Organics offering risk, reward for beginning farmer
QUEENSTOWN, Md. (Nov. 14, 2017) — Scaling up in a grain operation has challenges. In an organic grain business, there’s an added hurdle of the transition period.
Matt Nielsen of Tidewater Organics, LLC said organics is the niche he needed to get established as a beginning farmer.
“Organics may not cover as many acres, but it makes it easier for a beginning farmer to make more with less,” Nielsen said.
That’s not to say that it costs less to produce organic grain, Nielsen said.
The input costs can be higher and the transition period to convert conventional ground to organic certification is significant.
The organic certification process takes three calendar years, which Nielsen said can equate to two growing seasons in some situations.
During that period, he said it’s tough to find a market for a crop that carries the same costs and labor as an organic crop but without the premium that comes with the certification.
Nielsen currently has 150 acres certified for organic production. Half of that is at his home farm in Centreville.
He went through the transition period on that farm and this fall is harvesting a crop of Certified Organic corn.
The other half of his operation is on a farm he leases in Queenstown.
That land was fallow before he planted his crop, so he was able to produce an organic crop in the first season.
“The commodity is organic land,” Nielsen said. “Once you have that you can go down a lot of different avenues.”
Formal business planning was a considerable part of establishing his business, Nielsen said.
His family had another farmer who had been leasing his home farm previously and the relationship was good. But Nielsen wanted to start his own business.
“It was a big decision to go organic because we had to do it ourselves. We needed to make sure it would cash flow before we could make that investment,” Nielsen said.
He said he’s constantly running budgets to see where he’s at.
“Even in the few short years I’ve been growing grain, the market has fluctuated significantly, as with any commodity,” Nielsen said.
Looking forward, he said the goal is to expand. He’d like to add more acres and diversify to the business. The Delmarva Peninsula offers a unique opportunity for growth, he said.
“Demand (for organic grain) is way outstripping supply domestically,” Nielsen said. “Having poultry integrators here has made it a lot easier for a farmer like me who doesn’t have a lot of infrastructure.”
Nielsen said using forward contracts has helped him create stability in the business.
This year’s corn harvest will go to Perdue for its organic chicken sold under the Coleman brand.
Next year, he’ll also have organic wheat, full season soybeans and double crop beans to harvest.
Adding more acres would give him the ability to add infrastructure he needs to scale, he said.
Nielsen said infrastructure wouldn’t just help expand the business but also allow him to buffer some risk. Grain storage with the capacity to dry, he said, would be a good risk management tool in his operation.
While Nielsen is in the early stages with Tidewater Organics, he does have experience in organic agriculture.
For six years, he worked for Luke and Alison Howard at Homestead Farm in Millington. He started as a delivery driver and eventually moved up to manage the farm’s organic produce operation.
Nielsen said the experience he gained with the Howards was instrumental in helping him learn and understand organic production.
Grain was the right fit for him to start with, Nielsen said. But as he looks towards diversification opportunities, he said vegetables isn’t out of the question. The challenge is finding the right market and the right crop, he said.
“For me, trying to expand, it’s important to have a reserve. Transition is a significant cost and you have to plan for that,” Nielsen said.
He said there is a lot of interest from companies who are looking to increase the local supply of organics.
“The market is demanding it and I think more farmers are a good thing,” Nielsen said. “Organic is such a small slice of the pie but there’s definitely an opportunity there.”