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The New Entrepreneurial Agriculture

January 30, 2003 | By Patty Cantrell
Great Lakes Bulletin News Service

Photo: Brian Confer
Dawn Cambell and girls.

One baby in her arms, two more playing on the porch, Dawn Campbell will tell you why she put away her fancy cookbooks eight years ago to become a mid-Michigan farmer’s wife.

Dawn says she led a material-girl existence back in southern California, where she began her adult life after a cross-country childhood in different religious communities. Living on her own in California and working as a registered nurse, Dawn prided herself on wearing fashionable clothes and using only the best ingredients for elaborate gourmet meals. “I enjoyed doing that, and it seemed to matter to me at one point.”

But her life of following the wind settled down to earth when she met Eric Campbell after moving to Michigan in the early 1990s. A man with gentle eyes and a strong sense of purpose, Eric struck her as “someone who knew who he was and didn’t shake very easily.

“My husband is who he is because he was raised on the land. There’s an awful lot of common sense built into that,” she says with the quiet fierceness of a compassionate and committed woman. “He knows where stuff comes from and where it goes. That integrity was really meaningful to me.”

Married now, with three curly-headed children, the Campbells are building their lives on an economic foundation as old as time: Raising food on the land they love. In fact, they are living an American dream that, for most other farmers and their communities, has become a nightmare.

Unlike other farm families, the Campbells are not giving up on agriculture as a way of life or source of full-time income. They are, in fact, buying the farm where Eric was raised because they’ve found a way to make more money from their cows by spending less money on high-cost equipment, fertilizers, and high-tech barns.

They’re doing it with a grassland grazing system that dairies in New Zealand started developing in the 1950s and have used to become some of the lowest-cost, highest-profit operations in the world. The all-natural grazing system also has set up the Campbells to earn 50 percent more for their milk as certified organic milk producers.

Local Government’s Role

Room for Entrepreneurs
Michigan consumers spent $25.7 billion on groceries and eating out in 2001. Only about 10 percent of that food comes directly from Michigan farmers.
Capturing just a tiny fraction more of Michigan's food dollars - through direct sales and value marketing - can amount to a lot of money for Michigan farm families who want to stay on their land.
The most hopeful sign in the Campbell’s story, however, for so many Michigan communities struggling to keep farmers in business — and farmland free of sprawl — is that the Campbell’s are not alone. They are, in fact, part of a new wave of entrepreneurial agriculture taking root across Michigan and the country.

Guided by the invisible and powerful hand of the free market, this new crop of farmers is tailoring production to meet changing consumer demands rather than taking what global markets will pay for raw “commodities” — tankers of milk, bulk grain, or mass-produced meat. By capitalizing on new marketing opportunities, they are changing the face of agriculture across the nation, saving farmland from pavement and pollution, and building the foundation of a safer food supply in these times of global terrorism.

The challenge now before Michigan’s local government and economic development officials is to recognize they have a new and important role in increasing the number of such entrepreneurial farmers in their communities. At stake is nothing less than the future of Michigan’s rural economies, the fate of its reawakening cities, and the power of its valuable farmland to protect water and wildlife.

“The bottom line is that 10 acres, intensively managed to produce high valued products, may generate more profits than 1,000 acres used to produce bulk agricultural commodities,” says Dr. John Ikerd, professor emeritus of agricultural economics at the University of Missouri.

Many of the new entrepreneurial farms in America may not look like “farming” to people in traditional agriculture or like “economic development” to people who are intent on building factories, he says. But with net returns often 40 and 50 percent versus the conventional farm’s 15 to 20 percent, they amount to good-paying jobs and solid, long-term investments in the rural community and landscape. “Even a farm with only $50,000 in annual sales may net $20,000 to $25,000 to support the small farm family,” Dr. Ikerd says.

That’s a significant economic factor for local residents and leaders across Michigan who are working overtime to save farmland and open space by raising money to keep orchards and cropland off the real estate market. New markets providing new income for farmers are a key piece of the farmland protection puzzle because preservation programs cannot do it alone. Even the most successful farmland purchasing plan is stymied by the fact that farmers, facing retirement with little in savings, are selling land just as fast as five-acre families and strip mall developers can buy it.

Jobs, Sales, and Quality of Life
Putting entrepreneurial agriculture to work for Michigan requires two new types of thinking about farming and economic development.

