Scaling Organic Production w/ Brian Halweil

Interview with Brian Halweil, Partnerships and Product Consultant at Belltown Farms

Show Notes

Do you want to start scaling organic production and secure contracts with food companies? Well, Belltown Farms in New York may be a good model for how to do just that. Brian Halweil of Belltown Farms joins us to discuss their plans to grow their operation to 30,000 acres of certified organic grains and beans.

Learn more about Avé Organics: www.aveorganics.com 

Learn more about Belltown Farms: www.belltownfarms.com 

Connect with our guest on LinkedIn

#agriculture #farming #organicagriculture #organicfarming #scaling

Podcast Transcription

INTRO: Welcome to Organics Unpacked, a podcast for the business-minded organic grower, where we hear from top experts in the commercial organic industry. With a focus on the business elements of organic growing both in and out of the field, you will gain insight and grow your operation. This show is brought to you by Avé Organics, a Wilbur-Ellis company. Here’s our host, Tom Buman.

TOM: Brian, welcome to Organics Unpacked.

BRIAN: Hey, thanks for having me, Tom.

Scaling Organic Agriculture at Belltown Farms

TOM: Well, it’s great to have you, Brian. I know that you are working with Belltown Farms. Tell us a little bit about your job and tell us about Belltown Farms.

BRIAN: So Belltown Farms is a regenerative agriculture platform. It was formed a few years ago with the business model of buying large pieces of farmland in certain geographies in the United States, converting that land to certified organic and operating those farm hubs for decades into the future with really strong offtake agreements for organic grains and beans. Our focus is on growing certified organic grains, partly because, in looking at the American food marketplace, we saw that there was incredible demand for organic grains as an ingredient in all sorts of food and beverage products. And there were major bottlenecks in the American supply chain for those commodities. So major food and beverage companies like General Mills and Anheuser-Busch, large and small, were often buying organic grains and other row crops and organic commodities from non‑U.S. sources. So our vision was to develop grain hubs — organic grain hubs — in nine to 10 different geographies, nine to 10 different states, and meet that demand by just sort of hiring some rockstar organic grain farmers and getting really efficient at scaling up organic grain production.

Organic Grain Hubs

TOM: So, Brian, you said a whole lot there, right? To take that apart, you said that you have these hubs around the United States. I understood you to say that you purchased the land, or do you rent the land?

BRIAN: No, we purchased the land. So we raised money from different partners and investors to purchase this land. And in some cases, we will lease or rent land near our hubs. But the basic model is to get to a scale of about 2,000 or 2,500 acres in each geography. That’s what we’ve determined is efficient, allows us to get to the right scale of equipment and staffing. We have a hub where we’re going to have our infrastructure, our storage bins, our shop — essentially, our headquarters — and we will own and tack on land around that hub and, in some cases, rent or lease land near that hub. But ideally, we intend to own the land, partly because we see American farmland as an incredibly valuable asset, which, by some assessments, is still underpriced for how productive it can be and because we’re in this for the long haul. So we see that owning this land for 10 or 20 years is just a good investment. And once it’s certified organic, that will even increase its value even more. Now, I will tell you: so, currently, we own and operate farms in six states going east to west, if my geography is good, in New York, Michigan, Illinois, Nebraska, Texas and South Dakota and hoping to add two or three more hubs by the end of this year.

TOM: Wow, so where do you see those other hubs? Have you decided where they’re going to be? Or is that not something you want to release at this time?

BRIAN: I’m happy to say that we’re looking all over the country. We have ruled out a few states where we feel like there’s just too much environmental risk related to erratic weather, water shortages. For instance, we’ve basically ruled out California as a place where we want to have a hub, partly because of very high land prices and partly because of some of those environmental risks. But we’re looking actively in the Pacific Northwest, looking a lot in the Southeast and the Mid-South Delta right now — sort of the Tennessee-Arkansas-Mississippi area — and also looking in the Mid-Atlantic.

Different Sectors of Organic Agriculture

TOM: I want to go back to something you talked about earlier. It’s the crops that you’re raising at Belltown Farms. You’re not looking at leafy greens and high-value crops. You’re looking more at the grain crops?

BRIAN: Exactly. So we chose row crops — grains, beans — for a few reasons. One, we liked the efficiency, that these crops could be planted and harvested/​tended essentially with machines. So there wasn’t as large a labor component as growing vegetables or fruit or other perennial crops, even though there are quite strong organic markets for those commodities. We also were quite wary of how we could have the biggest impact on acreage, on the calories that people consume. And of course, grains remain the majority of the land usage in the United States and the calories that people consume. Also, in our analysis of organic agriculture and different sectors of organic agriculture in America, we found that organic grains and beans were the most fragmented market. When you look at organic lettuce/​organic berries, there are a few large players on the grower side that really dominate. And in the case of lettuce, you see a handful of large growers in California/​Arizona, the West and Southwest, who sort of set the standard and are the major players in those crops, and we didn’t see the same for grains. Even if we grow to owning and operating 30,000 acres, we will still be quite small when it comes to total grain production in the U.S. We’ll be quite small even when it comes to total organic grain production. But again, we saw the greatest potential to have an impact on the landscape with grains.

