Tobacco Out, Organics In

Oct 28, 2016  | 7 min  | Ep4210

As a way to help tobacco farmers recover from the Great Depression of the 1930s, the federal government established quotas that put strict limits on how much could be grown in exchange for government price supports.

The quotas were successful in helping many farms stay afloat through more than a few lean years. By 2014, the last of those payments were made to producers leaving them to establish contracts with tobacco companies or find another way to make a living.

And as Producer Peter Tubbs discovered, many have found a silver lining as they transition from the golden leaf.

These pallets of organic produce at Eastern Carolina Organics are destined for the five Whole Foods stores in the Raleigh-Durham Triangle. The organic strawberries, kale and greens were grown on land that once supported tobacco, but is now transitioning to organic produce as a result of the 2004 Tobacco Transition Payment Program.

But TTPP dollars did more than change the economics of individual farmers. Grants from the program helped assemble the infrastructure needed to assist farmers in increasing their reach into new markets.

Herbie Cottle, an organic farmer in Rose Hill, North Carolina, has found ECO beneficial to his farming operation.

"They do all the marketing for us, which gives me more time to so what I like to do which is farming."

Most of the produce from his 300 acre farm goes to Eastern Carolina Organics. The farmer owned co-op began as a wholesale food aggregator, coordinating with farmers to grow the produce the market needs, then delivering the produce to retailers and box delivery companies. Farmers receive 78 cents of each wholesale dollar, with ECO covering its expenses with the remaining 22 cent margin.

Matching farm production with consumer needs requires coordination with distributors like ECO.

Herbie Cottle: "They have a production planner who works with us every January and they try to figure out what we want to grow and what they need, and we try to work it out to what is best for both of us"

The coordinated production plan means the producer grows, harvests and packs produce, then delivers it to the ECO warehouse in Raleigh. ECO staff then inspects, sorts and repacks the produce for delivery to other wholesalers and retailers in the region.

Sandi Kronick, CEO, Eastern Carolina Organics "One of the greatest parts of my job is signing checks to farmers, and being able to tell elected officials and economic development representatives that we have paid over 20 million dollars to North Carolina organic farmers in the history of our company."

ECO began as an experiment to learn if the Raleigh Durham market was ready to support locally grown organic produce. Access to a market conduit encouraged farmers to risk the organic transition period in order to convert conventional ground. The results have been positive, both economically and environmentally.

Owen Rouse, Uncle Henry’s Organics "We are actually ending up at the end of the day making more money growing products organically. I think it's simply because the consumer wants the higher quality product and they are willing to pay a little more money for it."

Consumer appetite for organic produce has resulted in growth for both ECO and other organic vendors in the state. In 1999, North Carolina had 27 retail grocery stores with substantial organic inventories. Today the state claims over 500 such outlets. Even with 1700 percent growth in availability, only around 1% of state vegetable consumption is organic.

This growth has allowed ECO to move into a larger warehouse space with two different cold rooms to maintain the produce cold chain from field to store. Some produce crops, like kale and strawberries, are temperature and humidity sensitive and must be iced down in the field to protect them on the journey to Raleigh. Once unloaded, they are moved into 38 degree storage as quickly as possible, and they remain in the cold as they are sorted and packed for delivery.

Feedback from retailers assisted ECO during its startup phase, down to details like how to pick and package broccoli. The learning curve is never-ending.

Sandi Kronick: "What is very special for us is that the communication works both ways. When we hear from our farmers that there are extreme challenges growing a certain crop or maybe accessing seed, we are out there trying to figure out how to help them."

Organic production has built in market advantages. The three year switchover period is a barrier to entry for conventional farmers. As a result the smaller number of players in the organic market experience fewer price swings.

Owen Rouse has transitioned his farm twice in the last 15 years, first from tobacco, corn and beans to conventional produce. Recently he has been switching to organic production, and the benefits have been more than economic.

Owen Rouse: "I think the soil is a lot healthier, for one thing, it's not getting a lot of herbicide sprayed on it to actually deaden the land. I think we have a lot quality better soil now than we used to have. We use a lot of cover crops also in times when we don't have actual marketable crops on the field to help build up the land."

Using hoop barns, North Carolina farmers can grow produce crops year round, which keeps employees busy year round, reducing turnover. Replacing chemical input costs with higher labor spending helps the local economy as workers spend their incomes in the community.

For Cottle and Rouse, the downside of producing organically is that the organic customer is growing more sophisticated.

Herbie Cottle "10 years ago when I first started growing crops organically the quality didn't have to be quite as good as it is now, as it's mainly because you have more competition from farmers, and you also have the consumer, they have seen it pretty, the organic squash that is pretty, so they expect the next time for it to look that way."

Owen Rouse: "We produce a much better quality product now organically than what we used to produce conventionally."

With consumers willing to pay a 15-60% premium for organic produce, organic production can be economically viable on a much smaller scale than conventional commodity crops. Many of the 40 growers who supply ECO are working 100 acres or less, making farming a viable option for those just starting out. The move away from commodity crops is one reason the average age of North Carolina’s farmers has dropped from 53 to 48 in the last decade, while most of the country watches its farmers grow older. Kronick believes the switch from tobacco quotas to produce farming has done more than just put cash into farmer’s pockets.

Sandi Kronick "We really wanted to make sure we were reversing the conversation that our farmers were having with their children and partially that's how do I restore farming as a really dignified career so that people feel like it and have some good security for them it's not just financial security but it's the kind of thing they want to tell their next generation you know son daughter if you work really hard and you do well in school you too can grow up to become a farmer."

For Market to Market, I'm Peter Tubbs.

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