Make Your Organic Transition Period a Smart Investment

To become an organic farmer, you need to complete the organic transition period.

Unfortunately, that’s a financial barrier for many farmers. Why? Because unless you have some hidden acres, you’re growing crops organically for 36 months while selling them at commodity prices. But with the right loan, plan, and mindset, you can use this time to set you and your family farm up for long-term success.

Here are six tips to help ensure your transition process is a smart investment in your future.

1. Remember Your “Why“

What are your reasons for going organic?

Profitability is probably on your list. But maybe you also want to decrease your dependency on large ag corporations. Or diversify your income streams. Or maybe you want to be more sustainable so your grandchildren can one day take over the operation.

Whatever has prompted you to make the move to organic, know it and know it well. The organic transition period isn’t an easy phase, but it’s necessary to get you where you want to go. So before you get started, make sure your goals are clearly defined. That will help sustain you in challenging times so you can reach the finish line.

2. Look at the organic transition period as an investment, not an expense

The transition process can feel like a costly endeavor. You’re probably going to need to buy some new equipment. You’re probably going to see lower yields, and you’ll be selling the crop at conventional prices. And if you grow a crop like alfalfa, you may not see a return until the second year.

That’s why it’s important to view this period as an investment, rather than an expense. Every decision you make during this time should be focused on your ongoing financial success once you’re certified.

Think of all the inputs you purchase for your conventional crops and the returns you typically see. With organic, the return on every expense is amplified:

• Yields may be lower now, but soon every bushel you grow could be double its worth in conventional prices.
• That new tillage equipment may cost you now, but keeping your fields as weed-free as possible will help support strong organic yields.

• You may not make as much on alfalfa, but it can build up nitrogen in the soil for your first-year organic corn and save on fertility costs.

You also need to view the organic transition period as an investment of your time and commitment to learning. This is the opportunity to gain the experience and knowledge you need to do organics well. So when you do achieve certification, you’ll reap the profits of all your hard work.

3. Invest in the right things

We’ve talked before about how there’s a “Goldilocks” acreage for transitioning. That’s not too many but not too little, and it’s unique to every operation. The same applies to how much you need to invest in the transition.

The right amount for you will depend on a variety of factors, including your:

• Execution capacity
• Soil health and soil fertility
• Ability to control weeds
• Total acres you decide to transition over the long-term

Instead of focusing on specific numbers, you’re better off making sure you’re investing in the right things.

We see a lot of farmers stuck in a conventional mindset and they try to do as many corn and soybean acres as possible. So they invest in the biggest equipment possible for those two crops. But they would be better off investing in a crop like alfalfa that would result in better agronomic, operational, and economic success.

4. Create a plan based on reality, not aspirations

Sticking with conventional crop rotations is common mistake. Too many farmers believe they can only succeed with corn and soybeans. They also tend to overestimate their yield expectations while underestimating what it takes to execute.

That’s why you need to plan based on reality and not aspiration.

When we work with farmers, we try to capitalize on the unique aspects of their farm while mitigating the downsides. We do this by starting with a farmer’s region, as that determines their market opportunities. Then we examine which fields might work well in organic. Finally, we work together to honestly understand their strengths and weaknesses.

It’s a challenging task to take on alone. Creating a plan is an iterative process that requires triangulating a lot of data points. And it’s hard to be critical of assumptions you’re making about your future organic production without a partner to offer a reality check. You really need to pressure test your thinking in order to know what’s possible on your farm.

5. Present a strong plan to your lender

The good news is that once you’ve create a strong transition plan, you can use it to win financial support.

So what do you need to include in your plan that will help you secure a loan?

You need numbers, but more importantly, you need data to back up those numbers. We see a lot of farmers just drop figures into an Excel sheet without understanding where they came from or how they can change throughout the year. You need to know how you developed those forecasts and what influenced them.

Your plan should also emphasize the long-term value organics will bring to your operation. Present a longer plan, ideally 5-7 years out, and show them what that long-term profitability looks like.

The best plans acknowledge that you don’t expect to get everything right in the first season and that you’ll build on your success over time. Your plan should also outline how you’ll add more acres at a pace that doesn’t cause you to overinvest.

Creating such a plan will not only help win your lender’s support, but it’ll show them what a valuable customer you’ll be to them moving forward.

6. Tap experts for support and guidance

There’s a learning curve to organic farming. From killing weeds without chemicals to selling in an opaque marketplace, it’s not like conventional. So why go it alone when you can learn from others who have been there, done that?

There’s a wide range of resources you can tap into including:

• University research. Good for garnering insights into new practices and techniques.
• State-based organic nonprofits. They often hold regional conferences where you can learn, grow your network and meet companies in the organic market space.
• Seed companies. They understand what varieties work best in certain regions.
• Other organic farmers. Meet them at tradeshows, field days, and on-line connections.

However, it can take a lot of time and effort to align to these resources and build a network. You’re also not guaranteed constant, year-round support. That’s where AgriSecure comes in!

AgriSecure can help

AgriSecure was founded by people with first-hand experience of large-scale, row-crop organic farming. And our focus is to help you succeed in the transition period and beyond. In addition to our on-farm experience, we have a network to other farmers and industry connections. And our MyFarm platform allows you to build plans based on real data, not anecdotal evidence or assumptions.

So if you’re looking for help with the organic transition period and want to succeed economically, we’re ready to be your trusted partner. Contact us today for a free consultation call. In the meantime, download our free organic transition playbook for more tips on how to succeed with the transition.

By Steve Sinkula, AgriSecure Founder and CEO and Bryce Irlbeck, AgriSecure Founder and Owner of B&B Irlbeck Farms