to a local food wholesaler.

A table display at Stalford Seed Farms near Shed, OR highlights their flour products.  This farm has been key in the development of locally adapted hard red wheat and beans, and in the formation of Willamette Seed and Grain LLC, which processes, markets and distributes for local farms transitioning out of conventional grass seed and into edibles.

Legumes (family Fabaceae) fix nitrogen and are part of a healthy crop rotation.  Historically this area has produced clover seed.  The edible newcomers are lentils, chick peas, pinto and black beans.  Lentils and chick peas are probably better for our cooler climate as they can be sown before the last frost and mature quickly to be harvested in dry summer conditions.  Pinto and black beans are warm season crops that have had some success, but during the past couple of years the harvest has gone poorly as we’ve had cool summers and the beans didn’t dry in the field well enough before fall.  Something to keep an eye on is chickling vetch, which is being tested by farmers.  Soybeans like it hot, so nobody is sure they will be a good fit around here, although small farms are growing edamame varieties.

Rows of pinto beans at Stalford Seed Farms.

Flax (family Linaceae) has uses for food, fiber and industrial oil.  The cool climate here is perfect for flax, which can be either fall or spring sown.  Buckwheat is a very quickly maturing plant (family Polygonaceae) that is used as a summer cover crop and for its edible seed, which is usually made into a flour.  Cool season oil seed crops (family Brassicaceae) in the area may eventually be used for human food, and farmers are interested in these as they add to the crop rotation potential.  Canola grows well but is semi-banned since it can cross with vegetable relatives grown commercially.  Another member of the same plant family, Camelina, is better accepted.  Locally it has primarily been promoted for biofuel production, but is used for food in Europe.  Sunflowers, which have varieties developed for either seed or pressed oil, are being tried but may be marginal because of potentially cool summers.

The tour included a stop and delicious meal at Tom Hunton’s place near Junction City (Tom also owns SureCrop).  Pictured here is a field of buckwheat in flower.  I was also impressed by the diversity of commercial scale field trials on this farm, such as teff, and varieties of chick peas and lentils. Later in the year Tom reported a yield of 1800 lbs/acre for variety Dillon chick peas on his Malabon soil.

Where does Farmland LP fit in?

If you read this blog it is obvious that we are mainly doing livestock production on the farmland we manage.  This is because growing seed crops organically during the transition period from conventional farming is very difficult, which the Oregonian article touches upon.  By contrast, livestock grazing prevents weeds from going to seed, builds soil fertility, and provides us with a steady income before we are certified organic.

What we will do once our land becomes certified organic and the soils are in great shape is offer sections to organic seed farmers.  We will be looking for those with experience and the ability to plan and implement a diverse crop rotation.  After a few years in annual seed crops the land will go back into pasture, and the seed farmer may be given new areas to sow.  This pattern is expected to reduce the management costs and risk to the farmer while increasing yields, which should increase profitability for all of us.