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Minnesota has proven to be fertile ground for innovative agriculture ventures

In 2010, a major announcement by Wal-Mart acknowledged a grassroots movement that had been quietly growing for some time: locally focused, sustainable agriculture. The retail juggernaut pledged to double the percentage of locally grown produce it sells to 9 percent in the U.S. and 30 percent in Canada by the end of 2013.

Sustainable agriculture seeks to balance the long-term goals of economic profitability, environmental stewardship, and quality of life for farmers and their communities. The concept is sometimes dismissed by skeptics as an impractical, tree-hugger's fantasy. But in Minnesota and elsewhere, a new breed of farmers are proving that — with ingenuity and hard work — sustainable agriculture can be shaped into a viable business model.

When considering small-scale, sustainable farming, "many people have little concept of how productive an acre can be," says Jack Hedin, co-owner of Featherstone Farm in Rushford. Last July Hedin planted just under 10 acres of "storage carrots," designed for winter storage. In October, he picked 100 tons of carrots — a 10-ton-per-acre harvest.

Today's sustainable farmers use sophisticated, 21st-century techniques to maximize productivity and reach customers who want locally grown food. These small-scale ag and horticulture operations represent "an entirely different business model and proposition" from the industrial-scale agriculture that has come to dominate the U.S. landscape, says Paul Hugunin, coordinator of the Minnesota Department of Agriculture's Minnesota Grown program. "With smaller agriculture, it's not about sheer quantity, it's about producing value-per-acre and being able to capture the margins that exist, rather than using a middle man who is controlling the product."

Over time, small-scale ag entrepreneurs have generally become more skilled at managing and making the numbers work. You might call it a local ag renaissance. "If you go back far enough, people got their beef from farmer Jones and, to a certain extent, that was a branded product," Hugunin explains. "Then, we went through a period of such intensive consolidation in the food industry, people lost those connections and no longer knew where their food came from. Now, we're seeing that pendulum swinging back the other way. More people are willing to put time into knowing farmers and having those conversations: ‘How did you raise it? What makes it different from what I get somewhere else?'"

One manifestation of this trend is community-supported agriculture (CSA), a grassroots movement spawned in the late ‘80s that allows city residents to have direct access to high-quality fresh produce grown locally by regional farmers. Typically, "subscribers" to a farm or garden pledge in advance to cover the anticipated costs of the farm operation and farmer's salary. In return, they receive shares in the farm's bounty throughout the growing season. In Minnesota more than 90 farms have signed up to participate, and the number is growing.

Organic farmers typically pride themselves on sustainability, but Featherstone Farm, in the scenic bluff country of Fillmore county, has taken its commitment to the environment further than most. The 250-acre certified-organic farm, founded in 1996 by Jack Hedin and Jenni McHugh, has invested in geothermal and solar energy infrastructure to provide about half the energy used on the farm, which is one of the largest organic farms in Minnesota.

After a flood in 2007 severely damaged the farm, Hedin pondered climate change and decided to investigate alternative energy and carbon reduction. In 2008, the farm added a super-insulated packing shed that is heated and cooled by geothermal energy drawn from underground. In 2009, the farm converted the first of its 10 tractors to electric power.

But the farm's largest alternative energy investment is a 2,200-square-foot, 38-kilowatt solar panel array installed on the roof of the farm's machine shop in the fall of 2011. Including the addition of the cooler to store winter vegetables, the project cost about $250,000.

To finance the undertaking, farm employees launched a month-long capital campaign in the summer of 2011 that raised more than $170,000 in loans from friends, customers, and CSA members, as well as from several food co-ops. Whole Foods Market added a $100,000 loan. With the goal of reducing the carbon footprint as quickly as it could practically be done, Hedin says the farm is in the running for a federal grant that could reduce the payback period on the solar system to seven years; without the grant, the energy savings will recoup the cost in about 15 years, he estimates.

In an area blessed with what Hedin characterizes as the "A+ soil" essential for organic growing, the farm produces about 40 varieties of fruits and vegetables for distribution to natural food retailers, major grocers, wholesalers, and more than a thousand CSA members located mostly in the Twin Cities but also throughout the Upper Midwest. Even with mechanized harvesting, raising vegetables is still a labor-intensive enterprise. "The carrots are picked by a machine, but it takes six people to run that machine," Hedin says. Still, Featherstone has enjoyed steady growth — from marketing $18,000 worth of produce in its first year (1996) to $1.4 million–plus in 2012.

For small-scale farmers, marketing savvy has become as important as growing expertise. "Brand identity and organic certification are like a skeleton key to many types of markets," Hedin says. "Over the years we have built our brand. It's not just a logo or concept, but the real value we bring to what we do," based on principles like sustainability, fair labor practices, and community-building. "Those are meaningful things we really value and are trying to create. Then, it's a matter of getting people to buy into it."

