In the Spotlight

News & Features
The Economics of Organic Farming
By Dan Olson
June 9, 1998
Click for audio RealAudio 2.0 14.4

Part of an MPR Mainstreet Radio project on farming issues.
The June 8 - 10, 1998 series includes:
1. What's Driving U.S. Farm Policies?
2. "Freedom to Farm" Legislation Leading to Changes in Farming Practice
3. Regional Farmers Joining Global Economy
4. Secretary of Agriculture Visits Region, Offers Help
5. The Economics of Organic Farming

The news from farm country is not good. Prices are low and costs are high. The squeeze is reminiscent of the farm crisis 20 years ago. The response by farmers is to buy more land and equipment to raise more food. Getting bigger in order to sell more product, the argument goes, is the only way to survive low prices. But a handful of farmers are going in the opposite direction. They're farming smaller, and they are making a living. But it may not be a style of farming others can afford to follow.

A JANUARY WIND DRAGGING TEMPERATURES BELOW ZERO did nothing to cool the anger of thousands of farm families gathered 13 years ago at the Capitol in St. Paul.

Carmen Fernholz: Today Minnesota faces an emergency that threatens the very survival of our family farms and rural communities.

Carmen Fernholz and others protesting farm policy filled the Capitol grounds in St. Paul demanding relief from nosediving prices for farm products and rising production costs.

Fernholz: As in the 1930s, temporary emergency measures and courageous leadership are required if we are to avert an irreparable disaster outstate.

Fernholz and other leaders of the populist movement called Groundswell demanded state officials stop farm foreclosures, guarantee bank loans to farmers, and set minimum farm prices. They received a polite welcome, a sympathetic ear, but little in the way of response. Farmers by the thousands went out of business. There were 96,000 farms in Minnesota in 1985. The number in 1997 had declined to 87,000. Carmen Fernholz is still farming.

The 54-year-old Fernholz was raised on a farm, but after college he did a stint as a high school English teacher. He returned to his home near Madison, the county seat of Lac Qui Parle County in western Minnesota, and started farming 25 years ago with family members. On a bouncy pickup ride through fields, Fernholz says over the years it became clear conventional agriculture exacts too heavy a toll on farm fields in his area.

Fernholz: We're talking six inches of black soil; in recent years we've gone to mono-cropping or corn-soybean rotation, so we really haven't put back into the soil the biomass necessary to build humus.

Fernholz says his style of farming builds humus or healthy soil. He says the plants have a better chance of surviving dry or wet weather and resisting diseases. Much of Minnesota's most productive farm land is planted to either corn or soybeans year after year on the same fields. Intensive farming with little diversity makes plants vulnerable to diseases.

Fernholz's green tractor pulls a rotary hoe through young corn plants on his 300 acre farm. Steel blades kick out most of the weeds. He'll get the rest with a form of weed control nearly unheard of in this era of farm chemicals.

Fernholz: What I may end up doing once in a while later in the season is walking the rows picking out some of the broadleafs, things of that sort.

Pulling weeds by hand is one example of what sets Carmen Fernholz apart from the mainstream. He uses machines and hand labor to kill weeds. He doesn't apply any chemicals. Fernholz says he saves about $30 an acre.

Fernholz saves more money by not using commercial fertilizers. He uses manure from his hogs to fertilize fields. And he plants alfalfa, a plant that adds nitrogen to the soil. Fernholz's banker, Loren Noeldner, president of Klein National Bank in Madison, says Fernholz's style of farming takes a lot more time.

Noeldner: Because it's obviously a lot more labor intensive. Were it not, Carmen could be farming a larger operation.

Carmen Fernholz is finishing up a year as holder of the University of Minnesota's Chair in Sustainable Agriculture. He says farmers need to adopt farming techniques which protect the land and water.

Fernholz: That is not happening. I mean, why has the Minnesota River been declared one of the dirtiest rivers in the country? That's because we've been taking from the land and allowing the cheaper food on the food shelf but not putting money back into the land by means of erosion control or crop rotation, to allow farmers to protect the land and that type of thing.

Fernholz doesn't want, indeed, says he doesn't have the time to farm more acres. In an era when neighboring farms have grown from a few hundred to a few thousand acres, Fernholz stays small. How does he make a living? His wife has a job in town, but dual incomes on Minnesota farms, even big ones, are common. Fernholz is able to pursue his style of farming because it pays a premium. His aversion to using farm chemicals has won him certification as an organic farmer. Food processors who prize organic corn and soybeans pay top dollar for chemical-free products. His neighbors may get $6 a bushel for their soybeans this year. Fernholz says he'll receive nearly three times that amount.

Fernholz: I have my 1998 crop of soybeans contracted for $16.75 a bushel.

That's enough money to make a living because Carmen Fernholz's expenses are lower than most farmers. He doesn't have a huge land debt, for example. Many farmers borrow heavily to buy more land. They're trying to grow more to counter the low prices. They win big when crop prices rise. But banker Loren Noeldner says farmers who have big land payments face a tight squeeze this year.

Noeldner: The input costs get higher and higher every year, and, of course, if you look at the board, the prices keep falling in part because the Asian economy has gotten real bad.

Why, then, aren't more farmers following Carmen Fernholz's example - farming fewer acres, raising livestock to supply fertlizer and substituting physical labor for farm chemicals? University of Minnesota agricultural economist Dick Levins says most farmers can't afford to change their ways. They'd have to buy livestock to supply manure. They'd have to stop using chemicals and wait three years for organic certification in order to get the higher prices. And all the additional physical labor means farmers wouldn't have time to manage big farms. They'd have to give up land. Economist Levins says giving up land is unheard of behavior in rural areas.

Levins: It takes a long time to get land, even on rental basis to court a landlord and convince him you are worth working with and that door only swings one way. You give it up, it's going to be very difficult to convince him to give it back.

Economist Dick Levins says the switch to sustainable agriculture is too big a change for many farmers, but the value of studying the techniques shows them, especially those just starting out, there are alternatives to conventional farming.