Farmers looking for organic certification on all or part of their operations can get some financial help from Rabo AgrFfinance. The company has developed a loan product so farmers can get the capital they need upfront to help with costs associated with changing production practices. Farmers can then schedule loan repayments when they get additional revenue from selling certified organic products.
The USDA requires a three-year transition period for farmers to get their land certified as organic. The deputy head of Rabo AgriFinance says, “During that transition period, farmers often experience yield loss in comparison to conventional production, and they can’t collect organic premiums for that land’s production to compensate for the lower yield. That challenge has created a financial barrier against making the transition to organic production.” Farmers want to take advantage of consumer demand for organic products, but they often have trouble penciling out how they’ll survive the transition period it takes to be able to meet that demand.
Stephen Nicholson, a grain and oilseed analyst at Rabo AgriFinance, says the demand for organic products has grown faster than domestic production.