Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=216252
Story Retrieval Date: 10/21/2014 11:40:56 AM CST
Courtesy of Scott Koster/Geneva Lakes Produce
into trouble with my first girlfriend in eighth grade because I talked about
tractors instead of mushy girl stuff,” Scott Koster said.
30 crops, 30 hoops to jump through: How one farmer is dealing with 2013's challenges
Farmland supply is on the decline while average farm size is trending upward, which means large-scale farms have an advantage.
Claude and Shirley Koster hoped the Dutch hamlet of Wichert, Ill., would be a launching pad for their son Scott. The way they saw it, the gladiola and cash grains they grew there would be Scott’s ticket to a more lucrative corporate job.
What they didn’t know was that the deck was stacked against them.
“I got into trouble with my first girlfriend in eighth grade because I talked about tractors instead of mushy girl stuff,” Scott Koster said. “I’ve always had farming in my blood. I love it.”
There was the 13-year period after college when Scott worked for industry giant Pioneer Hi-bred, a subsidiary of E. I. du Pont de Nemours Co., but that, too, went the way of his eight-grade romance. He and farming were as inseparable as the Hoekstras, Schaafsmas and Vosses were to Wichert.
Koster’s reintroduction to full-time farming came through Geneva Lakes Produce, a 450-acre outfit in Burlington, Wis., that he began running after he left Pioneer in 1997. Farmers markets are Geneva Lakes’ lifeblood, and Koster’s network of helpers sets up tables at more than a dozen throughout the spring and summer months – from South Milwaukee to Chicago’s Portage Park neighborhood.
While his passion remains, financial success has been slow to follow.
“I was expecting to be farther along by now,” Koster said. “I wasn’t expecting to be struggling here financially at this point in my life, but that’s where it is. It’s just a reality.”
Farms of Koster’s scale are an increasing rarity in American agriculture. While more than 581,000 farms in the 180- to 499-acre range existed in 1978, that number is closer to 368,000 today, according to the U.S. Department of Agriculture. Meanwhile, prefixes like micro and mega are attached to farms at higher rates than ever before.
The movement towards the two extremes is troublesome for Rose Skora, who is on the front lines of the industry as a farm consultant for the University of Wisconsin’s extension program.
“They’re generally not so big that they can get access to sort of the really low prices because they’re so big, but they’re in many cases not small enough or not diversified enough to access some of the markets that the really small farmers go after,” Skora said of many mid-size farms.
Though Geneva Lakes is able to reach farmers’ markets and is exploring small-scale wholesaling, it’s nevertheless caught in an increasingly tough spot.
One difficulty is the constant struggle between pricing and the cost of marketing its products at locations up to 72 miles from the farm. By the time Koster has plucked, packaged, shipped and displayed his produce at farmers markets, he has already incurred costs that eat at his profit margin.
“If you’re raising that many crops and you need that many sales outlets, it is incredibly labor-intensive,” Skora said. “The average consumer doesn’t really seem to understand what it takes to provide you with corn, and why in the heck are you charging $6 a dozen or whatever.”
Another issue is variety. Customers not only want a diverse array on the farmers’ market table, but they want Koster to have grown it all – unlike some stands, which sell other farmers’ goods. To meet that two-part request, Geneva Lakes grows everything from squash and lettuce to kohlrabi and leeks.
“We’re dying to learn how to grow all these crops efficiently and it’s very hard to do it,” Koster said. “Our diversification is our strength, but it’s also our weakness.”
The farm faces increased costs on-site for a variety of reasons. One is the farm can only afford so many production-boosting capital expenditures, such as a mechanical green bean picker the family acquired in 2012.
Because the produce must be moved and staffed and the Kosters must pay farmers’ market fees, the costs add up. Grain-only farmers, by comparison, have only to drive to the elevator, unload their crop and receive a fixed price, notes Skora.
“I can’t sell it as competitively priced as I’d like to, and it isn’t as profitable as I’d like,” Koster said.
