Even with Higher Price Points, Organic Farmers Fight Recession

photo by Eric Tadsen

Slowly but surely, a not-so-subtle shift is occurring in the way Americans look at their food and how it gets to their plates. In Greater Madison, the growth of Farmers' Markets has given area farmers, particularly organic farmers, a place to sell their vegetables and eggs directly to consumers who appreciate their more humane and eco-friendly practices and the fact that locally grown food is more flavorful and, in the view of the farmers, demonstrably more nutritious than food produced by what is now derided as "industrial farming."

Members of the Willy Street Co-op wasted little time raising $1 million to finance a second co-op store, this one in Middleton, that will give organic farmers another touch point with consumers. Visions of a vegetable plant in Iowa County, which would enable local farmers to get their produce in local hospitals and schools, has economic development specialist Rick Terrien dreaming of building such facilities in counties across the state.

Even the major food companies and big box stores have moved aggressively into organic in the past few years. Consumers can hardly go into a supermarket of any size without coming across an organic produce section, in many cases a sizable one.

But organic farming comes with higher price points for produce, dairy, and poultry, and the strength of the industry was put to the test during the most severe economic downturn since the Great Depression. So far, it appears that consumers have remained loyal and that organic agriculture has withstood the nation's economic decline relatively well, according to area farmers and Rod Nilsestuen, secretary of the Wisconsin Department of Agriculture, Trade, and Consumer Protection.

With just under $60 million worth of production, the state's 1,443 organic farms make Wisconsin the nation's leading state in organic dairy and livestock production. Organics have been a rapidly growing segment of Wisconsin agriculture since the early 1990s; for most of that time, this segment has seen 20% annual growth.

"We're at a point now where nearly one-third of all U.S. families are buying more organic food and bought more in 2009 than in 2008, even though with the recession, organics have had some challenges, just as the rest of the economy has," Nilsestuen said.

Given the premium they can charge, organic farms tracked "pretty significantly" with the rest of economy during the recession, Nilsestuen said. Dairy, as in the rest of agriculture, is the biggest single sector within organic farming, and it experienced flattened demand because organic products are priced somewhat higher and there was less discretionary family income.

Organic Valley, the largest organic marketer in Wisconsin, went to a two-tier price system that helped its farmers by paying them the organic price for milk up to the amount they produced the previous year. For any amount above that, they paid the rate other farmers were getting. "That's much less of a shock than regular dairy producers were getting because their prices went from an all-time high two years ago to being cut in half in just a matter of months after the economy fell off the table in 2008," Nilsestuen said.

Home on the Free Range

Organic production is a very good fit for small farms and for family farm-sized operations, particularly in western Wisconsin and in the state's unglaciated and driftless areas, where bluffs and hills and coulees dot the landscape. The farm fields there are smaller and more challenging to farm, but organic production doesn't require as much acreage because people are paying a premium for the product, and the farmers get a better return on their investment.

Farms become certified organic through an extensive process that follows federal standards for certification. Organic farms must be certified by a third-party certifier to ensure the consumer is getting something truly organic and not just labeled organic. That's critical to both the integrity of the product and its reputation because consumers are willing to pay for the extra value (and cost to produce) added to organic products.

Organic farmers like the interaction of direct sales, or sales through a cooperative, and they take pride in providing healthier food. Some organic farmers sell through Community Supported Agriculture programs, where consumers buy shares of a farmer's harvest, and some sell more directly with their own business models.

Keene and Cindy Hollenbeck run Keene's Organics, a 40-acre farm outside of Marshall whose main crop is garlic, and whose customers include the patrons of farmer's markets and individuals who order on their website. The Hollenbecks raise pastured chickens and are in the process of getting their poultry certified as organic. They say the growing interest in organic food is made possible by consumers who place value over price.

"There is no way we could ever compete on price," Cindy acknowledged. "If we weren't doing pastured eggs and chickens, we really couldn't compete on price because eggs are 99 cents in the store, and on average we sell our eggs for $4 a dozen.

"That doesn't mean we're making a large profit on $4-per-dozen eggs. You would think that we could, but there is a lot of extra work that's involved in doing it this way."

