New JV to Raise Profitability for Organic Grain Farmers
In a move undertaken to foster more large-scale organic farming operations, Farmers Business Network (FBN) – the company behind the independent farmer-to-farmer network built to connect farmers and allow for the sharing of data, insights, and information critical to agronomic decision making – and AgriSecure, a Nebraska-based turnkey organic platform, have announced a strategic partnership that will raise profitability for organic grain farmers.
As a part of the agreement, FBN will make an undisclosed anchor investment in AgriSecure in exchange for FBN’s farmer-members being granted priority access to the AgriSecure Platform.
Founded in Arlington, Nebraska, by fifth-generation farmers, AgriSecure partners with organic farmers giving them the tools needed to simplify the process and reduce the risks associated with transitioning from traditional to organic grain production, while increasing profitability. The platform includes end-to-end management of organic acreage, certification support, management on a whole-farm and field-level, agronomic advice, and data platform and marketing access by providing farmers with production expertise, technology systems, and on-farm support.
Organic sales on the U.S. market reached $47 billion last year, according to the 2017 Organic Industry Survey conducted by the Organic Trade Association. Of all organic categories, organic food sales saw the greatest increase – jumping by $3.3 billion or 8.4 percent over the previous year. Despite this rise in demand, over the three years to 2017, The Organic and Non-GMO Report states that 37 percent of U.S. organic corn supplies and 74 percent of organic soybean supplies were from (sometimes fraudulent) imports.
“In a time when U.S. farm profits are low and we’re importing organic grains, AgriSecure empowers U.S. farmers to capture the profit potential of organic grains such as corn and soybeans with a seamless transition,” says FBN co-founder and VP of product Charles Baron. “By providing buyers state of the art traceability, it enables food companies to manage their organic supply chains domestically, at scale, and with field-level traceability.”
This disparity is a reflection of the challenges farmers face in switching to organic production including the lag of a three-year transition period, a lack of economic business models for transitioning, and the red-tape needed for certification.
“It’s a major investment,” J.P. Rhea, founder and CEO of AgriSecure, told Bloomberg in a telephone interview. “For farmers that are struggling with cash flow already, going through the organic transition is daunting.”
However, farmers that are leveraging the AgriSecure platform, are realizing much higher revenue per acre, as their organic grains are fetching prices that are two to three times those of conventional grain.
“We believe AgriSecure has cracked the code on large scale, row crop organic farming: the AgriSecure program makes organic farming a viable commercial option for large-scale commodity farmers,” said Rhea.
FBN’s farmer network currently represents 24 million acres across the U.S. and Canada, and the company has targeted specialty crops as a revenue channel for its growers.
“If farmers can capture the changing aspect of the food system, producing traditional commodities won’t be their only option,” Baron told Bloomberg. “Consumers are going in the other direction, buying more specialty products and buying for environmental reasons.”
The joining of these two platforms will now mean that FBN’s farmers will have priority access to AgriSecure’s platform, while the capital gained from FBN’s investment will be able to back the scaling of AgriSecure’s services to a wider range of crops, and eventually to include financing and marketing.
The deal also will benefit buyers of organic grains, who will have access to not only AgriSecure’s traceability platform, but to the FBN Crop Marketing’s Identity Preserved contracting programs.
“Buyers can now work end-to-end. They can line up long-term supply, grown by premier farmers, with total traceability and field-level crop knowledge,” said Baron. “We can even help them roll out and manage custom or proprietary seed genetics, for a crop tailored to their end product.”