Small Business Opportunities Grow As Cover Crop Acres Expand

Kurt Lawton | December 13, 2019

Farmer entrepreneurs are seeing solid business growth as they launch cover crop support businesses in Iowa. While it’s not Silicon Valley, some farmers are doubling their business annually, which provides great diversity to commodity-driven farm businesses.

As cover crop acres ramped up in Iowa from 100,000 in 2011 to almost 1 million in 2019, so have the businesses that serve these farmers — from custom applicators and seed sellers to full-service cover crop companies and soil health businesses.

Bill and Melissa Frederick holding their daughter dressed in a bee costume.Greene County farmers Bill Frederick (shown with his wife Melissa and their daughter) and James Holz are just one example of young entrepreneurs who pooled their talents to create a successful business, Iowa Cover Crop, based near Jefferson.

“We were two young farmers back from college looking to make some money outside the farm, both selling cover crop seed,” Frederick says. “So, in 2014, we combined our forces to see if we could turn it into something. Our seed and application business has doubled every year, applying close to 15,000 acres of cover crops in 2019.”

Financial and promotional support

Since 2013, the Iowa Department of Agriculture and Land Stewardship (IDALS) and the Natural Resources Conservation Service (NRCS) have offered cost-share dollars for farmers who use cover crops and other practices. The goal is improved water quality and soil health to meet the Iowa Nutrient Reduction Strategy (NRS).

In 2014, the Iowa Agriculture Water Alliance (IAWA) and IDALS began the Conservation Infrastructure (CI) Initiative to organize and coordinate the investment and engagement of public and private sectors to implement the NRS.

Sarah Carlson, strategic initiatives director for Practical Farmers of Iowa (PFI), is Co-Lead on the CI Cover Crops Working Group with Bert Strayer from La Crosse Seed. Their efforts focus on working with farmers, agronomists, and cover crop champions to showcase best management practices that work, along with creating a peer network of experienced cover crop farmers helping other farmers succeed.

Carlson, an outspoken agronomist at PFI and advocate for the value of cover crops, realized early on during CI meetings that most co-ops don’t have the time nor adequate return on investment to add cover crop application to their busy schedule. So, part of her task is to help promote a supply chain of entrepreneurs who can help farmers get cover crops established.

Millions of more acres needed

Currently, there’s not enough cover crop seed produced in all of the U.S. to meet Iowa’s anticipated need – to increase the current 1 million acres of cover crops to roughly 12 million acres or more that may be needed to meet the goals of the Iowa NRS.

 “We’re promoting companies like Iowa Cover Crop, Sponheim Sales & Service, and many more,” Carlson says. These small businesses are providing the missing infrastructure needed to supply both cover crop seed and seeding services.

 Frederick and Holz, who were high school classmates, initially formed Iowa Cover Crop to just sell seed. Coming from a farm conservation background, where Frederick’s dad Al was a longtime no-tiller, small grain grower, and cover crop user, that philosophy helped spur him into the cover crop business.

“My dad and grandpa for sure influenced my conservation attitude,” Frederick says. “I’m the third-generation soil commissioner here in Greene County as they both served in the same role. It’s easy to be excited about taking care of the soil when you have great role models that show you the way.”

Iowa Cover Crop initially grew oats for cover crop seed and used on-farm storage. Then they started doing custom application for local farmers. As cover crop acres expanded, Frederick and Holz decided to expand by setting up a network of Iowa Cover Crop seed dealers around the state, as well as supplying seed to some co-ops. Recently, they’ve also added local CRP and grass waterway installation.

One company leads to more

Like any growing supply chain, one business often leads to the growth of others. For example, Iowa Cover Crop hires local growers to grow cover crop seed. Currently, they also buy high-quality rye, turnip, radish, and other cover crop seeds from the Dakotas and Oregon. They hire a local pilot to fly on seed, employ an area farmer with a Hagie interseeder for cover crop application, and enlist farmers who apply with drills. They also lease a seed cleaning facility in a nearby town.

 “As a business, we’ve been doubling every year. Rye, oats, and turnips are the big three cover crops used around here. We’re starting to sell a little more triticale, and we’ve been trying to grow it locally, too,” Frederick says.

 Another cover crop growth area that Frederick sees is with cattlemen. “Both James and I have been grazing cover crops for years, which can pay for a rye cover crop immediately in hay savings,” he adds.

 Frederick has been part of a PFI study, now in its fifth year, that measures cover crop dry matter in the fall, how many grazing days, and hay savings. “Even with rye that’s only six inches tall, which you can achieve seeding early after silage harvest, you’ve paid for your seed costs, as that dry matter adds up pretty fast,” he says.

Farmer tillage attitudes changing

Regarding future growth, Frederick sees larger and more mainstream farmers starting to both experiment with cover crops and getting excited about growing them. “That’s encouraging to us, as well as seeing more guys coming around to the idea of stopping fall tillage and that’s a big hurdle,” he adds.

 “We really appreciate all the cover crop education efforts by PFI and NRCS and how they help businesses like us promote our services. It’s nice to network with like-minded people, and PFI’s help has been huge,” Frederick says.

 “We try to sell our first-hand experience as farmers since we have some fields with over 10 years with cover crops. It’s kind of like a crop insurance-system for me; it helps level out the bad years as we don’t have drowned-out spots or hills that burn up anymore,” he says. “We attribute some of that to cover crops. The fields are more supportive of equipment, too, as we’ve never bought a tow rope for the combine or tractor.”

 Carlson sees more farmers having fun again. “Not just our PFI farmers, but a lot of farmers talking to their neighbors about their cover crop experiences, pro and con,” she says. “Yes, cost-share is helping get farmers started, and we’re seeing more guys pay for it themselves after they see the soil benefits. We just need more farmers and landowners to start down the cover crop road. And these small businesses certainly help the cause.”

Frederick is a believer that cover crop adoption will one day be widespread. “It’s just going to take time,” he concludes. “Once more farmers see their neighbors do it and see that they haven’t gone broke, then more will decide to try it.”