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Characterizing Ag of the Middle and Values-Based Food Supply Chains

Agriculture of the Middle (AOTM) encompasses a spectrum of farms and ranches that are declining because they are too small to be served well by commodity markets and too large to be served well by direct markets. Most AOTM farms are characterized by: (1) their size; (2) their business organization; and (3) the production and marketing strategies they adopt to remain viable.

(1) Size: It is important to recognize that the definition of AOTM farms and ranches is scale related but not scale determined. Most farms are in the $50,000-$500,000 range of gross sales. But there may be farms with higher gross sales that meet the other criteria. The specific size that is too big for direct markets but too small for commodity markets varies with crops produced, geography and market.

(2) Business Organization: AOTM farms and ranches tend to fall into either the farming occupation farms or large family farms categories of the USDA farm typology. They rely on farming as a main source of income for the household. They also tend to be businesses in which one or more family members make the majority of on-site management decisions, and contribute substantially to the labor requirements of the operation.

(3) Production and Marketing Strategies: Agriculture of the Middle as a term also incorporates strategies that AOTM farms and ranches have taken to create markets that address the decline. These strategies enable midsized farms and ranches to produce and retain more value and profit. Many successful AOTM businesses market differentiated food products through wholesale supply chains, and operate with high environmental standards. They mainly supply markets that are larger than most farm-direct markets and more differentiated than commodity markets. Many but not all AOTM farms/ranches participate in business organizations that serve as product aggregators (e.g. co-ops, LLCs, etc.)

Values based food supply chains are strategic business alliances among farms/ranches of the middle and other agrifood enterprises that: (a) handle significant volumes of high-quality, differentiated food products, (b) operate effectively at multi-state, regional levels, and (c) distribute profits equitably among the strategic partners. Values-based supply chain business models place emphasis on both the values associated with the food and on the values associated with the business relationships within the food supply chain.