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Is there more opportunity in "C" quality farms?
We tenant farmers have a few ways to improve our margins — and generating revenue from our machinery line isn't the only one.
In our operation, we've historically steered away from “C” quality farms.
Today, though, we're asking ourselves if there's an opportunity in those types of tracts that we haven't seen before.
What's a “C” quality farm?
It’s not just one factor. A “C” farm combines several elements:
- Soil types
- Drainage
- Drainage outlets
- Property shape and size (farmability)
This means that no single characteristic defines a "C" farm.
One reason we've avoided these tracts is their incompatibility with the machinery model popularized in the late 1990s (which still has a place today). As I recall, we installed a monster spotlight (think of the bulbs used to light up Jack Trice Stadium) on our planter tractor with the idea of running it day and night. This doubled our productivity!
The play back then (and still somewhat today) was to invest in tractor and equipment technology, then spread those costs over more acres. This helped reduce our operational expenses, allowing us to offer better returns to landowners while maintaining our profit margin.
Odd-shaped farms or those with undrained wet spots were out of the picture because they didn't allow us to apply the large-scale equipment efficiency model we embraced 25 years ago.
But today, market incentives have shifted. While this large-scale model still works, it’s been widely adopted, leaving fewer opportunities. Today, those square/uniform farms come with a premium, or we're forced to look farther afield.
Both scenarios reduce any potential margin gain.
Enter stage left, sustainability — and, more specifically, its dollar value.
As an example, the USDA's Partnerships for Climate-Smart Commodities grant is starting to bring real money into sustainable practices like no-till, cover crops and other initiatives.
Pivot Bio's N-Ovator Program is another example, cutting the cost of nitrogen products to half that of synthetic alternatives and providing growers in-season nitrogen with similar outcomes.
Both of these sustainability initiatives generate value from large, publicly traded corporations and offer real value to those who adopt them.
And, although it hasn't matured yet, the carbon market and the 45z tax credit hold potential value.
So, we asked ourselves: What if we applied a different model to a sub-section of our operation?
For instance, to combat the inefficiencies of a farm with 15 corners, let's make only the key passes:
- Plant
- Spray
- Harvest
What if we adopted no-till or reduced tillage? We’d qualify for sustainability programs.
What if we added cover crops to promote natural drainage? That could open up even more sustainability funding.
While my peers who focus on “A” and “B” tracts might argue that these fields won't be fit to plant until 20 days after theirs, I’d counter that, while that’s true, planting at the end of our normal window and harvesting at the beginning essentially extends our season and spreads out our fixed costs.
We have years of experience handling grain, hedging and merchandising. We know how to source and apply inputs. Both of these strengths are still rewarded in a “C” farm model.
In truth, we tenant farmers have a few ways to improve our margins. Generating revenue from our machinery line is one.
But it’s not the only one.
Reid Weiland is the managing partner of Weiland Farms. He oversees the farm’s day-to-day operations and leads all land management and farmland acquisition efforts.
