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Audio Transcript

Chad Fiechter: Welcome to the Purdue Commercial AgCast, the Purdue University Center for Commercial Agriculture’s podcast featuring farm management news and information. I’m your host today, Chad Fiechter. I’m an assistant professor, and I’m the instructor of the advanced farm management class here in the Department for Agricultural Economics. So we bring in speakers, uh, to speak to the students. And so I’ve invited one of the speakers to join me for a conversation.

[00:00:28] Guest Introduction: Michael O’Donnell

Chad Fiechter: With me is Michael O’Donnell, so I’m gonna let him introduce himself, and, um, you’ve had a pretty unique career journey, and maybe tell us a little bit about you, and then about that unique career journey.

Michael O’Donnell: Yeah, sure. Thanks for having me. Um, had a unique journey into agriculture. I did not grow up in farming or in agriculture and in fact, don’t even have any, direct education or degree in agriculture. I did attend Purdue University, have a bachelor of science in mechanical engineering. I worked in the engineering industry for a while for General Electric Power Systems and for Cummins, the diesel engine manufacturer down in Columbus, Indiana. There I did have some interface with agriculture. I was working on what they call current product support on control systems in their diesel engines and on the industrial side, and that included agricultural equipment. So I often find myself at a farm troubleshooting engine control problems. So that was kind of my first exposure to agriculture.

But I went back to grad school down at University of Texas at Austin, in mechanical engineering, but found myself working with a very interdisciplinary research team where all of our work was kind of at the interface of energy technologies and policy. And I found myself on an EPA funded project looking at biofuels. So doing some life cycle analysis of biofuel production and also kind of a policy assessment of the newly passed, what turned the renewable fuel standard into, kind of ramped it up. I think it was called RFS2 for short. So with that I needed to study more about corn and soybean production as the feedstocks for biofuels. And as I dove into that I just started getting very interested in agriculture, farming, sustainability. And one thing led to another. I did I did wrap up my graduate studies and thesis and left University of Texas with a master of science in mechanical engineering.

But while doing that, started working on a large certified organic vegetable operation, then found myself back in Indiana with a, diversified grain and livestock operation in west central Indiana. Had my own small market farm with my family for a lot of years, and then found myself, working with Purdue University with the cooperative extension service. Worked in Delaware county as an ag educator, supporting the range of people working in the agricultural industry in that county. Um, and then found myself in a role as a statewide organic agriculture specialist with the Extension service. And that was a new position at the time. And just based on where questions were coming and where I saw the need for support from Extension and where resources, you know, could help out was specifically in the area of grain farming. More and more farmers interested in looking at organic, getting into organic, transitioning land. Uh, so that is really what got me into organic grain farming and that whole industry.

Um, so I did that for a little over four years, but then, ran into an opportunity with a farm about 30 minutes north of Purdue’s campus with an operation called Living Prairie Family Farms. At the time was mostly a conventional operation with I think one field in organic and an interest in transitioning the whole farm, which was a little over 4,000 acres to organic. So I joined the team and became worked directly with the farm owner on helping him work through that process. Currently, I find myself working with a company called Belltown Farms in a role as a regional manager, supporting a couple of their farming operations in the United States.

Chad Fiechter: So, in your role with Purdue, when I think about the organic production industry, you spent a lot of time with smaller farms kind of early on, and then this, this kind of part of your career you’ve spent with kind of these larger operations.

[00:04:31] Belltown Farms

Chad Fiechter: So can you tell us a little bit about Belltown and what you’re doing currently at a high level, and then what your role is?

Michael O’Donnell: Yeah. Yeah, sure. Yeah. And in my time in Extension, I worked with farms of all sizes. I worked with small diversified farms, small vegetable operations to large conventional grain farms. And then in my role in the organic position, a lot of the farmers I was working with were large conventional grain operations transitioning into organic.

Chad Fiechter: Sure.

Michael O’Donnell: Belltown purchases farmland. Currently we operate in five different states. That could increase. Um, and we’re typically looking to purchase areas of land of about 2,500 acres or more. We just find that that’s kind of a sweet spot. If we go any smaller the economies of scale just aren’t there for the type of farming we’re doing. Currently, Belltown owns something around 25,000 acres, but we operate on about 30,000 acres. It’s five different states currently. New York, Illinois, Michigan, Texas and Nebraska, with nearly half of the portfolio of the company in Nebraska.

Chad Fiechter: Okay.