At Hoch Orchards & Gardens in La Crescent, horticulturist Harry Hoch caters to consumers with sophisticated palates who appreciate the expertise and persistence required to grow more than 50 varieties of organic apples, as well as plums, wine grapes, berries, apricots, and cherries.

Hoch has used his training and experience as a University of Minnesota horticulture researcher to develop a thriving fruit-growing operation on prime land his family has owned since the 1950s.

Hoch received an associate's degree in Horticulture in 1985, managed Hoch Orchard through 1989, and worked as a research plot coordinator at the university's Horticultural Research Center while earning a master's degree.

Hoch, along with his wife Jackie and their children, moved back to their orchard in the summer of 1997 and started replanting. Hoch Orchard now has around 10,000 apple trees planted on 25 acres, along with about 10 acres of plums, apricots, cherries, grapes, and berries. It also rents an additional five acres of apple trees.

The company sells about $250,000 per year (gross revenue) worth of fruits and vegetables. Fresh produce accounts for about two-thirds of that total, and value-added products such as jellies and applesauce provide the rest. Hoch also runs a fruit-processing company called Minnesota's Finest Fruit Products.

"The demand for locally grown foods seems to be expanding," Hoch says. "I'm not sure if the demand for organic fruits and vegetables is expanding as fast as it once was."

"Factory farming" has often been used as a pejorative term by critics of industrial-scale agriculture. But entrepreneur Dave Roeser and his startup Garden Fresh Farms have placed factory farming in a new, eco-friendly context. 

Roeser was looking for ideas to start a business in a vacant vending-machine warehouse he owned in Maplewood. Reading about the innovative practice of aquaponics — raising fish and plants together — sparked the idea for his innovative venture.

After a six-figure investment and two years of collaborating with University of Minnesota students and faculty, Roeser tweaked and combined existing techniques in new ways to create an indoor farm that now produces 40,000 fish and 460,000 plants annually in a dozen 1,500-gallon tanks. He says its "100 times more efficient" than conventional agriculture.

The fish provide carbon dioxide and fertilizer for the plants and swim in water purified by the plants. Fluorescent light takes the place of sunlight; next to labor, energy represents Roeser's biggest variable cost. But, through careful calibration, he has reduced his energy costs to about a nickel per plant (for the plant's lifespan). "Each species has its own ‘sunlight' saturation point; we match that to the plant."

He's growing 1,100 lettuce plants on vertical panels, and he's producing 40 pounds of basil a day, along with oregano, thyme, and watercress, on an "orbital garden" that slowly rotates to expose plants to the optimum amounts of light and water. Roeser plans to add tomatoes to the operation. He's already selling fish, herbs, and vegetables to area restaurants and corporate dining facilities, including companies that have signed sustainability pledges to buy 20 percent of their food locally. He's also working on a second farm.

Roeser says the idea of a closed-loop, no-waste system that bypasses some of the challenges of traditional farming appealed to him. "Those things fit my logical thought-processes," he says. "And this system solves a problem that is here now and will be a bigger problem in the future."

Helene Murray, executive director of the Minnesota Institute for Sustainable Agriculture, calls Roeser's plant "an amazing operation, and they're doing everything they can to improve it." She's been working with Roeser on grant proposals to improve lighting efficiency and figure out uses for the composting waste that the facility produces. "The vertical-wall panels for growing lettuce and the circular system for herb-growing are unique."

The Maplewood facility's patent-pending system could be replicated anywhere in rural or urban settings, according to Roeser, who has set up an LLC to license investors who will set up additional farms under the Garden Fresh Farms brand. In recent weeks he's spoken to prospective investors from the U.S., Russia, Bangladesh, China, and other countries. "We're looking at expanding fairly quickly," he says.

Hoch Orchards sells to about 10 food co-ops, about half of those in the Twin Cities, including St. Paul–based Co-op Partners Warehouse. He's found supplying the co-ops to be a more viable business model than selling to major grocers.

"At the high-end stores, all of my competition is fighting for shelf-space," he says. "Another issue is that because we grow more than 50 varieties, we don't have a high volume of some varieties. We give the co-ops a weekly inventory sheet and they can order off that inventory. Many of the co-ops' customers are more accepting of unique, non-traditional varieties that might be more tart or sweet, rather than something with the ‘perfect' sugar-acid balance...A lot of the co-op produce managers are ‘foodies' who are interested in these things and are willing to tell customers about our varieties and promote them."

Growing organic fruit in the Midwest is a daunting, labor-intensive undertaking because the humid summer climate is conducive to many pests and diseases. That makes recruiting and retaining skilled labor essential. "We don't use the typical model of bringing in a short-term crew to harvest and after a few weeks letting them go," Hoch says. "We're picking, packing, and shipping a lot of different types of fruit, which requires cross-training employees to work in many different areas. It's not like working on an assembly line."