First is a shift away from the prevailing picture of farmers being interested only in high yields and government payments to a renewed vision of farmers as innovative small businesses.
Second is adding back into economic planning farming’s valuable contributions to the look and feel of both rural life and land.

“Agriculture is a forgotten segment of the economy, but it’s a critical segment of the economy,” says Jonathan Scott,  economic development director for Mecosta County, who worked with entrepreneurial farmers in North Dakota before moving to Michigan.
“Agriculture could be a very strong area of growth with more focus on it as a business,” he says. “It’s an entirely new perspective versus raising crops. It’s about selling products, labeling, processing, packaging. That’s what economic developers need to work on; they need to facilitate that.”

Local government also needs to recognize that viable farms — whether one-acre flower growers on the edge of town or a group of fruit producers investing in their own jam production — mean more green space, fresh food, and local commerce. That’s the most valuable part of entrepreneurial agriculture for communities that need and want a quality of life that keeps and attracts residents, says Dr. Dick Levins, professor of applied economics at the University of Minnesota. “It preserves a rural environment, and it preserves a pleasant living environment in a way that’s self-supporting, and I think that’s not given enough attention.”

The new entrepreneurial agriculture does not aim to replace the all-encompassing mass food market of large-scale farms, mega processors, and superstore chains. “We will continue to depend in a major way on global markets,” says Michigan State University agricultural economist Jake Ferris.

The new entrepreneurial agriculture does, however, aim to claim its competitive place in food and agriculture markets by serving consumers who value the quality many farmers have to offer. And it is Michigan’s smaller farmers — who own the majority of land at risk for conversion to concrete — who have some of the best opportunities to make money and save farmland by switching from commodities to higher-value consumer markets. They just need their local leaders and nonfarm neighbors to make the switch with them.

Changing Commodity Minds
Like hometown banks or specialty retail stores, farms can succeed despite mega mergers all around them. They, too, can do it by adding value to their products with a friendly face or specialty processing, by finding profitable market niches (anyone for goat’s milk yogurt?), and by finding new ways to consumers, such as selling shares in the next season’s harvest (see page 12).

But even though agriculture is the state’s second largest industry — and a primary attraction for tourism, which is often the largest local industry — economic development officials do not work, on the whole, with farmers.
“Some clearly are,” says MSU agricultural economist Chris Peterson. “But their biggest challenge is convincing others in economic development and government that farming is commerce,” he says.

With just 3.6 percent of Michigan residents employed directly in farming after decades of decline, economic developers see little hope in promoting smaller-scale local agriculture.

“Our program is designed to fund projects that create a significant number of jobs,” says John Peck, the U.S. Department of Commerce’s representative in Michigan. “The agency’s cultural thinking is directed that way.”

The problem is that many officials and agencies with the resources and authority to put agriculture back on the list of Michigan’s important economic development strategies still see farmers as passive food producers, not as active food sellers.
This way of thinking is a major obstacle to further development of the new entrepreneurial agriculture in Michigan, Mr. Peterson says. “We have to convince people that agriculture is legitimate commerce so farmers can get the business assistance they need.”

Logical Conclusion

Photo: Brian Confer
Bill's Farm Market, Petoskey
That will take overcoming some history. For 50 years, farmers have been focused on producing more and more bulk food for distant markets. Local government has, therefore, left the business of farming to state and national agriculture agencies, which have been the experts on helping families get more corn or cherries per acre with ever more powerful seeds, pesticides, and fertilizers.

But the reason so many farm families now sell their land and give up on agriculture is because this mass-production approach has long-since reached its logical conclusion for small and medium size farms.

The global market — stuffed with food from livestock factories and foreign orchards owned by American companies — pays peanuts for tanker loads of yet more grain and apples from Michigan farmers. The mass market also is tough on smaller farmers because its system of huge warehouses and million-dollar orders is not set up to handle a pickup load of melons or hogs, no matter how many blue ribbons they’ve won at county fairs.
This powerful trend will continue until communities stop thinking of farmers as generic food producers and start recognizing them as small businesses with just as much spunk and potential market smarts as any other local entrepreneur.

Selling Value vs. Selling Out
Moving to a more market-savvy approach to growing and selling farm products is not something farmers can easily do alone, however, in a hostile environment dominated by large companies and under pressure from high land prices, Dr. Levins says.

The responsibility of local residents and leaders — if they want the environmental quality and economic choices that the new entrepreneurial farming can bring — is to get involved, he says.

