August 22, 2016
Absentee ownership and the farm: How to help growers succeed in the face of long odds
You own the land. You farm the land.
Once upon a time, this was simply the way it was. Every farmer’s dream was to own a prime patch of land, farm it his or herself, and make a comfortable living on their own property. Independent. Free of upstream management.
My, how things have changed. An increasing amount of farmers rent or lease land, having to deal with landlords who just want to make a profit and get the heck out of dodge. According to the USDA’s 2014 Farmland Ownership and Tenure survey, nearly 40 percent of U.S. farmland is rented or leased. In high-production states of the corn belt, that number can be even higher, and has been on an upward trend over the last 30-plus years. An Iowa State University study showed the amount of owner-operated land in Iowa dropped from 55 percent in 1982 to 40 percent in 2012. That’s 60 percent of all farm acreage in a heartland state that is owned by someone other than the grower.
More importantly, the percentage of land farmed through a cash-rent agreement jumped from 21 percent to 46 percent. In the first half of this decade, when commodity prices were higher, rents also rose – reaching an average of $260/acre in Iowa for the 2014 crop year. Since that time, cash-crop prices have dropped close to 50%, while cash rents have only gone down 15%.
In short, many growers today face challenges that farmers of old never had to consider. Lower profit margins and limitations placed on you by people who don’t know (or maybe even care) about your business are specifically 21st-century problems.
A gap in communication
Of the two million landowners renting acreage to others for ag purposes in the U.S., 87 percent were landlords who did not operate a farm themselves. That’s 350 million acres of land controlled by people who may not understand the needs of their growers.
Often, it just takes a farmer to talk to a farmer.
For those growers who are fortunate enough to work with owners who are current or former operators, the conversation is manageable because they have someone who understands their challenges. However, those growers who are working with owners without a farming background have an uphill climb. If a farm management-company is in the mix, growers have yet another hurdle when it comes to making decisions.
And what about contract quirks or regional and/or environmental issues? Renters face myriad issues that absentee owners may not fully understand. Leases may require certain land improvements or benchmarks (soil testing, property conservation, fertility and liming agreements), or restrict certain farming practices (double cropping, fertilizer restrictions, cattle stocking rates, prescribed fire, limitation of cattle’s access to surface water). Growers, in many instances, don’t have full flexibility to make the best changes or decisions on their farms due to contracts and farm management relationships.
So how do we help?
The good news is that when a grower has a problem, a supplier (and, in turn, the supplier’s marketer) has an opportunity. There has never been a more fertile ground to provide growers with tools to help differentiate their products and enhance their bottom line. And, since they’re often dealing with landlords who don’t fully understand their plight, growers are likely to be very receptive to those who do.
Obviously, a product has to perform. If a tool doesn’t work, a farmer won’t buy it even in the best of financial times. When the bottom line is on the line, every decision on the farm is a big one, especially when it comes to outside costs.
But in today’s landscape, performance isn’t our only opportunity to differentiate. If we can provide secondary benefits to not only meet the distinct needs of today’s producer and also play into the needs of their landowners or downstream customers, we’ll easier separate your product from the competition. One multi-tool is better than a number of separate tools, after all. Less packaging and fewer trips to the store in the first place are concepts that anyone can understand.
Being proactive to grab the grower’s ear is another key aspect to marketing to this audience. Why show them a brochure, when you can use an app? If your product can help them, do you have a tool that can prove it? Can you evaluate their situation and show them exactly what they need to do to be successful? Pretty words and lovely green landscapes can get you in the door, but proof that you understand what they’re looking for –and even what they aren’t— is the closer. It’s the difference between winning the El Dorado and the steak knives.
Reaching out to the landowner or management firm is always a possibility, if your product can help their situations. If the product improves the grower’s crop, but also creates a sustainable situation for the soil, you’ve literally raised the value of the land. If you have tools in place that can prove it, you might have an influencer that can encourage a grower to hear you out.
The more you know
As always, knowledge is the most valuable tool in a marketer’s pocket. Knowing your audience’s ownership situation allows you to adjust your channels so that growers can be armed with the tools needed to make the crop a win-win for all parties involved.