Diversification Revolutionizing Farming and Sustainability
Agriculture diversification is transforming modern farming, offering a sustainable, resilient approach to market volatility and rising land values.
By integrating various crops, livestock and innovative farming techniques, farmers are securing their operations against economic uncertainties.
Diversification is engaging in production or marketing practices beyond traditional commodity production. Working primarily with Compeer Financial’s emerging markets clients, I have noticed a trend in why some farmers choose to diversify.
DIVERSIFICATION TRENDS
A lot of the farmers who we work with in the emerging markets program are first-generation farmers. They didn’t grow up on a farm, don’t have a farming background or don’t have a family farm to return to after school. Others are late in their career or retired from another profession and decided to farm as a second occupation.
Beyond first-generation farmers, Compeer is seeing more multigenerational farmers diversify, with the third or fourth generation returning to the farm and seeking ways to generate enough cash flow to support themselves.
Historically, farmers expanded their operations by acquiring more land or building new barns and adding livestock. However, with higher land values and increased construction costs, diversification among enterprises has become more popular.
Many clients are direct marketing their beef to consumers or converting part of their farm to organic. They’re finding ways to generate more cash flow without necessarily expanding the scale of their operation. Diversification is about expanding the scope instead.
PERKS OF DIVERSIFICATION
The biggest benefit of diversification is that farmers become price makers rather than price takers. By moving away from commodity production, they can exert more control over their prices.
In addition to direct marketing, farmers benefit from using regenerative or sustainable practices. Utilizing cover crops for vegetable operations or managing grazing for grassfed beef, pork or lamb helps prevent soil loss and sequesters carbon.
If implementing certain agronomic practices, clients can receive income by participating in a carbon market program. Compeer is here with resources to help producers explore the right options for their farm.
A free April 16 webinar will dive into the ways carbon programs work and how they can drive a new source of revenue.
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Our emerging markets producers often operate on relatively small acreages. That means more people are investing in the community. Our producers are known to share equipment and buy locally. Diversification has enabled them to open value-added businesses, like meat or cheese processors, which depend on small producers following practices that consumers are interested in.
RECOMMENDED NEXT STEPS
For those interested in diversifying, consider starting with a focused idea and developing a business plan using Compeer’s online template.
A business plan helps clients clarify what they want to do, how they will market their products and whether they need a loan.
A comprehensive cash-flow projection is critical in the process too. This helps producers understand when cash is coming in and going out, and how much will be left at the end of each month.
I most enjoy helping clients realize their dream, whether they grew up on a farm or feel called to farming. Now, more than ever, there are options for those in small-scale agriculture roles.
With the way things have evolved in society and work-life balance, farming is becoming a viable option for many. When diversifying, do some soul searching and think carefully about what you want to achieve.