They can get to know their farmers and the particular advantages the local land offers food producers. Likewise, farmers can get to know their consumer neighbors and potentially find — right down the road — profitable markets that could get them out of the losing game of harvesting more bushels each year for less money.

In the strategic middle are economic development officials and agriculture agencies, such as Michigan State University Extension, that can join forces to help local farmers research markets, develop products, and seek financing. In Minnesota’s Rice and Steele counties, for example, extension agents and business groups are working together to analyze and capitalize on regional food markets, Dr. Levins says.

Extension agents in Michigan already are busy helping launch farmers markets and processing ventures, such as a farmer-owned, organic-certified oilseed processing facility in the Thumb area (see page 5).

But they need help. And they need respect. It’s a matter of local leaders bringing agriculture back into their picture of what the local economy is all about and then providing the business expertise and market connections that can invigorate the new entrepreneurial agriculture (see p. 10).

Michigan’s Advantage
Bringing Michigan farmers closer to consumer markets is one of the best courses of action for the state’s second-largest industry, says Michigan Department of Agriculture Director Dan Wyant.

“The national trend is that agriculture is going in two different directions,” he says. One is toward larger operations that mass-produce commodities under contract with larger companies. The other direction is toward niche and specialty food markets; toward farmers adding value to their crops with their own processing ventures; and toward locally grown and locally sold agricultural products.

“Michigan is uniquely situated to take advantage of niche, value-added, and local market opportunities,” Mr. Wyant says. “We have a lot of diversity in the things we produce, and we have a lot of agricultural production where we have a lot of people, unlike some big rural states that don’t have a large population base.”

Indeed, the state’s farmers have plenty of untapped sales potential. Michigan is second only to California in its broad range of agricultural products — from pears to perennials. The state’s farmers also sit within 500 miles of half of the populations of both Canada and the United States.

Even more overlooked are the ready markets right at home. Michigan consumers spent $25.7 billion on groceries and eating out in 2001. Only about 10 percent of that food comes directly from Michigan farmers, according to industry researchers. And only an estimated 43 percent comes back to Michigan stores after the state’s farmers sell their products into the mass market of large-scale processors and superstore chains.

Michigan farmers get the short end of that export-import deal because the large-scale middlemen make all the money. Processing, packaging, and distribution take up a full 80 percent of the final purchase price of food, according to the U.S. Department of Agriculture.

Farmland Tax Savings

Farmland protects rural taxpayers from the high costs of roving residential development. Marshall Township, south of Battle Creek, for example, spends $1.47 on public services for every dollar that new housing generates in tax revenue, according to an American Farmland Trust study. The township spends only 27 cents on services for every dollar that farms and open land generate.

For more information about farmland protection efforts in Michigan, contact: Rural Partners of Michigan, 517-702-1530, ; American Farmland Trust, Central Great Lakes Region, 517-324-9276, ; and Michigan Farmland and Community Alliance, 517-323-6550.

Capturing just a tiny fraction more of Michigan’s total food dollars — through more direct sales, processing, and value marketing — can amount to a lot of money for independent farmers in Michigan who want to stay on their land.
And that means greener pastures for everybody.

New income from new markets can add up to sizable farmland protection in Michigan because smaller, independent operations make up the majority of the state’s farms. They are the most likely to make the entrepreneurial switch, and they own a significant portion of the land under the threat of sprawl. By USDA’s definition of “small farm,” for example, 93 percent of the state’s farms are small, and they work 66 percent of Michigan land in agriculture.

The New Agriculture
A strong and growing segment of the population would rather live the independent, agricultural life — close to the land and to family — than spend hours every day on freeways and years punching clocks. That’s why many, whether from farming backgrounds or simply with soil in their souls, are following new agricultural opportunities and taking the entrepreneurial risk.

Newlyweds Terri and Rick Hawbaker, who live about half an hour away from Dawn and Eric Campbell, for example, also are in the process of buying a 120-acre farm from Terri’s parents for their own grassland grazing dairy

In the eastern Upper Peninsula, Rus and Amy Goetz have come home from jobs and commuter lives in Omaha, Nebraska, to raise their two young daughters close to their Goetzville roots on the Lake Huron shore. The Goetz’ were able to make a profit in their first year of raising poultry on pasture in movable, outdoor pens for local customers who want chicken free of synthetic hormones (see page 14).

