Farm Transitions: Valuing Sustainable Practices: Alternative and Specialty Crops

For growers in the Midwest, anything other than corn and soybeans can be considered an alternative crop. Alternative crops such as small grains (oats, wheat, rye, barley) and oilseed crops (canola, safflower, sunflower) can be grown as part of a crop rotation on large acreages. Legume crops such as alfalfa and dry beans can help build soil by hosting bacteria on their roots that “fix” atmospheric nitrogen into the soil. Alternative crops in the rotation can help reduce disease and insect problems, as well as diversify a farming operation to spread income out more evenly during the year.

“Specialty” crops like fruits, vegetables, and nuts; and even more unusual specialty enterprises like agritourism and aquaculture (fish farming) can be quite profitable. Fresh fruit and vegetables can return up to $18,000 in net income per acre, or sometimes even significantly more—for example, $54,000 per acre for heirloom tomatoes. However, these high-dollar estimates do not include marketing costs (1). Based on farmers’ financial reports from 2008 through 2011 in Minnesota, average net income was about $1,800 per acre for mixed vegetable production and $2,200 for strawberry production (2), so a figure of $2,000/acre/year net income for mixed fruit and vegetable production is used in the Cost/Benefit Table.

Specialty crop operations do not require the large acreages typically seen for grain and forage production operations. A hundred acres would be considered a large vegetable farm in the Midwest. A vegetable or fruit operation in which the farmers sell directly to the public typically involves fewer than 30 acres. This presents an opportunity for a larger-acreage farm to split off smaller parcels that could support one or several new specialty crop farmers.

If alternative crops are something that you want to encourage for the future as part of a crop rotation or if you want to foster a beginning specialty crop farm on your land, then farm transition process should include enterprise budgeting to determine likely cash flows of the future farm(s) and the farmer’s ability to pay the rental, lease, or sale price that you want for your property. Your farm’s distance from potential markets should be a consideration in deciding whether this is a reasonable option to pursue for your property. Direct-marketing farm operations generally do better when they are close to large urban markets, for instance.

Specialty crops are often a riskier option than cash grain crops. While some federal crop insurance options are available for some specialty crops, the insurance options are generally much better established and easier to use for cash grains (see Uninsured/Underinsured Risk text box). Some specialty crops are more sensitive to weather variations, diseases, and pests than grains are. Crop protection chemicals (herbicides, insecticides, and fungicides) that are available to grain producers are often not labeled for use on specialty crops. Limited availability of crop protection tools increases the risk of crop yield reduction or loss of salable product. High labor requirements per acre are also a type of risk. With specialty crops on a small acreage, the time required per acre is high and failure to get necessary tasks done in the time window required by the crop can lead to losses (see Labor Hours for Fruit & Vegetable Specialty Crops text box).

The farm transition plan should include recognition of all these risks as potential costs and barriers to a new farmer starting up an enterprise. It is also true that the potential profits from a specialty crop can be much greater per acre than from a cash grain crop. Rent, lease, or sale terms can be structured so that the retiring farmer or landowner shares in the risks, but also in the potential rewards from a lucrative specialty crop.

Use the Alternative and Specialty Crops Cost/Benefit Table to estimate the value of alternative and specialty crops for your farm.

References:

(1) Ag Decision Maker, Iowa Fruit and Vegetable Production Budgets. Craig Chase. Iowa State University Extension. www.extension.iastate.edu/agdm/crops/html/a1-17.html

(2) Minnesota Specialty Crops, An Analysis of Profitability and Performance: Minnesota Department of Agriculture
www.mda.state.mn.us/~/media/Files/food/organicgrowing/specialtycrop2012.ashx

(3) Projected 2012 Crop Budgets, North Central North Dakota. December 2011. Andrew Swenson and Ron Haugen. North Dakota State University Extension Service.
www.ag.ndsu.edu/pubs/agecon/ecguides/nc2012.pdf (accessed 8/19/13)

Further Resources:

Crop Insurance Options for Specialty, Diversified and Organic Farmers. 2012. Jeff Schahczenski. Appropriate Technology Transfer for Rural Areas (ATTRA).
https://attra.ncat.org/attra-pub/summaries/summary.php?pub=413
This publication reviews federally subsidized crop insurance, with special attention to options available to specialty, diversified, and organic farmers. It gives special attention to understanding whole-farm revenue insurance options, which may be of particular interest to growers of diverse specialty and organic crops and livestock.

Alternative Agronomic Crops. 2000. Patricia Sauer and Preston Sullivan.Appropriate Technology Transfer for Rural Areas (ATTRA).
https://attra.ncat.org/attra-pub/summaries/summary.php?pub=84
This publication provides an overview of the considerations involved in selecting, cultivating, and marketing alternative agronomic crops. Many additional resources for alternative crop information are referenced in this publication.

Horticulture Crops as Alternative Crops. Appropriate Technology Transfer for Rural Areas (ATTRA).
https://attra.ncat.org/horticultural.html
This series of six publications offers detailed information on production of specific horticultural crops, focusing on sustainable and organic production methods for traditional produce and also introducing a range of alternative crops and enterprises. It includes information on strategies for more sustainable greenhouse and field production of everything from lettuce to trees.

Organic Risk Management. 2010. Editors: Kristine Moncada and Craig Sheaffer. University of Minnesota.
www.organicriskmanagement.umn.edu/alternative_crops.pdf
This online manual is intended as a guide for organic and transitioning producers in the Upper Midwest. It includes a lot of good, basic agronomic and soil science information that is useful for non-organic farmers as well.