Diversification strategy for small and medium-sized farms

Farms that achieve economies of scale by specializing and growing in size are common in US agriculture. Small and mid-sized farms, however, need a different kind of economy.  Economies of scope rely on managing diverse enterprises, to access more profitable markets and reduce the cost of off-farm inputs.  Research has demonstrated that diversified production systems have ecological and economic benefits, but research on the process of diversification in US agriculture is needed.  Funded by USDA and NIFA, the Agroecosystems Management Program (AMP), in The Ohio State University, investigated the effects of diversification on a model farm (Mellinger farm) that had been producing primarily no-till corn and soybeans for the past few decades.

The overall goal was to develop a decision-making framework for the transition from specialized commodity production systems to diversified crops and livestock production. The diversified system targets local and regional markets where small and midsized farms compete more effectively, taking advantage of economies of scope.

We expect the advantages of diversification to include:

1. Greater output in new value chains;
2. Entry into new markets that bring new revenues;
3. Lower costs of production due to ecosystem services that derive from synergies between crop, animal, and farm energy enterprises;
4. Lower cost of capital because human, social, built, and natural capitals can be used as substitutes for more expensive financial capital in diversifying small and medium sized farms; and
5. Greater net revenue and return on investment for the farm. 

The total acreage of the Mellinger farm is 324 with 270 being tillable land. The replicated area of this diversification research project consisted of 2.63 acres, located just west of the farmstead. The research design replicates relatively common diversification scenarios. Experimental plots were established in 2016 with four replicates (individual plot size is 0.09ac). The treatments are designed to mimic a five-year rotation within the four years of the grant.  The rotation includes a small grain crop (hulless/naked oats) followed by an oilseed crop (sunflowers), then three years of pasture. The rotation sequence was: Naked oats > Sunflower > 1st Year Pasture > 2nd Year Pasture > 3rd Year Pasture. The naked oats, sunflower and 1st year pasture plots were established in year one. By adding 1st year pasture plots in years 2 and 3, the 2nd and 3rd year pasture plots were established by year 3. Half plots of the 3rd year pasture plots were planted in vegetables.  Half plots of the 1st and 2nd year pastures were grazed by chickens during August and September each year.

• Poultry - Processed carcass Weights; Feed Consumption; Ingestive Pecking; Biomass Removal by Chickens; Cost & Revenue Data
• Vegetables - Harvest Yield; Pests and Diseases; Qualitative and Quantitative Data; Cost and Revenue Data
• Pasture - Diversity indices; Biomass Production
• Sunflower - Harvest Yield; Pests and Diseases; Oil Production; Cost and Revenue Data
• Oats - Harvest Yield; Pests and Diseases; Chicken Feed Production; Cost and Revenue data
• Arthropods and other invertebrates collected 3 times during the growing season each year.
• Photographs of all the activities in each year

Careful accounting of all inputs, outputs and costs will add to the understanding of diversification paybacks and benefits, as well as reveal challenges faced when transitioning agricultural lands to diverse agricultural systems.

Research outcome will be published, once the data are analyzed and finalized