Minnesotans will long remember the stubbornly late-arriving spring of 2013. But even with snow and cold that hung on past mid-April, Jerry Untiedt had much of his tomato crop planted by late March. 

That's because for more than 30 years, Untiedt's Vegetable Farm near Waverly has practiced high-tunnel agriculture: a technique developed in Europe using light-dispersing plastic tunnels to create ideal micro-climates for growing. 

On the farm that Jerry and Sue Untiedt founded in 1971, about 25 acres of crops are sheltered by the high, arched tunnels, built with simple metal frames and plastic designed to diffuse light. "I'd love to say this has all been done in a scientific manner, but a lot of it has been trial and error over the years," admits Untiedt, who started with smaller 12- to 14-foot-wide tunnels and now uses structures that are 24 feet by 500 feet. 

The tinkering was done under duress, he notes. "We've been subject to just about every variable Minnesota could throw at us, from late-season snowstorms to very high winds to episodic rain events."

By keeping the tunnels closed early and late in the growing season to trap the sun's heat, Untiedt has extended his growing season by at least six weeks. 

He also applies pre-season soil amendments (worm castings, compost, and manure), raised-bed construction, drip irrigation, and mulch coverings. To pollinate plants, bumblebees are used in place of regular honeybees in the tunnels because of their non-aggressive nature and ability to thrive beneath the plastic coverings. 

The tunnels require some maintenance, such as hourly snow removal during winter storms - no small task. But they remove some of the risk related to Minnesota's capricious weather, Untiedt notes. By mid-June, he's picking his first tomatoes.  

Judicious selection of plant varieties is another way to extend the growing season. One of Untiedt's newest fruit varieties is "day neutral" strawberries, which can be harvested until the end of October. 

During the early years, Untiedt's farm was a "marginally profitable" operation selling mostly to wholesalers in the Twin Cities. With seasonal cash flow limited to a few months a year, Untiedt quickly realized he needed to expand his crop offering and began building greenhouses to grow flowers and other bedding plants. 

Marketing directly to the public through farmers' markets and CSA has been a successful strategy. 

"We do our very best to build relationships with the people who purchase and consume our products," says Untiedt, whose customers also include retailers such as Kowalski's, Coborn's, and Jerry's Markets, along with a few Twin Cities restaurants. 

In addition to the sheltered crops, the farm also grows vegetables, grain, and soybeans on uncovered land.

While working as a consultant and CFO-for-hire for a number of small Minnesota companies, Todd Churchill never thought he would return to farming. Then in 2002, Churchill read a New York Times trend-piece about grass-fed beef that reminded him of his youth growing up on a cattle farm in Illinois. 

Churchill realized he had, for the most part, stopped eating beef after being repeatedly disappointed by the relatively tasteless mass-market meat sold at supermarkets. Churchill was inspired to found Cannon Falls–based Thousand Hills Cattle Company, a meat production operation specializing in the chemical-free, grass-fed beef that was beginning to find a consumer market. 

Churchill wrote a 50-page business plan but soon discarded it in favor of a simple mission statement: to provide consumers with "an incredible eating experience."

Grass-fed beef was once the norm, until cheap grain became the preferred feedstock for raising cattle. Over time, as producers relied increasingly on antibiotics and focused on producing food as cheaply as possible, relatively tasteless beef became the norm, according to Churchill. 

Anticipating growing consumer demand for higher-quality beef, Churchill worked with experts in Argentina and Australia to educate himself in the grass-fed animal-husbandry techniques that remain standard in those countries. 

He also made a serendipitous connection by serving as temporary CFO of Lorentz Meats, a startup processing plant also based in Cannon Falls designed to produce natural, organic, grass-fed meat.

The plant and Thousand Hills both got off to a rocky start. "We got the market direction correct," Churchill recalls. "We were just a little off on the timing  three or four years ahead of the market."

Today's standard industry practice of raising corn-fed beef made economic sense when grain cost around $1.50 a bushel. But it also produced unhealthy, artery-clogging beef. Today, with corn selling for $3.50 to $8 per bushel, the economic model has shifted. Using more sophisticated management techniques, Churchill has proven raising grass-fed beef can be an economically viable proposition. One of the keys is his selective approach to buying cattle only from ranchers who meet the company's natural/organic/grass-fed standard.

Grass-fed beef costs about twice as much as the "traditional" meat sold in supermarkets. But companies like Churchill's target a growing market of consumers willing to pay more for healthier meat. Major retailers are responding to the demand, as are neighborhood food co-ops. Thousand Hills customers include major retailers like Target, Cub Foods, and Kowalski's. 

Producing about two million pounds of beef per year, Churchill has achieved annual revenue growth ranging from 20 to 100 percent in recent years.  

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