Michael O’Donnell: So Belltown’s goal is to transition the land that we own and lease to certified organic production. So most of the land that we take over is, conventionally managed. And so we have to take it through the three year transition process, which is part of the USDA organic program, the rules for organic farming regulations. In order to get it certified organic and sell products as organic that we produce. Our focus is on producing organic grains. Um, so like any conventional farm, corn and soybeans and wheat, different types of wheat. Out West, we’re doing a lot of hard red winter wheat, but we’re also on other farms doing soft wheat, some hard red spring wheat. We have some barley production on some farms. And then some other smaller niche crops like buckwheat. And some sorghum we’re playing around with on some farms. And then hay, depending on the farm and what we have going on and the rotation and what kind of land we’re managing. We also have some alfalfa production and mixed grass hay on some of these farms. But the goal is that all this land gets transitioned to organic. We’re focused on producing organic grains to supply the organic food industry.

Um, we’re definitely focused on trying to produce food crops, but a lot of our crops also go into the organic livestock industry. So dairies that need feed stuffs and poultry. Those are two big parts of the organic industry. So we supply those but also Increasingly looking to supply food processors.

Chad Fiechter: Yeah. Great. How about, so your specific role now is.

Michael O’Donnell: Yeah. So as mentioned, my role is as a regional manager. So we have several regional managers, at Belltown farms and each of us oversee and support two to three different farms within the company’s portfolio. And so what that means is that we work directly with, the teams that we have on the ground at the farms, which are comprised of farm manager, assistant farm manager and a team of operators, depending on the scale of the farm that’s going to dictate, you know how many operators we got. And it’s one of our larger farms. We even have some other focus positions like irrigation management or an operations manager if it’s a big enough farm But the regional managers are there to support those farm teams, collaboratively work with the farm managers, and then also other folks within the company’s management finance people working on budgets. But essentially making sure that our farm teams have what they need to do the job that they need to do effectively. And hit the goals that we set for each of our farms.

 

[00:08:22] Organic Grain Production and Market Dynamics

Chad Fiechter: Yeah, sure so you shared that you and Dr. Michael Langemeier generated some crop budgets here for Indiana when you were working with extension. You mentioned your current interest in growing alfalfa. How do you make decisions about your crop mix on all of these farms? Is it dictated by, uh, demand? Are you getting asked to produce things? Or is this just you’re seeing some opportunity and then transitioning acres into production of X crop?

Michael O’Donnell: Yeah, great question. And there’s a lot of pieces to that, I guess. As I mentioned, the company’s focus is on, on grain production in the organic space and supplying, the organic industry with grains. Whether that’s food processors or livestock users. And there has been generally, a demand domestically that needed to be satisfied with domestic grain production because we’ve historically satisfied a lot of the demand for dairy, for poultry, et cetera, with, with imports. It was not too long ago that we were actually importing the majority of the organic corn and soybeans used in the United States.

Chad Fiechter: I did not know that.

Michael O’Donnell: Of, you know, a big push of transitioning acreage and interests amongst, grain farmers here in the U.S. that shifted pretty quickly to where we went from, you know, 75 percent or more of organic corn being imported to now it’s, it’s, I, I haven’t followed those statistics closely, so don’t, don’t quote me on it, but I believe it’s, it’s well under 25 percent of the corn is imported. It may be a lot less than that. Soybeans were over 80 percent imported. And that has since shifted quite a bit. So the idea is we need to produce this domestically. Supply the industry here. It’s an opportunity. And traditionally, you know, the price premium, if you want to call it that over conventional commodity grains, was attractive enough to, you know, where it’s a good business case to pursue that opportunity. But in terms of the mix on a given farm, it’s really going to be dictated where, you know, markets that are nearby where there’s opportunity, whether it’s dairy farms or, a broker that brokers grain into different buyers or, a food processor, is gonna, inform where we’re selling crops. But generally we’re starting at least with a base crop rotation that might look like corn, soybean, wheat. Right? So maybe a traditional, conventional Indiana crop rotation. I know here in Indiana means mostly corn, soybean as a rotation, but traditionally, you know, there was wheat. And there still is wheat has its place in conventional grain farming. But that’s what we’re looking at as kind of a baseline rotation. Okay.

Rotation is very important in organic cropping systems because of a lot of tools that we can’t use, no herbicides, things like that. So weed management, the crop rotation goes a long way in helping to address some of those agronomic challenges. So we’re also, looking to have cover crops integrated throughout that rotation. That base three crop rotation is kind of where we like to start. And then if there are other opportunities to expand that rotation or integrate different crops like barley or edible beans, we might pursue those kinds of opportunities.

Chad Fiechter: Okay.

Michael O’Donnell: so as an example

Chad Fiechter: there’s a potential here, so maybe we should explore this crop.

Michael O’Donnell: Yeah. And a great example, one of the farms that I manage is in the Hudson Valley of New York.

Chad Fiechter: Mm hmm.