More Land on Smaller Farms
Farms with annual sales of less than $50,000 make up 76 percent of Michigan farms. Those with less than $250,000 in sales account for 93 percent of Michigan’s farms and 66 percent of the land in agriculture. United States Department of Agriculture
And in Kalkaska, George and Sally Shetler’s two oldest sons have returned from city jobs and lives to help build the family’s “From Moo to You” milk bottling business. The dairy now is well past the breakeven stage and supports multiple family members in its business of delivering all-natural, nonhomogenized milk in glass bottles to independent grocery stores in the area.

Consumer Confidence
The Campbell’s, Hawbakers, Goetz’, and Shetlers are not playing the global market game of producing more and more commodities for less and less money. They know that their all-natural milk and pastured poultry is in high demand right next door in Detroit, Muskegon, or Sault Ste. Marie, where most supermarkets carry only mass-market brands. They also know that this consumer demand for greater food choice has grown far beyond the hippie-granola crowd.

More people want to know more about where their food comes from and how it was raised. An estimated 23 percent of U.S. adults from all income and age levels, for example, now make environmental and health considerations a primary factor in their everyday purchasing decisions, according to the market research firm American LIVES.

These consumers are driving the phenomenal growth in farmers markets — up 63 percent nationwide from 1994 to 2000. They’re also behind the record-breaking sales of organic products — up 38 percent between 1999 and 2000, nearly 10 times the conventional grocery industry’s average growth rate of 4 percent.
The September 2001 terrorist attacks on the World Trade Center, Pentagon, and postal system have only added to the growing demand for more locally produced food by exposing the vulnerability of the country’s centralized, interstate food system. The typical tomato, can of corn, or loaf of bread now travels an average 1,500 miles from field to plate, according to a new University of Iowa study. Most of it comes via processing facilities that mix meat and milk from hundreds and thousands of producers in common vats.

New entrepreneurial farmers have the opportunity to restore consumer confidence in both agriculture and food.

Better “Fast” than Big
The shifts in consumer awareness and demand fueled a quiet revolution in agriculture during the 1990s. It’s been heating up as more and more farmers discover that consumers are eager to buy those blue-ribbon beans that the mass market doesn’t value. And like entrepreneurs through the ages, farmers are finding ways to supply that demand and to satisfy consumers who are fed up with supermarket choices.

“The saying in agriculture used to be ‘you better get big or get out,’” says Wendy Wieland of the Northern Lakes Economic Alliance, a three-county community development organization based in Boyne City. “Now the saying is: ‘You’re either big, or you’re fast.’”

Faster Food
The fastest growing categories of organic food products from 1999 to 2000 were:
Meat, dairy alternatives 215 %
Meat, poultry, and eggs 64 %
Canned and jarred products 51 %
Dairy 40 %
Organic Trade Association, 2001
Most of Michigan’s farmers are no longer willing or able to grow their operations even larger. They’re choosing to retire or sell their land rather than invest millions of dollars and take on untold environmental risks with mega operations that still pale in comparison to their competitors’ size and sales potential.

That’s why some Michigan communities now are asking how they can help their farmers get fast.
The Northern Lakes Economic Alliance is one organization taking on that task. The alliance embarked last year on an initiative to research consumer demand and develop strategies to help farm families in Emmet, Charlevoix, and Antrim counties maximize their market potential. The Alliance knows that improving local farm profitability also protects farmland, which improves the area’s chances of controlling sprawl and bolsters its tourism economy.

Alliance Director Tom Johnson says putting agriculture back into economic development is a matter of first realizing the opportunity exists and then making it happen. “When you see consumer demand unfulfilled, you go get it. That’s what business is all about,” he says.

Michigan communities can look to southwestern Pennsylvania for proof of the possibilities and payoffs. A nine-county agency called the Southwest Pennsylvania Commission launched a novel effort five years ago to keep area farmers on their land by working with them to generate new sources of farm income. The initiative is going so well that it now figures prominently in the region’s economic future.

“Our first goal was to stop the loss of farms,” says Allen Matthews, a farmer and staff member of the Pennsylvania Association for Sustainable Agriculture, which has partnered with the commission. “Now our goal is to increase the number of farms.”

True Value of Agriculture
The key was recognizing how important local agriculture is economically and how central it is to local lives and the local landscape, says Rita Pollock, special projects manager for the commission.