Organic farmers who sell poultry allow their chickens to mostly roam free in designated pastures, protected from predators by electric net fencing. Sometimes called free-range chickens — Hollenbeck prefers the term "pastured" — their eggs and meat are purportedly more nutritious and lower in cholesterol than those that are cooped up because they get fresh air, and they eat the grasses and bugs they were meant to. They spend time inside when they are ready to lay eggs or sleep, but most of their droppings are left outside.

Keene Hollenbeck said customers care enough about sustainable farm practices to pay Keene Organics a visit. "We're getting a lot of people who are coming out to our farm that kind of look at our farm to see what we're doing, and see the practices," he said. "They want to know the farmer, so we have an open farm for a lot of our customers. They see what we do to build up the soils."

Organic farms also are distinguished by a greater emphasis on more sustainable, ecological farm practices. The majority of organic farms in dairy and in livestock use intensive-managed grazing, eschewing chemical fertilizers and pesticides. They depend primarily on perennials like grass and hay for most of the cow's rations. If they do a good job of managing the perennials, they stay in place year after year, reducing soil and nutrient (not to mention chemical and pesticide) run off.

 

"They generally have a softer environmental footprint, and their energy use, particularly petroleum and oil-based, is much less because they are not using petroleum-based fertilizers and they aren't running tractors across the field as often," Nilsestuen said.

There has been a significant amount of sustainability crossover, particularly in crop production, as traditional farmers also adopt such practices. Years ago, the moldboard plow was a standard implement, and farm fields were turned over and plowed often in the fall, right after a crop came off, exposing the bare soil to winter storms and wind erosion, and to spring run off and rain erosion before a cover crop could be planted to protect the soil. Today, conventional practice farmers are employing more organic practices like conservation tillage, and in many cases minimum till, which disturbs only about three inches of soil where the seed goes, protecting it from erosion, requiring many fewer passes with machinery and a tractor, and saving on fuel, a major cost for farmers.

Matt Smith, a self-described "asparagus guru," runs Blue Valley Gardens, an organic farm in Blue Mounds. After obtaining an agricultural degree from UW-Madison in 1978, his first two farm-related jobs required the application of chemicals he came to disdain. When it came time to invest in his own farm, there was no doubt it would be organic, and his approach to weed, disease, and insect management now entails manual cultivation.

As he explains, asparagus has only has one pest, and it's a minor one. Asparagus beetles lay eggs on the asparagus spears, but since the crop is picked frequently, Smith could just walk the fields and pick off the egg masses. The same approach was employed when he planted potatoes and was introduced to the color potato beetle. "We are not planting acres and acres," he noted, "so we can do small things like that and eliminate a lot of problems."

Smith doesn't sell through a CSA, but at Dane County Farmers' Market, restaurants, and Willy Street Co-op. Recessionary impacts were limited to the fact that more people developed a preference for half chickens rather than whole ones, but they maintained their appetite for fruits and vegetables. "Madison is the kind of city where regular sales for fruits and vegetables really isn't affected by that," he observed.

The basis of Dreamfarm, a 25-acre certified organic Cross Plains farm run by James and Diana Murphy, is farmstead goat cheese, of which it produced 3,600 pounds in 2009, and laying hens for eggs. Dreamfarm's organic approach excludes the use of antibiotics and bovine growth hormone, but whey produced from the cheese is used to nourish goats and pigs, and supplies like feed and grains are sourced as locally as possible. Hay is produced on the farm, but the feed comes from Beaver Dam or Westby.

Dreamfarm sells through a CSA, the West Side Community Farmers' Market, and through Trillium Natural Foods in Mount Horeb and Willy Street Co-op.

Organic farming is something Diana Murphy has believed in for a long time because it involves the health of the environment, and the health of the people living in the environment. She also believes that in time, more people will discover what the patrons of farmers' markets already know. "I think if they were to get a little bit more — and I hate to say 'educated' — but if you understand what's in the food, and how that affects you, I think more people would consider the value of organic production."

Nilsestuen expects the interest in organic farming to continue to grow because the interest in locally based food and artisan products like specialty cheeses continue to grow at a strong rate. However, he said the biggest barrier for local food production is the distribution system because buyers still need to know what they are getting in terms of volume, quality, and price.

"What you're dealing with, in the conventional, national, and international food systems, are food chains that have been developed over decades, and big players like Walmart and Hy-Vee who really have this thing fine tuned," he said. "That is the standard that Americans are used to, and so that's the challenge for local foods."

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