Owners of midsize farms and students planning to return to farming after college may face difficulties if they continue to compete in the same markets as large farms that produce bulk commodities.

“Large consolidated firms are demanding that products come to them in terms of their business interests,” said Fred Kirschenmann, director of the ISU Leopold Center for Sustainable Agriculture.

Kirschenmann said these firms want products as cheaply as possible and the largest producers are in the best position to be the lowest-cost supplier.

“Farmers are being told that’s the only way they can compete,” Kirschenmann said. “That’s going to squeeze midsize farms out of business.”

Another option for midsize producers is to create specialty products in mid-tier value chains, Kirschenmann said. Specialty products could include things that are produced using animal-friendly or organic methods, he said.

“An example is the Neiman Ranch – a group of hog producers that raise hogs according to particular standards,” Kirschenmann said. “They market their products to upscale restaurants.”

Kirschenmann said restaurant patrons know the pork they are getting comes from “hogs that have been able to run around, and the baby pigs have been able to play.”

Another example of creating a differentiated product comes from a farmer in South Dakota, who has 4,000 acres of a golden variety of phlox, Kirschenmann said.

“It’s high in omega-3, which makes it attractive to health-conscious consumers,” Kirschenmann said.

The farmer manufactures a range of consumer products, including a two-pound bag of phlox sold with a grinder, Kirschenmann said.

By marketing to the consumer, the farmer receives around $168 per bushel instead of the $3 per bushel he would get by selling to the local elevator, Kirschenmann said.

“The producer is a key player in the marketing channel,” said Jim Kliebenstein, professor of agricultural economics.

The attribute that creates value for a product is created on the farm, Kliebenstein said.

“The producer has more power there, at that point in the marketing channel where that attribute is created,” Kliebenstein said. “I can’t buy from someone else who’s not doing what you’re doing.”

In the past, products have been created and then people have attempted to find markets for them, Kliebenstein said. A specialty product may create opportunities which would not be there without it, he said.

“A number of these opportunities start out very small,” Kliebenstein said. “For a large producer, it may not be economical to try to fill that niche.”

Midsize farmers can compete more effectively in specialty, or niche markets, Kirschenmann said.

Niche markets are “not necessarily small,” he said. The Leopold Center is currently working on a pork niche- marketing workshop where they are bringing groups of specialty pork producers together to increase their market share, Kirschenmann said.

“It has enabled us to interest the Cisco Corporation,” he said.

They are looking to this group of producers as a way of getting an adequate supply of products, Kirschenmann said.

“When you get a group together, you can become attractive to larger entities,” Kirschenmann said.

Producers will need to make use of various strategies and tools to market their products, Kirschenmann said.

“Some of the tools we need to be looking at are the new tools that are available through Internet technology,” Kirschenmann said. “We also need to create identity products in supermarkets so customers can identify these products and purchase them.”

The creation of differentiated products and changes in how those products are marketed will have an impact on the future of farming, Kliebenstein said. Students returning to farming after graduation will be affected by these changes.

“Farming is going to be much more than producing something,” Kliebenstein said. “It’s sort of a change from the way it was 10 to 15 years ago.”

Kirschenmann said students should “be very clear about what kind of agriculture they want to be involved in.”

Andy Meyer, junior in agricultural studies, said he plans to return to his family’s 1,100-acre row crop farm after graduation.

Although corn and soybeans are the family’s major source of income, the farm also contains about 500 acres of timber, he said. “[It] isn’t that big,” Meyer said. “I think the row crop is going to have to get bigger.”

Meyer doesn’t know if the farm’s timber is considered a specialty crop, but they sell a lot of the hard wood to log foresters and log buyers who “come in and bid on it,” Meyer said.

“It kind of helps offset prices in the bad years,” Meyer said.

Meyer’s grandfather started the timber operation and his father continued it, Meyer said. The operation requires 60 to 70 years before returns are seen.

“I plan on continuing what they’ve started,” Meyer said.

Producers of specialty products should “get really savvy on how to use the Internet as a marketing tool” and determine how to anticipate new markets, Kirschenmann said.