Michael O’Donnell: Unique place to be operating a grain farm. And it looks very different from the other farms in Belltown’s portfolio. Because of the land it’s on, we’re farming pretty small fields, highly variable soil types. Um, you know, I like to say we’re farming patches. but an advantage there is that we’re on the East Coast, close to huge metropolitan areas. I don’t know how much of the U. S. population is right there. We could probably get to half the U. S. population within a day’s drive or something. So because of that, there’s a lot of unique market opportunities. Almost all of our production is focused there on food grade opportunities. Um, Looking to sell corn to tortilla processors. Um, where we have contracted production on all our small grains to go to either Molsters, going into the you know, the brewing industry. And Milling grade wheat so some spring wheat winter wheat going to mills paying premiums, you know, compared to what we might find for Midwest organic wheat prices. We’re also raising buckwheat ’cause there’s one of, I think maybe one of two buckwheat processors in the United States is based about 120 miles from that farm.

Chad Fiechter: So that, with that specific farm, was kind of that purchase, was it motivated by kind of a strategic, we see these processors, or are you mainly looking for these plots of lands where you can produce, and then it goes, so, compared to Nebraska, western Nebraska, was there a reason to go there.

Michael O’Donnell: the New York farm, you know, I think part of it is there’s a unique opportunity there but I think historically and I wasn’t involved originally with the purchase of that farm, but I think some of the motivation for it is you know, that farm sits on the East Coast. Perhaps we could get some exposure with that farm. People are interested in the company. Um, it’s easy to get people to that farm. Rather than, hey, why don’t you go visit one of our farms over here in Western Nebraska where you’re going to fly into North Platte and then drive three hours. You know, so it’s, it’s a good farm where if we want to show people what we’re doing, it can, be a bit of a, showcase, but, but it’s, it’s still focused on profitability of that farm.

Chad Fiechter: So, in your strategic role that you have now for these farms what’s the thing keeping you up at night or what are you thinking about?

Michael O’Donnell: There’s a number of things both, in the day to day decision making of these farms, and some of the higher level things that we’re looking at as a company and that anybody in the organic grain industry is concerned about.

But, you know, a little more specifics about what I do in this regional manager role, as I mentioned, it’s essentially make sure that my farm teams have what they need to manage these farms well and hit yield goals. stay within our operating budget, try to hit profitability numbers that we want to hit. Anything from crop planning. What does the crop rotation look like? Which fields are getting what crops? Variety selection. Working with a farm manager directly on variety selection. What covered crops are going where? Timing of everything. How are we executing on that? What’s the whole crop plan look like? Making sure that the farm team is executing on that because we try to define certain windows of when we want to get things done. How the farm is tooled up. So what equipment do we have in place? And for each farm we have a specific equipment budget that we operate within. And so at each farm we sell and buy equipment and just make sure that we’re operating within that budget. So, how a given farm is tooled up. It’s always evolving like any farm. And that’s a big part of the work that I do with my farm managers.

 

[00:15:36] Challenges and Opportunities in Organic Farming

Chad Fiechter: Real quick, on like a, let’s say, let’s take a 2, 500 acre farm, what, like from a functional standpoint, what looks different from personnel and equipment versus just a traditional sort of commercial, farm of the same size?

Michael O’Donnell: Yeah. I mean, if you pulled up and just saw what the fields look like, if it’s a well managed organic farm, you may not know the difference. If you step into a corn or soybean field. Again, if it’s well managed, right? The weed profile might look different. You know, what kind of species we’re working with and the weed pressures that we have.

In terms of how it’s tooled up, you’re likely going to see a few more power units, a few more tractors.

Chad Fiechter: Um,

Michael O’Donnell: You, you may or may not see a sprayer.

Chad Fiechter: hmm.

Michael O’Donnell: You know, we’re not out there applying herbicides, fungicides, etc. But some organic farms do a lot of foliar feeding. Right now, at Belltown, we aren’t doing a lot of that. So you’re not going to see a sprayer our farms. Unless it’s a one off where we’re working with a co op to do an application. One major thing that you’re going to see that’s different is you’re likely going to see more tillage equipment because we’re generally going to be more relying on tillage, as part of our weed control, you know, weed management system. There are no till rotational, no till systems that work in organic, but generally speaking, we’re going to be relying on tillage. And you’re going to see cultivation equipment. So row cultivators, tine weeders, rotary hose, and then possibly, depending on the scale of the farm and the kind of equipment capital we can, we can justify, you might see, you know, weed burner, um, or weed zapper. So weed zapper is generally used for, managing weeds that get up over a soybean canopy. You get an idea. electrocute those weeds.

Chad Fiechter: Yeah, sure.

