Five years after then-Secretary of Agriculture Sonny Perdue visited World Dairy Expo in Madison, Wisconsin, and fielded questions on whether or not the family dairy farm can survive an economy of scale, a different message was shared.
On Friday, Oct. 4, current Secretary of Agriculture Tom Vilsack returned to the expo to say he accepted that challenge to develop strategies that help small and midsized operations continue to be in business.
The last four years combined have been the best four years of ag income in at least 50 years – and quite possibly ever – but not every U.S. farmer felt that because of the way in which the income is divided and distributed.
The top 7% to 10% of farming operations (150,000 to 180,000 farms) received between 85% to 89% of the total farm income, leaving 1.7 million farms to share what was left.
“I think there’s a genuine desire on the part of all of us to figure out ways in which we can enable small and midsized farming operations,” Vilsack said.
These farms, defined as operations that sell less than $500,000, are important to rural communities and the schools, small businesses and emergency services within them.
Rural America also provides a disproportionate number of people who serve in the military because of the ethic of service and genuine belief in country, family and community that comes from small towns.
“It’s a value system that’s worth fighting for,” Vilsack said. “But to do that, you’ve got to create an opportunity for those small and midsized operations to be able to profit.”
He added, “It can’t just be support programs. It’s got to be a new and creative model in which we essentially challenge ourselves to figure out ways in which those same farm families can generate more than one source of income from their farming operation.”
The USDA is pursuing several different strategies on this front.
Climate-smart initiatives
The first is to have producers get paid not only for what they produce but for how they produce it.
The Partnerships for Climate-Smart Commodities encourages farmers to embrace climate-smart agriculture and to be rewarded for that with a market premium.
Thus far, 136 contracts have been signed, involving all 50 states and every major agriculture commodity and livestock that’s produced in this country.
Close to 200 climate-smart practices will be incentivized to bring value-added opportunities back to the farms. The program is measuring, monitoring and verifying the conservation and environmental results of those practices, which will set up an opportunity for producers to create a new source of income from ecosystem service markets (carbon market, water market, biodiversity market, etc.)
Rural energy
Significant resources have been invested in the Rural Energy for America Program (REAP) to help convert agricultural waste into a variety of products, such as anaerobic digesters that convert manure into something more valuable.
In an example, Vilsack mentioned a dairy in Wisconsin that invested in a digester. They are selling methane from the digester to produce renewable natural gas, using the manure solids from the digester as bedding to reduce costs and creating two types of fertilizer – phosphorus-based and nitrogen-based – that can be used on-farm or sold to neighbors.
“Instead of just one income source, farm families now have two or three or four income sources,” the secretary said.
Local and regional food systems
The USDA is encouraging the development of local and regional food systems to help farmers keep more of the food dollar.
For milk sold as a commodity, dairy farmers get roughly 15 to 20 cents of that food dollar, but when sold directly to a customer, school or farmers' market, that farmer can potentially generate 50% to 75% of that food dollar for their operation.
Through the Value-Added Producer Grant program, the USDA is encouraging the use of local food purchasing agreements.
In instances where the USDA provides money to the state to support food banks and schools, it is using this program to direct a portion of that money be spent with local and regional food producers to create new market opportunities for small and midsized farming operations.
Recently, the program received a new investment of $1.7 billion spread across all 50 states.
Organic
As some small and midsized farms have opted for organic farming methods, the USDA has invested in expanding the development of organic markets.
The Organic Market Development Grant (OMDG) program has awarded $85 million to projects that will support the development of new and existing organic markets to increase consumption.
Another $58 million was made available in late September specific to dairy. The Organic Dairy Marketing Assistance Program (ODMAP) 2024 assists organic dairy operations in deferring some of the expenses associated with marketing of their product.
Innovation
The USDA has invested in four dairy innovation centers across the country, located at California State University – Fresno; University of Tennessee; Vermont Agency of Agriculture, Food and Markets; and University of Wisconsin.
These innovation centers utilize resources from the USDA to focus on the development, production, marketing and distribution of new products.
To date, $64 million has been invested to fund over 600 new opportunities for dairy producers in 40 states across the country.
With a focus on value-added opportunities and modernizing dairy facilities for small and midsized operations, Vilsack announced another $11 million available to those four dairy innovation centers.
From climate-smart initiatives and rural energy opportunities to boosting local food systems, organic operations and value-added innovations, the USDA is using a multifaceted approach to ensuring small and midsized farms can stay in business.
“We are betting on and we believe in this industry and the importance of this industry, and we believe that if we can continue to do this, that over time, we can begin the process of reversing the decline of dairy farms in small and midsized operations in this country,” Vilsack said.