TOM: Sure. So, as you’re setting up these hubs and growing your crops, I understood you to say that you probably have contracts with companies before you even plant them?

BRIAN: Well, that would be ideal. We have been lucky, in a couple of cases, to have relationships with large breweries, large regional bakeries — in some cases, feed producers — livestock feed producers who currently have a very strong demand for organic corn and beans, for instance. In the case of some regional bakeries, there’s a really strong demand for organic winter wheat, organic wheat and even transitional wheat (wheat that we grow in the two years where we’re not spraying anything, but it’s not certified organic yet). So, in those cases, we have been lucky enough to lock in contracts before the crop is even harvested. But for the most part, especially as we get up to scale and we have more acreage to harvest and market, we’re just developing offtake agreements as we go along.

Growing the Organic Foods Market

TOM: All right, so it’s some of both, right? Some you have offtake, some that you hope to develop in time. So your founders must have had a real sense that organic foods was a growing market with consumers.

BRIAN: Yes, exactly. Not just a growing market. There’s good evidence that the organic market’s been growing at 20% a year for, coming up on, 10 – 15 years. But what was really compelling is that premium that a given organic crop is sold for, versus a nonorganic crop. That premium is still two to three times and two to threefold, and it doesn’t really show any signs of shrinking, even more than the growing market for organic foods. And the United States, by the way, is where half the organic food sales on the planet take place. So America is really the big driver of the organic marketplace, more so than Europe, more so than Asia. And here in the U.S., you see that a given bushel of organic soybean sells for literally three times what a bushel of conventional soybean sells for. You see that across all the major crops that are in our rotation, from wheat and barley to corn and soy and black beans. And now, getting into some other crops that we’re starting to grow at scale, oats, peas, canola and some of these other ingredients that are getting popular as we move away from more dependence on corn and soy.

TOM: So what do you see as Belltown Farms? What does Belltown Farms see as the future of organic? The passes looked really good. The premiums look good. The growth is at 20%. Does that slow down some day or in the foreseeable future? Or do you feel like this is a trajectory that will continue?

BRIAN: It’s a trajectory that will continue for the foreseeable future. Organic acreage in the United States is still under 1% of total acreage. Organic food sales are still in the single digits percentage of major grocery categories, from produce to various shelf-stable items. Even dairy and eggs, where a lot of households do choose organic, we’re still talking about the 5% range of the total market. So quite a bit of room to grow before organic even becomes mainstream in a way that it isn’t currently.

Scaling Up with Different Organic Crops

TOM: When we talk about the crops that you plant, you talked about small grains. You talked about row crops. Specifically, what are the major crops that you look at now, and what are some of the crops that you think you would be looking at in the future?

BRIAN: Our main crops, of course, this varies by our hub. One of the reasons that we decided to set up hubs in nine or 10 geographies is to be able to grow different crops that work in those areas, but also to hedge against crop failures or weather events in any given one. If I want to talk about the crops that are dominant across all of our farms, it would be corn and soy, wheat or barley, black beans or other dry beans and, increasingly, peas. Peas and oats are in our rotation. For our winter cover cropping, it’s often a rye/​clover mix, and then we’ve done some more sophisticated cover cropping, as well, in the two years of transition on our farm. Again, in Illinois, our farm manager, Chuck, is quite an innovative, experimental, thoughtful guy. His cover crop for the transition has been a mix of sunflowers, brassica or radish and wheat and clover. Coming up to that field, it’s quite beautiful. Those plants have different stories. Then, in New York, our cover crop has been a little more traditional. It’s been a rye or a winter wheat. And in our transition years, we’re often growing a forage crop for nearby dairy farmers, so it’s an oats/​peas mix, a timothy/​alfalfa mix, pretty traditional crops. One of the big challenges for any organic farmer is for those first two years of transition, before you can sell your crop as certified organic, your revenue takes a major hit. In some cases, you have zero revenue. So we always try to be creative with what we can plant and grow at a minimum of cost and find some market for. So we’re trying to be really creative in thinking about: is there something? Is there a buyer nearby for a transitional grain? Is there a good market for some livestock forage that we can take off of those transitional fields?

TOM: Brian, has Belltown Farms given any thought to organic meat production? Are you strictly in crops?

BRIAN: We’ve given a lot of thought to organic meat production. But apart from using livestock in a transitional way, as having livestock run on our land during those transitional years, we are not planning to raise beef or pork or chicken. We think we’ll do best specializing in grains, which already has quite a wide range of crop diversity to experiment with. And while we’ve had animals on our farm in Illinois and Nebraska — and we will probably have animals on our farm in New York — it will be more for fertility and weed control and to improve soil health in the transition years or in the off-season, not to produce meat.

Organic Farm Managers

TOM: Okay, so in your different locations that you have — your different hubs, Brian — how do you go about picking a farm manager? It seems to me like somebody really in organic farming is probably doing it for themselves. How do you go about getting a farm manager for those hubs?

