If you’ve recently bought a Clif Bar, eaten organic black beans, or had a bottle of organic vodka, you’ve likely tasted some of Matthew Fitzgerald’s products. Matthew owns and operates Fitzgerald Organics, growing organic grains with his family at Fitzgerald Family Farms in Glencoe, Minnesota. Located on the edge of the prairie “between big-sky and the big woods, with rich soils and plenty of rain,” the farm spans 2,000 acres of owned and rented land.
Matthew farms with his parents, his wife, two full-time employees, and additional seasonal help. The Fitzgerald’s grow corn, soybeans, wheat, alfalfa, black beans, green canning peas, and dry yellow peas. Most of their crops are grown organically or are being transitioned to organic, and the majority are sold through brokers or processors in the Midwest between 20 and 200 miles from the farm. The organic wheat, peas, and corn from Fitzgerald Organics show up in familiar brands such as Annie’s, Clif Bar, and Prairie Organic Vodka, while their alfalfa is sold to a conventional dairy and the organic black beans are sent to a buyer in Michigan.
In addition to the farm business, Matthew and his father have a consulting business helping other farmers transition to organic and Matthew is a chapter leader with the Central Minnesota Young Farmers Coalition.
Building a family farm
In the mid-1990s, Matthew’s parents were in their 40s and looking for a career change. In the early 2000s, they connected with an older woman through Midwest Organic and Sustainable Education Service (MOSES) who was retiring and looking to sell her farm. The landowner was interested in seeing the land stay in organic production and sold to Matthew’s parents, who were the only organic growers in the area.
Matthew grew up on the farm, but didn’t feel pressure or expectation to stay involved. He also wasn’t sure it was an option. As is often the case with relatively small family farms, the Fitzgerald’s operation was big enough to support one family but not two. Matthew moved away to go to college and ultimately got a job in the Twin Cities.
When Matthew’s father became sick with cancer in 2014, Matthew quit his job in the city and moved home to help run the farm for a year and half. This began his long and winding process of deciding to return full-time. In 2016, Matthew was off the farm again working at Cargill as a merchant assistant on the trading floor when a neighbor called his father and asked if he or his son would be interested in buying the neighbor’s farm.
“That was an opportunity,” Matthew says. “You sort of have to know someone or have a lot of money to get into farming, so that was a little opening.” The phone call started a series of conversations between Matthew and his wife Hannah, and they decided to take the leap and buy the farm.
Financing the farm
Matthew and Hannah worked with the local Farm Service Agency (FSA) to get a Guaranteed Farm Loan and purchased the 80-acre farm in 2017. “We were floored,” Matthew remembers. “It felt crazy to be able to buy a farm.” In the Guaranteed Loan program, FSA partners with another bank to provide financing to farmers.
In 2019, another opportunity came to Matthew and Hannah in “one of those neighbor-pulls-over moments” as Matthew describes it. This time, the neighbor was stopping to tell them that some absentee landlords—who hadn’t been to the farm in 50 years—were interested in selling the 160-acre parcel that they owned.
Matthew had maxed out his credit at that point and didn’t think he would be able to get financing for the land. The 2018 Farm Bill had just passed, however, and the FSA farm ownership loan limit was increased, making it possible for Matthew and Hannah to purchase the second farm. Policy work can sometimes be slow and those who advocate for it may not experience the benefits themselves, but in this case, Matthew had a direct connection—he had traveled to Washington, D.C. not long before to advocate for the loan limit increase with the National Young Farmers Coalition.
Matthew ultimately received another FSA Guaranteed Loan and purchased the farm, but not without a few challenges—the property was held by a third-party trust located on the West coast that had never sold farmland before, making the process complicated and drawn out. The Guaranteed Loan was structured with FSA, a private lender, and the Rural Finance Authority, based in Minnesota, which took a position on the half of the loan covered by the private lender and was able to bring the interest rate down to 3.75 percent. “It’s a relatively modest but pretty wonderful state program,” Matthew says.
Read more about FSA loan programs in Young Farmers’ Farm Service Agency Loans Guidebook and explore our Finding Farmland Calculator.
Balancing renting and owning
In addition to being capital intensive with lots of equipment and product storage requirements, grain operations require a lot of acreage in order to be profitable. Although Matthew and his family have had opportunities to purchase land, they have also had to seek out leasing arrangements in order to achieve the scale they need.
In an area where development pressure is growing and competition for remaining land from farmers is fierce, Matthew has had to get creative. He has put ads in the paper and sent newsletters to other local farmers explaining what he does in hopes that they will have land they’re interested in renting to him. “Maybe I’m approaching it too much like a millennial,” he says, “but I think people are cautious to lease to us because we’re young farmers, or organic, or not a fifth generation—some combination of those factors is just enough that people don’t respond.” Being organic gives him a bit of price premium, allowing Matthew to offer $50-$100 above market rate for leases. He points out that landowners can have their land cover cropped, raising organic food, and farmed by a beginning farmer, all for above market rate, yet still few landlords call him back.
Another dynamic is at play in the area where Matthew lives—it is becoming increasingly common for landowners to hire third party land managers for the farmland they own. Most landowners who hire managers live out of state and use the land as investment income. The land managers oversee all aspects of leasing the farm and aim to get between 3-4 percent return on investment for the landowners. This means that for a property that is worth $6,000 and acre, the lease might be set at $180-240 per acre per year. Working with these individuals, who manage all aspects of leasing the land to farmers, is “more transactional and in some ways slightly more equitable,” Matthew says, because they don’t have the bias against young farmers or organic practices that he might run into cold calling neighbors—they simply want to close the deal.
