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Indiana farmers look for ways to diversify

hop vines
SHOULD YOU DIVERSIFY? Some people are finding that niche crops like hops help diversify the farm. Others try specialty crops and decide the wide swings in income from year to year introduce too much risk.
Farmers branch out into hops and other high-value crops.

By Charlaine Barth and Hannah Tucker

Looking at 400 acres dedicated to corn and soybeans, a farmer thinks back to his college assignments from more than 50 years ago. In class, he mapped out a crop management plan that included six to eight different crops. But like most Indiana farmers, he ultimately chose to produce only corn and soybeans. This farmer knows this can’t be the only answer.

Before World War II, most farmers had more diverse operations than what is typical today. But as technology advanced and food and fuel demands rose, Midwestern farmers began to grow primarily corn and soybeans. Then academic and industrial institutions followed suit and invested their resources into these cash crops.

“Capturing the rapidly evolving economies of scale required increasing the size of the operation,” says Jim Mintert, director of Purdue University’s Center for Commercial Agriculture. “Farms started to increase in size to capture the scale economies associated with new technology, and most farms opted to specialize in the production of a smaller number of crops or livestock.”

That doesn’t mean the demand for diverse crops has been lost. Consumers today demand local and nutritious food choices, which opens the door for diversified markets. Success in these areas requires farmers to do their research, learn from other operations and evaluate the risks associated with diversification.

“I always say farmers would scare me in Vegas,” says Tamara Benjamin, assistant program leader for Purdue Diversified Farming and Food Systems. “They have a gut for risk. They’re also very thoughtful and very logical. They will take risks that are based on good, foundational data, and that good, foundational data is not there [in this case].”

Many Indiana farms have patches of land that encompass enough acreage to grow some type of crop, but they aren’t large enough to make the equipment hassle worth it for a major cash crop. These are prime locations to test out a specialty crop. Universities and government programs provide grants that allow farmers to experiment with diversification while keeping their risk low.

The USDA’s Sustainable Agriculture Research and Education program and Specialty Crop Block Grant Program award grants to farmers and ranchers to conduct on-site experiments. In 2017, more than $400,000 was dedicated to diversified crop research in Indiana. By identifying grant programs, implementing personal research and using Extension resources, farmers can determine which diversified crop is the most feasible option for their operation.

Hops works here
Crazy Horse Hops in Knightstown, Ind., has found a way to make 100 acres of hops as profitable as 3,000 acres of corn. How? They were willing to do their own research, they say. Crazy Horse connected with other hops growers, combined three generations of farming knowledge and assessed the risk of adding another crop to their operation.

Ryan Hammer, now chief executive officer of the company, approached Josh Martin with the idea of diversifying in 2012. Martin, a third-generation corn and soybean farmer, agreed to convert 10 acres of his family’s land to hops.

“When [Ryan] was telling me about hops, it was the worst time we had ever had in corn and beans,” says Martin, now chief operating officer of Crazy Horse Hops. “It was a no-brainer.”

Converting 10 acres of tillable ground into a hops operation was neither a simple nor cheap task. Hops thrive in similar conditions as corn and soybeans but require considerably more labor, management and infrastructure.

Crazy Horse sprays hops with fungicide every seven to 10 days, fertilizes every three days and irrigates almost every day, depending on the weather. Harvesting, processing and storage also require specialized labor and equipment.

“It’s a whole different animal,” says Martin. “You put corn or soybeans out in Indiana, you spray them once, and you’ve got a decent crop — that’s easy. This isn’t easy.”

Unfortunately, there’s no perfect formula that maps out how to diversify. There is, however, substantial potential for those who are willing to step outside of their comfort zone. Every operation is different, and requires its own evaluation of diversified crop success.

Weigh risks vs. benefits
Tom Farms of Leesburg, Ind., is an example of an operation that weighed the risks and benefits of diversification and decided that the risks were too great. In the 1990s, Tom Farms produced sweet corn, cucumbers, tomatoes and peppers in addition to corn and soybeans.

“We saw large swings in revenue generated from these vegetable crops,” says Kip Tom, CEO of Tom Farms. “Some years resulted in very good profits, and others ended in substantial losses.”

Tom Farms also found that competition with other parts of the country made it hard to compete and keep production costs low.

“On the surface, many specialty crops look very appealing, especially when commodity crop returns are low or into negative margins,” says Tom. “Oftentimes, they are rewarding for those who choose to perform the due diligence to see if it fits their farm business long term.”

But Tom Farms acknowledges the benefit of diversified crops being grown in Indiana. With a significant trucking workforce, established transportation network and central location, Indiana is a prime location to produce and distribute diversified food products.

Do your homework
This doesn’t mean that rash decisions should be made in changing an operation, Tom notes. Even with the greatest infrastructure and support, keep in mind that it is important to weigh the risks and benefits before diversification is put into action.

“Do your research upfront — know the crop before you put it in the ground, and do the math,” adds Hammer. “Have a place for your product to go before you start growing it. It is riskier to diversify in the short term, but in the long term, it will pay off.”

Barth and Tucker are seniors in the Purdue University Ag Communication program.

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