For the crops that don’t compete with the “grain elevator” model – things like strawberries and spinach – there is an equally imposing foe waiting: big-box retailers whose sheer buying power affords them the ability to charge 50 percent less than Geneva Lakes.
Competition among peers at the point of sale is at an all-time high. According to the USDA, the amount of farmers’ markets in the U.S. had more than quadrupled by the end of 2012.
Skora, who sits on the Burlington, Wis., farmers’ market board, said she is happy to see the increased demand for market locations, though there are consequences. More towns have established markets than the demand calls for, and symptoms of the overexpansion include low farmer turnouts, diminished crowds of customers and poor selection.
When Koster needs money to cover his early-season losses and capital expenditures, the business model of retail agriculture again rears its head.
“My father, to his credit, I don’t think he ever borrowed a dime in his life,” Koster said. “I’m the opposite and I’ve probably borrowed too much.”
While he has a good relationship with some lending firms , Koster says explaining his atypical business to a lender can be difficult.
“Now, especially in the specialty crop business, when I list a green bean picker as collateral, most lenders look at you and say ‘A what?’” he said. “They don’t know what it is and they don’t know what it’s worth so to figure out what it’s worth on the collateral list is very hard for them to do.”
For Koster, that means he is sometimes left to rely on his word to buy seed and other supplies. “There are some people that will just work with us and we’re very thankful for them,” Koster said.
Still, bills remain from 2012 that the farm is unable to pay. One culprit in particular is to blame: the nation’s most far-reaching drought since 1956. The drought burned a significant portion of the Kosters’ produce, and the wound is in the early stages of healing.
“We would normally have eight potatoes per plant – we were getting two or three,” said Corban Koster, one of Scott’s five children. “That’s a huge loss when it comes to that.”
For awhile, it looked like Geneva Produce was going to run out of money by the end of the week. But at the last minute, the Kosters were able to secure a loan in time. That mean they have at least another year to grow their business.
Drought insurance would have helped the farm and it is available through private lenders as well as the USDA, but Geneva Lakes is again in a tight spot. Each crop must be counted and documented, which is too costly for Koster given his 30-crop array. It could even mean bringing on another full-time employee.
“It’s just logistically impossible for us to do and so we don’t qualify for drought assistance loans that are out there, so the specialty crop farmers have really been left out in the cold on this thing,” he said.
One option from the USDA’s Farm Service Agency is called the Noninsured Crop Disaster Assistance Program. But that, too, is out of reach for Koster given his crops are technically uninsured by choice and not because they’re uninsurable varieties.
Koster said he has completed an exhaustive search to find answers to his insurance dilemma and written to authorities such as U.S. Secretary of Agriculture Tom Vilsack and former Vice Presidential candidate Paul Ryan to share his plight.
Though the Kosters expect to receive a check on the insured portion of their crops (the easily counted corn and soybeans) the other decimated crops such as potatoes and onions were simply losses for the farm.
Corban Koster demonstrated the hit to the onion crop at a farmers’ market in Evanston one morning in January, making a golf ball-sized circle with his thumb and forefinger. Whereas a larger onion could fetch a dollar, the onions this year are going for a quarter.
Liquidation would be the last resort for Geneva Lakes, though Koster is hopeful that the farm will rebound.
“Worst-case scenario is we’d have to sell a tractor,” Koster said. “You lose a lot of sleep this time of year trying to figure out how we’re going to get through another season. Hopefully we have a good year and don’t go through another drought.”
While Koster has found himself in a difficult financial picture, the passion from his childhood remains in a very palpable way. His tone is concerned but plucky, and he underscores that he has the greater picture in mind.
“My kids all work with me on the farm--it’s an awesome place,” Koster said. “They all have a fantastic work ethic. There’s a lot of good. We are surviving and we’re all healthy and happy so I’m not necessarily saying anything bad about it, but it’s a tough situation. It’s tough to be profitable.”