Matthew notes that in the fall of 2020 alone, land prices rose $2,000 per acre and some parcels have sold for as much as $10,000 an acre.
The intersection of organic farming and land access
After Matthew and Hannah bought their first farm in 2016, they immediately got to work transitioning the property to organic. Ownership was a huge factor in making this possible. Although farming organically is something Matthew is committed to both for business and ecological reasons, it adds a level of challenge to accessing land, particularly when it comes to leasing.
In the area where Matthew farms, leases are typically two to three years with the occasional possibility for up to five years, and are structured as cash rent. For land to be certified organic, there must be three years between the last non-organic application and seed use. This means that for Matthew, securing longer leases is critical. “You need the fourth year to break even and year 5 start to make money,” when transitioning land to organic, Matthew explains. “That’s also why you need to farm at such a scale in organic grain production—to cover the costs of lands that are transitioning.” He has been trying to push his leases towards seven years at least and to include crop-sharing or flexible rates so that the arrangement will be profitable for organic production.
Debt for conservation
Land ownership has brought a lot of possibility for Matthew and his family, including opportunities to implement conservation practices. One avenue for this work is FSA conservation programs, which provide the dual benefit of incentivizing on-farm conservation practices while reducing FSA debt.
Different from the NRCS conservation programs, the FSA conservation programs work through a collaborative process where the farmer can negotiate which practices they want to pursue in exchange for forgiveness of their FSA debt. Debt forgiveness is commensurate with the number of acres the farmer puts the practices into effect on. When Matthew’s loan officer told him about the FSA Conservation Contracts program, he admitted he hadn’t done one of these projects in 20 years, but they were both eager to give it a try.
The project is still in progress, and has been slowed a bit by covid-19, but Matthew is working with FSA, Natural Resources Conservation Service, and the Minnesota Department of Natural Resources to talk through options for different conservation practices that could be implemented on the 160-acre property. The parcel has a low wetland area in the middle and is overrun with invasives from being abandoned for the prior 70 years. Matthew points out that unlike the farmers he has met from Colorado where acquiring water is the main issue, in Minnesota the challenge is to get rid of it and managing drainage.
Cumulative impacts of farm ownership
Land ownership provides security for farmers, but it also has a cumulative effect on farm viability and profit. Because he owned land, Matthew was able to access FSA programs and leverage conservation practices for debt reduction. Owning land also gave him collateral, putting him in a better position to take out additional loans.
That is not the mention the positive impacts on farm viability. If the business makes it through the impacts of the covid-19 pandemic, Matthew says, owning the farm will change the course of his farming career. “By being able to purchase the farm,” he points out, “not only do I have the long-term confidence that the losses associated with transitioning to organic will be paid back over a lifetime, but I also to feel confident in knowing we will retain improvements to the soil.” The location of the farm—just across the street from his parent’s farm and visible out of their front window—makes managing it that much more efficient as well since they can observe the fields instead of having to drive.
As a result of the two farm purchases, Matthew now farms about 400 acres and owns 240 acres of the 2,000 that he and his parents grow on, and is in the process of leasing additional land for his operation. He describes both farm purchases as “being in the right place at the right time” when landowners were ready to sell. In the case of the first parcel, the owner of a larger farm wanted to bring in cash in exchange for some of their acreage. In the second, the land was owned by a trust whose members were looking to cash out. Neither of the landowners gave him any breaks on price because he was a beginning farmer, but the FSA loan programs ultimately made it possible for him to step in and buy the land.
Between the 240 acres that he and Hannah own, the 200 that his parents own, and the remaining acres that are leased, the Fitzgeralds operate between close to 2,000 acres of land. When asked what his ideal farm size would look like, Matthew says, “It’s complicated, I’m wrestling with that right now. We’re working on what’s reasonable and what is within our capacity financially to have two full-time employees and pay living wages.” With covid, markets have been changing rapidly and Matthew has been facing a lot of uncertainty, making it challenging to plan for the future. There’s also a limit with what is possible to manage well growing organically that Matthew thinks they may be close to.
Policy change
Matthew is an active member of the Central Minnesota Young Farmers Coalition and was instrumental in helping the chapter advance land access legislation in 2017. The Beginning Farmer Tax Credit program, which was championed by the Land Stewardship Project for over ten years, was signed into law by Governor Mark Dayton in May 2017. The program provides a tax credit for the sale or lease of land and/or farm assets to beginning farmers. Although Matthew didn’t use the tax credit himself, the ripple effects of the advocacy of chapter and other partners are being felt across Minnesota and country. Since 2018, when it was implemented, the program has issued almost $6 million in income tax incentives, connecting 900 beginning farmers with financial management training and facilitating over 1,000 leases and sales of agricultural assets to qualified beginning farmers. In 2019, a similar bill was passed in Pennsylvania.
When asked about helpful policy changes that should be adopted and expanded, Matthew pointed to anti-corporate farming laws, the beginning farmer tax credits, and the Minnesota Rural Finance Authority program that exist at the state level in Minnesota. Federally, he highlighted the importance of the FSA Guaranteed Farm Ownership loan program, increased funding for the sale of development rights, and the Relief for America’s Small Farmers Act that was proposed in the U.S. House of Representatives in the spring of 2020 and would have provided FSA loan debt relief for farmers across the country.
Photo credit: Ane Fitzgerald