“Local organic farmers face an uncertain 2022 as they battle inflation”
90.5 WESA | December 14, 2021
As reported by Susan Scott Peterson on 90.5 WESA and The Allegheny Front, December 20, 2021:
” … At the beginning of the pandemic, people turned to local producers when grocery stores had empty shelves. For local organic farms, that meant a big bump in demand for their vegetables, meat, dairy and eggs — and a historically good year.
Some farms ramped up production for a big 2021 season, but many of the new customers didn’t stick around when pandemic restrictions eased up. Now, with inflation impacting nearly everything, farmers are facing even more uncertainty as they look ahead to the 2022 season.
Phil Taylor is a business consultant at AgChoice Farm Credit, a Pennsylvania-based cooperative that provides loans and financial services to farms.
‘I’m an older guy,’ Taylor said. ‘I can say that in my tenure working in agriculture that we haven’t seen this kind of inflation where almost everything is increased.’
He says the high prices of farming inputs and materials really impact a farm’s bottom line, because farming is already a low-margin industry. In his work with local farms, he says he counsels farmers to aim for their operating costs to make up around 75% of their gross income.
‘That provides the farm business with a margin then that they can replace capital, it can pay interest on borrowed funds, and then they can compensate the owners,’ Taylor said.
He says when farming inputs become as expensive as they have, a farm’s operating costs can rise to around 90%.
‘That really pinches that margin for the farmer,’ Taylor said. ‘It’s a different kind of dynamic and it’s just making it difficult on the profitability for the farms’ …
Some local organic farmers are beginning to think beyond the usual strategies. Nigel Tudor of Weatherbury Farm in Avella grows organic grain and mills flour. During the pandemic, the farm lost most of its restaurant sales, but they more than made up for it in direct sales. People were cooped up at home and started stress-baking, which led to a nationwide flour shortage and lots of demand for the farm’s flour. But Tudor say’s the farm’s revenue is down this year.
‘[People] are not baking as much at home,’ Tudor said. ‘And we haven’t gotten restaurant sales back because a lot of the restaurants have either closed or they have limited menus.’
In the meantime, everything has gotten more expensive. Tudor said when he compared this year’s prices to last year’s, he found lumber had gone up as much as 74%, diesel by 82%, gas by 32% and product packaging by 33%.
‘We filled up our farm diesel tank and that same day we got heating oil, and I think it was about $1,500 more that we spent than we had the previous year,’ Tudor said. ‘Just imagine something that costs $1,500 and previously you could have bought that, but now, you can’t.’
Instead of waiting for prices to fall or business to pick back up, Tudor says Weatherbury is trying to diversify.
‘We’re building a wood-fired bread oven and we’re hoping within the next six months to a year to launch a wood-fired bakery on our farm here,’ Tudor said. ‘You have to adapt to the market.’ (ed note — actually the farm hopes to offer classes in 2022 and open the bakery in 2023)
At the new bakery, he says he hopes to offer classes and sell ready-made bread, and maybe that will help the farm attract new customers.”