“When we looked into it, we found we had more people employed in agriculture than in high-tech industries.” That information put the commission on a different economic development course. “We realized that agriculture puts food on the table for a lot more people in our region,” Ms. Pollock says.

The commission, along with the Pennsylvania Association for Sustainable Agriculture, put together a regional advisory board that brought economic developers, local government officials, and community planners together for the first time with farmers, consumers, and agriculture agencies. This broad partnership and high-level commitment has been key to the project’s success, Ms. Pollock says.

Danger Ahead
Michigan is projected to lose 25 percent of the farmland in its metropolitan counties by 2040 — and 15 percent of farmland statewide — if current suburban growth trends continue. Michigan Land Resource Project, 2001
Among the new farm-to-market initiatives now changing the face of agriculture in southwest Pennsylvania are: A network of 14 farmers markets and farm stands; a project to supply five area school districts with local beef; plans for a major public market in a nearby urban area; and a farm-to-chef partnership. The partnership supplies trucks that pick up, drop off, and coordinate orders.

Farmer’s Choice
Of course, not every farm family in Pennsylvania or Michigan is prepared or willing to choose the new entrepreneurial direction. But enough opportunity exists for enough people to make a big difference.

Jim Fuerstenau, director of the Michigan Farm Bureau’s Farmland and Community Alliance, says he believes new farm business development has an important place in the mix of a community’s farmland protection strategies.

“The issue is product differentiation. If you grow a tomato locally, that’s a differentiation. That’s something you can market, and you can extract a premium (price) selling that product.”

It’s important for communities, as well as the younger generation of farmers, to recognize that these opportunities exist and that they are valid options for improving farm profitability and protecting farmland, he says. “We see the two issues of farm profitability and farm preservation as being so interlinked.”

That link is people, says Carol Osborne, chair of the Michigan Organic Food and Farm Alliance. “Those farmers making person-to-person contact with customers — whether that’s a school or a grocery store or a neighbor down the road — are the key. When you have those relationships, people realize what they’re paying for when they buy your food.”

Leap of Faith
Helping farmers reconnect with consumers after years in faceless, thankless commodity markets is the part communities can play.

But first they have to get over the longstanding wall between the farm and nonfarm sectors of their local economies, says the Southwest Pennsylvania Commission’s Rita Pollock.

“This is still pretty revolutionary stuff. It’s not your standard vanilla type of economic development.”

Farmers and communities have to look beyond the wall and trust in their ability to try — and succeed — at something new. Like the Southwest Pennsyl-vania Commission and Michigan’s Northern Lakes Economic Alliance, they can recognize that farming is not only a significant local economic sector but also a valuable and irreplaceable quality-of-life asset.

And like Dawn and Eric Campbell, they can look at each other and know that life on their land with their children is worth a few skeptical looks down at the café.

“Five years ago people just thought we were doing the dumbest thing,” Eric Campbell says of the initial reception their grazing dairy received. “Now they’re asking us how to do it.”

Important Things in Life
Eric and Dawn don’t look revolutionary on most mornings in the milking parlor.
Their manure-flecked, rubber barn boots are the same essential gear that any dairy farmer in mid-Michigan wears much of the day. And Dawn is the picture of a young farm wife balancing babies and budgets as she adjusts her daughter on her hip while the milk tank sloshes.

But there’s a noticeable calm among the cows and a solid sense of security in Dawn and Eric that speaks to a big difference between their 60-head operation and the more conventional large-scale dairies.

They don’t have the huge debt that can stress families who are invested heavily in making a living with several hundred or thousands of cows. And they enjoy more comfortable margins between their gross sales and net profit lines because their production costs are remarkably low with the New Zealand grazing system.

Still it took faith in themselves and trust in the free market for Dawn and Eric to do something completely different with their lives and their land.

“We just knew we didn’t have to keep cows on concrete to produce milk. And we knew we could make due and eat beans while we got started,” Dawn says.

After five years of building their herd — rather than going into debt to buy cows all at once — the Campbells now are making enough money not only to pay the bills and themselves but also to purchase the family land that they have been renting.

But more than the money, the Campbells value what grassland grazing allows them to do.

“Our highest priority is being able to raise our children ourselves — to teach them how much God loves them,” Dawn says. “I believe there are things worth dying for, and raising my children well is one of them.”

New Agriculture Profiles: Farmers Take Control of Crops

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