BRIAN: Well, we take many of the steps that any business takes when they’re trying to hire someone. We put out help wanteds. We do a full-court press on our network and any major hiring websites from LinkedIn to Indeed, different farmer employment websites and also through some sustainable agriculture networks. And we do find that many of our applicants are either managing another organic farm, but they’re ready to move on — or maybe they’re ready to move geographies — or they manage their own family farm currently. And maybe there’s an opportunity for some other family member to take that over, and one person is ready to work off the farm. So several of our farm managers also have a family farm that they’re still involved with that’s nearby. But they’re looking to maybe take on a new challenge, as I said, move to another geography and also be part of a team of organic farmers. We have weekly calls for all of our farm managers, where everyone downloads what they’re working on on their farm — what challenges they’re facing — and it’s an incredible opportunity. I think about it as a type of Dream Team” or Avengers” team of organic farmers where, once one of them shares a problem, all of them kind of bring their knowledge and experience and thoughts together to help overcome it. So I think it’s a nice opportunity for someone who’s maybe been working on their own, or just working with family, to work with a broader set of folks.

Small Organic Growers

TOM: So, Brian, I noticed that on your website, Belltown Farms, you have a career place where, if somebody’s interested in knowing about it, certainly they can get there. So one of the things, Brian, oftentimes we find is that in the organic space, there are a lot of small growers that have kind of built out the space for organic farming, and they worry about larger companies coming in and taking over. And in the last couple minutes, what would you say to a small farmer about Belltown and how they might displace other farmers? I know that it’s a growing space, but there’s always that kind of concern that we built this space for organic farming, and we could lose it to large-scale organic farmers. What would you say to them in the last couple minutes?

BRIAN: Well, a few things come to mind. First, we talk a lot at Belltown about having an open-door policy. So, whether it’s a nearby conventional farmer or organic farmer, we do want to be in touch. And we do want to share how we’re growing — what sorts of crops we’re thinking about — and share a lot of details also about our approach to business if it’s something that can be helpful to other farmers or just in a way of sharing best practices to help raise up all organic growers. In all the areas, all the geographies where we operate, we are fairly sensitive when we’re looking to purchase a farm, for instance. If we feel that that purchase would disrupt another organic farmer in the area, we generally steer clear. We’re not interested in doing that. In the work that I’ve been doing in the Hudson Valley, which is certainly a close-knit county where there’s a lot of competition for land, there have been fields that I’ve been looking to lease, which I have then learned from the land owner are currently leased to a local beef grower, a grass-fed beef grower or a local organic farmer. 

And sort of across the board, I’ve said, Well, I appreciate you contacting me about leasing, but I understand that so-and-so leases your land. I don’t want to disrupt their operation. We know this field’s important to them.’ So we’ve steered clear. In our other geographies, which are sort of much larger, and there’s more commercial agriculture, I don’t feel we’ve encountered a lot of situations where our interest in buying a farm is really going to disrupt nearby organic growers. Also, the markets we’re going after are fairly large. The companies that we’re selling into have told us they would take substantially more than we currently can sell them. So we don’t feel that us entering the market is really eliminating markets for other growers. That sort of competition may be more the case on a very small-scale level. If there’s, let’s say, some organic vegetable/​mixed vegetable growers who are selling into a local community of farmers’ markets or grocery stores, maybe a large, new player coming into the area would disrupt those markets. But we are really selling to much larger wholesale accounts: food and beverage companies, food and beverage manufacturers. So we don’t feel we’ve been in a situation where we’re taking away or disrupting markets for those local growers.

Scaling Organic Markets in the U.S.

TOM: I think the other thing, Brian, is we have to realize how much of those grains are imported. It seems odd — here we are, in the United States, where we export so much grain — that a significant portion of organic grains are imported into the United States. I think the bigger risk to small organic farmers is losing the market to imports, where people can get a foothold. It always seems to me that we ought to do our best to keep these markets homegrown and in the U.S. the best we can.

BRIAN: That’s a great point. For many of these commodities that we’re talking about, the vast majority of the organic supply in the U.S. is coming from outside the country. So, if our goal is simply to bring some of that market back into the country, there’s a lot of market to go around. And again, if we get to a scale of 30,000 acres, as we hope to within the next few years, we’re talking about under 1% of all the organic grain acreage in the United States, which, by the way, in turn, is 1% of all the total grain acreage. So we’re still a fairly small player compared to, let’s say, some large organic lettuce growers or berry growers, which might have a five or 10 or higher percent market share. Certainly, our intention is not to disrupt markets for small organic growers. It’s to increase the size of the organic market, in general, and to make it easier for large food and beverage companies to roll out organic brands, which, in turn, should generate even more demand for organic.

TOM: Right. Brian, thanks for being a part of Organics Unpacked this week. We really appreciate your time. It was fascinating to hear about your journey and the journey of Belltown Farms, and we look forward to hearing more about you. So, Brian Halweil, thanks for your time.

BRIAN: Hey, Tom, it’s a pleasure. Thank you, and thanks for all you do.

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