Transition to Organic Sustains Family Farm

A student of the 1980s, Joel Layman never thought he’d have the opportunity to farm. His parents encouraged him to attend Michigan State University where he earned a degree in agriscience. During his nearly 20 years working in ag retail and for famrers he couldn’t shake his desire to farm.

The problem? The 80s were hard on his family’s farm—so he had to build his operation from the ground up. That’s no easy task, especially when you throw in a full-time job and a family.

In 2007, Layman started farming part time near Berrien Center, Mich. “I took most of my paychecks and bought farm supplies with it—I lived frugally and really only bought essentials so the rest could go to the farm,” Layman says. “It was hard, but my gut said this is where I want to be in the future.”

In 2013, he transitioned to the farm full time. Shortly after, he took an even bigger risk by dabbling in organic production.

To date, 1,700 of Layman’s acres are certified organic, 200 are in transition and 350 are being rented out and farmed conventionally. He’s raised snow peas, green beans, fall squash, corn, soybeans, black beans and pinto beans. Layman also uses cover crops on nearly every acre.

It all started after working with his neighbor, who in 2013 had recently started farming under organic standards. After seeing its potential, Layman rented 25 acres that had been fallow for five years and went through the process to certify them as organic.

That same year, Chipotle released “The Scarecrow” video. After the video went viral, Layman decided to see what all the fuss was about. A visit to the restaurant changed the trajectory of his farm.

“I was the oldest person in Chipotle by at least 10 years,” he says. “I then went to a McDonald’s after that to buy a Coke and I was the youngest person there by at least 10 years—that’s when it hit me: that’s the future.”

He saw first-hand consumer interest in local, organic and natural, and he wanted his piece of the demand. At that point, he decided he would do whatever it takes to become an organic producer. He started the process by transitioning 1,000 of his acres.

“We went wide-scale on transition—though it wasn’t everything at once,” Layman explains. “I rented out 500 of my acres to a neighboring farm and I’m still renting ground to them. It was a risk mitigation strategy and it helped convince our lenders to give us a shot.”

When he buys new land, which he’s done on a couple times since starting in organic, it immediately goes into transition. In addition, he is taking back the land he’s renting to a neighbor in 100- to 200-acre increments. Soon, everything he owns will be 100% organic or in transition.

Understand the risks

The profit margins for organic production are attractive. According to USDA, organic corn prices ranged from $7.25 to $9.00 per bushel in 2019, and soybeans ranged from $18.90 to $19. With prices more than double their conventionally grown counterparts, why aren’t more farmers jumping into organic production?

The first stumbling block is your own perception; I had to buy the organic concept mentally,” Layman says. “After that, whether I farm conventionally or organically, I have the same challenges but if I’m committed to the change I can find a way to overcome them.”

However, there are three key financial-type hurdles he discovered during transition that many farmers might not consider:

  • Crop insurance—particularly when transitioning fields crop conventional to organic. Because management and farming styles are shifting, producers must use county averages rather than historic APH for the three years it takes to transition. And once the field is certified organic and the clock resets and it takes another four years to build an organic APH to base crop insurance guarantees.
  • Financial risks—because guarantees are low during transition and the first few years of certified organic production, poor weather or other catastrophe could wreak havoc on balance sheets. If this happens, it could take years to dig out of the hole.
  • Lender confidence—low guarantees, anti-organic biases and lack of understanding make getting a lender to buy into organic farming challenging. It might mean producers have to shop around. After getting established it’s a lot easier, but lending can be a major barrier to entry for many would-be organic producers.
“A producer making the transition needs a strong balance sheet in order to weather lower returns during transition,” says Stephen Nichols, Rabo AgriFinance senior analyst for grains and oilseeds. The first three years, when farmers are in transition and can’t receive organic premiums, are the often the hardest and what stop many producers from taking the leap into organic production.

“Organic systems give producers a price-competitive advantage in a time of tight conventional row-crop margins,” Nicholson adds. In addition, a January 2018 Rabobank report estimates production costs in organic corn are 30¢ per bushel less than conventional. That on top of organic premiums it means once acres are certified, it can be very lucrative.

“When I first switched it was out of pure capitalism,” he says. When Layman first started farming, he would have said there was no way he’d ever grow organic crops. Today, as he gazes at his microbe-rich soils, he wonders why he didn’t start sooner.

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