Michael O’Donnell: So, so, you know, scale, you know, scale of equipment and the type of equipment that you see in terms of the tractors and combine and, you know, even most of the tillage equipment. It’s going to look just like a grain operation, but you’re going to see probably a little more tillage equipment then your weed management tools.

Chad Fiechter: How about personnel? Do you think you have a couple, a person or two?

Michael O’Donnell: Generally speaking, you’re going to have more people.

Chad Fiechter: Okay. Because you’re in the fields more often doing those tillage passes, which that’s little more labor intensive than a sprayer running through.

Michael O’Donnell: That’s right.

Chad Fiechter: Yeah. Okay. How about, so from a high level, what’s the, are you thinking about as far as the industry, how it relates to kind of conventional row crops and just in general?

Michael O’Donnell: Yeah, I think one of the things that we’re seeing right now in organic grains is, prices are somewhat depressed compared to where they had been, you know, was just a couple of years ago, two, three years ago, you could get soybean contracts for, 35 to 40 a bushel. And now they’re at least in the kind of the Corn Belt area, we’re looking at 18 to maybe 20..

Chad Fiechter: Okay.

Michael O’Donnell: And for corn, you know, not too long goes anywhere from 10 for feed grade up to 14 for, for some food grade contracts. And now we’re, we’re looking at, I mean, some areas are below 7 bushel, but it could be anywhere from there to, you know, eight, eight 50, depending on where you are. So very different position in terms of pricing. the premium is still there over conventional commodities, but, feeling the pinch in terms of finding profit on these farms, like any grain right now. Some of the reasons for that are perhaps unique within the organic industry. Um, understanding where markets are headed is, is pretty difficult to wrap for me to wrap my head around it. And I think for, for others to know where we’re headed. And one, one thing that I think is unique to the organic industry in this regard is the fact that we do still import a substantial quantity of corn and soybeans and also wheat from other areas. And so those supplies, you know, create some uncertainty and what, what’s the price point on those, those imported supplies. And there’s, there’s been for years, major questions around some of the, integrity of some of those imports.

Chad Fiechter: Sure.

Michael O’Donnell: Meaning, Is it really organic?

Chad Fiechter: Right. Because we can’t, we can’t really test and tell.

Michael O’Donnell: Right. I mean, you can at least tell that it’s non gmo, which is required in You could theoretically do some pesticide resin testing, but yeah, it’s difficult. It’s a paperwork chain and the USDA has implemented, has been implementing this year a new rule that adds to the national organic program called the strengthening organic enforcement rule. Which is looking to address some of the loopholes that have allowed some of these things to happen, but it’s, you know, the industry has a way to go.

Chad Fiechter: So,

Michael O’Donnell: But, I think, that’s not the only piece of it, there’s generally questions, in terms of organic food and what is the consumer? Their, their food purchasing decisions, where are they headed? A unique thing that we saw was during COVID, a lot of organic purchasing went up. The organic dairy industry saw very positive gains. Something as subtle as like organic popcorn sales were up. It’s because we shifted from where here in the United States, we mostly, you know, we spend more than half of our dollars, outside of grocery stores. Eating out. You know, restaurants, food institutions, et cetera. But during COVID that all shifted into the grocery stores. So people were making more choices at the grocery store to choose organic. And we a lot of that demand come up. But as we moved out of COVID, we saw some of that come back off and soften.

So just, you know, where is that consumer landscape headed? You know, we’ve seen continuous growth in organics for very long time since that label has existed. And you know, will that continue? We sure hope so I think consumers are gonna always be looking for a quote unquote clean food label. Um, but you know how much it continues to grow, are there gonna be other competitive labels in the marketplace? Those create some uncertainty.

[00:22:10] Future Outlook and Optimism

Chad Fiechter: So, real quick, because I want to wrap up with a question here. Can you give us something optimistic that you can share about kind of your job or where you think the industry is heading that’s like, yeah, this is cool.

Michael O’Donnell: Oh, I mean, despite some of these uncertainties in the marketplace and the currently where we find prices and whatnot, I have no doubt that, the organic grain landscape will, you know, it’s going to rebound. It’ll continue and prove it has its ups and downs like any industry. And. I just get excited working with a company like Belltown that is wholly focused on, taking farmland and moving it into the organic space, getting it out of conventional production into a different system of management that, a lot of consumers want to support and be a part of. And to play a role in that shift of land into organic and regenerative management. I’d love to be a part of it.

Chad Fiechter: That’s great. Michael, thanks for being the guinea pig on this thing with me. I appreciate it a lot and hopefully it’s the beginning of more to come.

Michael O’Donnell: Yeah, very good. I appreciate it. Thanks.