Root Causes:
FARM GROWTH ObSTACLES
Assumptions:
[1] State of the Food System Report, p.4 & p.11
[2] The Economic Impact of Austin’s Food Sector, p.23
[3] State of the Food System Report, p.4
[4] https://www.npr.org/sections/thesalt/2015/02/05/384058943/are-farmer-market-sales-peaking-that-might-be-good-for-farmers, Are Farmers’ Market Sales Peaking? That Might Be A Good Thing for Farmers
[5] A Looming Crisis on American Farms, Farm Aid, https://www.farmaid.org/issues/farm-economy-in-crisis/looming-crisis-american-farms/
[6] Scaling UP: Meeting the Demand for Local Food, University of Wisonconsin – Madison https://www.cias.wisc.edu/scaling-up-meeting-the-demand-for-local-food/
- There is significant opportunity to grow the Central Texas economy through the expansion of the local food sector. There is more demand than supply for local foods grown in Central Texas.[1]
- While demand for local foods is growing in Central Texas[2], the number of farms is in decline due to land development pressure, aging farmers, lack of farm labor, and weak institutional farm support.[3]
- A main driver behind the growth of small farms since the 1990’s was the growth of direct farm sales channels including Farmers’ Markets, CSA’s, and Farmstands. All these sales channels are now stagnating or in decline.[4]
- Small and medium sized farms are struggling economically.[5]
- One way for small and medium sized farms to remain competitive in the market is through economies of scale through the increase of production, buying power, and other efficiencies. [6]
- Scaling for small and medium sized farms – and the establishment of new farms – has incredible challenges including high cost of land, volatile markets, lack of mid-tier distributors, lack of insurance and government support, and more, that all must be overcome in order to realize economies of scale.
[1] State of the Food System Report, p.4 & p.11
[2] The Economic Impact of Austin’s Food Sector, p.23
[3] State of the Food System Report, p.4
[4] https://www.npr.org/sections/thesalt/2015/02/05/384058943/are-farmer-market-sales-peaking-that-might-be-good-for-farmers, Are Farmers’ Market Sales Peaking? That Might Be A Good Thing for Farmers
[5] A Looming Crisis on American Farms, Farm Aid, https://www.farmaid.org/issues/farm-economy-in-crisis/looming-crisis-american-farms/
[6] Scaling UP: Meeting the Demand for Local Food, University of Wisonconsin – Madison https://www.cias.wisc.edu/scaling-up-meeting-the-demand-for-local-food/
The Obstacles
- Navigating internal business components
- Recordkeeping
- Bookkeeping
- Insurance programs: Crop, vehicule, general farm, product liability
- Lack of functional crop insurance programs for diversified farms (Whole Farm Revenue Protection Program & Non Insurable Crop Assistance Program don't work)
- Labor
- Lack of training support for specialty and sustainable crops for labor (little support from Extension or other institutions)
- Small labor pool for willing agricultural workers. Both documented and undocumented pool of labor is shrinking with restrictive immigration policies.
- Lack of affordable legal council specific to agriculture
- Right of Way issues
- Lack of financial literacy programs
- Land Access
- Development Pressure in metropolitan and metropolitan adjacent counties
- Weak lease agreements for farmers renting land
- Ability of farmers on leased land to invest in capital expenses
- Absentee landlords can lead to miscommunication between owner and renter, creating discord in farm business.
- Land is increasingly unsuitable for agriculture as climate change accelerates.
- Lack of land transition programs
- Heirs' Property law as an example of lack of legal access leading to property loss across generations (http://southerncoalition.org/hprc/?q=node/5)
- Access to Capital
- Access to traditional lenders like banks and USDA are difficult for non-conventional farms to access
- There is a general distrust of equity-based financing options among growers.
- Unhealthy and Volatile Agriculture Economy
- Conventional farms net-negative.
- Difficult to turn strong profits
- Death, Disease, Divorce, Disaster can push farms over the precipice and make business unviable.
- Complying with Organic and other certifications can create operational and financial burdens
- Access to Viable Markets
- Mid-Tier supply chain players
- Processors and Manufacturers
- USDA Inspected Meat Processors & Organic Meat Processors
- Co-Packers
- Aggregation and Distribution
- Cold and Dry Storage
- Inability to differentiate products in marketplace:
- Need more specialty wholesalers and retailers in sustainable food space
- Need more integration of sustainable foods into traditional retail space
- Need more/stronger 3rd party certifications to differentiate sustainable foods.
- Many sustainable and specialty crop producers cannot access price support programs, as these are mostly for commodity crops.
- New FSMA regulations require producers high capital expenditures to come into compliance
- Lack of stability in contract purchasing on both sides of purchasing and producing.
- Lack of large scale OMRI certified inputs for large Organic producers.
- Small and mid-size producers often do not have economies of scale to get cheaper inputs.
- Lack of cooperation amongst small and mid sized growers to cooperatively purchase inputs.
- Mid-Tier supply chain players
- Technical Assistance and Mentorship
- Lack of formalized mentorship programs
- Lack of farm training and agricultural business development programs.
- Lack of technical assistance for Organic and Sustainable ag practices.