“Our oats are starting to come up,” he said. “They’re a couple inches tall.” He had already planted a little early corn, experimentally. But he said the ground was still too cold, really, for corn or soybeans. Oats like a cool spring and don’t mind frost, but they do not do well come summer if the temperature gets too hot before harvest.

Plagge farms 4,000 acres in Latimer, Iowa, with his father and uncle, and his oats are a rarity among the nearly endless rows of corn and soybeans in the neighborhood.

Oats once were ubiquitous in Iowa, with 6.5 million acres planted in 1950. But the second half of the 20th century brought myriad changes to Midwest agriculture including the near disappearance of work animals, the separation of livestock from many crop farms, the confinement of chickens and pigs, readily available synthetic nitrogen fertilizer, and federal policy incentives for corn and soybeans that led to significant investment from seed and chemical companies.

Iowa farmer Landon Plagge grows oats and joined a pilot project with Oatly. (Photo credit: Anne Plagge)

It became easier and more profitable to grow only corn and soybeans. By 1980, Iowa had just 1 million acres of oats, and by 2000, just 180,000 acres. Today it’s less than half of that.

Plagge is one of a handful of farmers who have been taking part in an oat-growing pilot program launched in Minnesota and Iowa in 2019. Through the program he gets both technical assistance and some money to plant oats and cover crops.

“I’d like to plant more oats,” Plagge said, “but the market isn’t good enough right now.”

Plagge knows, as generations of farmers did, that oats break up pest and weed cycles and nurture the soil. Diversifying crop rotations also can lead to environmental benefits such as reducing pollution in waterways and decreasing a farm’s greenhouse gas emissions. But oats typically can’t compete with corn and soybeans when it comes to profit.

The ubiquity of oat milk at coffee shops and in grocery stores suggests demand for oats in this country may be having a moment. And shoppers increasingly care about the environmental impact of their food choices, which is propelling some people to advocate for policy changes that could make growing oats more viable.

In the process, though, they’re learning something else that Iowa farmers have long understood: Few elevators or grain mills—the critical link between farms and food companies—are buying oats these days. In recent years, however, as more people and companies have recognized the barriers to growing domestic oats, they’ve also started pushing for changes that could return more to the landscape.

Oat Milk Explosion

Oatly, the Swedish company that took North America by storm in 2017, is one of more than half a dozen companies selling oat milk in the U.S. It has dazzled consumers with its cheeky marketing, gaining plenty of name recognition.

And it buys a lot of oats—from Canada. That’s where the vast majority of oats processed and eaten in the United States come from. Canada’s cooler, drier climate also contributes to its dominance as the world’s largest oat exporter. In 2022, farmers in the country grew 3.9 million acres of oats. In contrast, farmers in the U.S. grew just under 900,000 acres of oats that year.

In recent years, however, Oatly’s sustainability goals have led it to explore sourcing more of its necessary ingredient from the Midwest.

Over the last three years, about 20 farmers have participated in the pilot Plagge joined, planting oats on about 1,500 to 2,000 total acres in northern Iowa and southern Minnesota, according to  Lydia English, crops viability manager at Practical Farmers of Iowa (PFI), a nonprofit that nurtures farmer-led innovation. When Oatly came calling with the pilot idea, PFI was already working with a group of farmers who were experimenting with oats on their own as a way to diversify their corn and soy rotations, said English.

“If we can get some private investment,” she said, “and a company that is using those oats in a product, to also invest in the region, all the better.”

As a participant in Oatly’s pilot program, Plagge has received agronomic advice and a cost-share benefit, which reduced the expenses related to planting oats and, after harvesting them, using a diverse cover crop mix to help him build healthy soil.

“We could sell [the oats] wherever we wanted to,” he said. Oatly “would like to have the oats from those acres, but it wasn’t a requirement.” And if the harvested oats didn’t make the cut for food use, farmers enrolled in the pilot received help marketing them for other uses.

“Our interest is in trying to pivot to a regenerative supply,” said Julie Kunen, Oatly’s director of sustainability for North America. Specifically, she points to reducing greenhouse gas emissions, increasing biodiversity and ecosystem health, and providing a crop that contributes to “farm viability and resilience to shocks, including the shock of climate change.”

For the pilot project, Oatly also partnered with the Sustainable Food Lab, another nonprofit that pushes for change in the food system, which Kunen said is part of Oatly’s goal. And Grain Millers, which processes oats in both the U.S. and Canada and has a plant in St. Ansgar, Iowa, became the destination for the pilot-grown oats. Eric DeBlieck, director of crop sciences at Grain Millers, said the pilot connected the mill to new farmers who “definitely have a keen eye and interest in some of these sustainability, or even regenerative, practices.” Some of the farmers had never grown oats, he added, and others hadn’t planted them for decades.

Oatly’s Kunen said the company is learning a great deal from the pilot and will make the written case study available to the public soon.

“After four years… we have definitely come to understand that cost share alone, or guaranteed payment alone, is not enough to overcome the barriers that exist,” she said. Other barriers the company identified include the lack of local processing, the lower profit on oats compared to other crops, and the social pressure farmers face when disrupting the status quo and deviating from their farm’s recent past.

PFI’s English said she’s hopeful the pilot will attract more companies willing to invest in U.S. oats on a broader level, though the leap from small-scale pilot project—however successful—to sweeping changes in a company’s supply chain is a big one. “Scaling those types of initiatives takes an internal sell for the company,” she said, which can be a bottleneck on the pathway to significant change.

Developing Oat Varieties for the Midwestern Climate

Corn that grows in soil where oats grew the previous year typically doesn’t need as much nitrogen fertilizer as a crop in a corn-only or corn-soybean system. Those reductions help cut down on the farm’s overall greenhouse gas emissions.

But Wiersma says the warm, humid weather in the Midwest can be a challenge. Farmers in South Dakota, Minnesota, Iowa, Illinois, and Wisconsin, the main states where oats are grown, have had inconsistent success meeting the food-grade standard, called “test weight.” The air temperature before harvest plays a role in the final weight. A crop that doesn’t make the food market can still be sold for cover crop seed, animal feed, or forage, but pricing varies, often resulting in a scramble to find the right buyer at harvest time.

New oat varieties might help, but few scientists are breeding them. While the big seed companies haven’t invested in the crop the way they have in corn and soybeans, a few universities still support oat breeding. Melanie Caffe leads the program at South Dakota State University.

“We obviously try to develop varieties that have better productivity for farmers,” said Caffe. That means working toward higher grain yield, higher test weight, and better disease resistance. She added that other goals include breeding for better milling efficiency and nutritional quality.

The U.S. Food and Drug Administration (FDA) recognizes oats as good for heart health, which is something food companies like to state on packages. “To be able to make that claim, it needs to have a certain amount of beta glucan,” Caffe said, “so we are trying to develop oats with higher beta glucan content.”

Having more varieties specifically geared toward the food market could go a long way toward ensuring that more farmers integrate them into their rotations. But farmers also need to know what price they can expect. Oat Information’s Strychar said that can be a challenge without a lot of groundwork and price comparisons.

An Uncertain Market

Still, “the market is booming on the consumer side,” Strychar said, “and the supply side has not adjusted to it.” He added that food companies are buying fewer oats for cereals and snack bars, but the boom in oat milk keeps demand high.

“Oat milk’s impact has been very significant,” he said. “And we are still dealing with wide swings in acreage numbers about every two years.” Market disrupters such as a drought, pest infestation, or global market shock (such as the war in Ukraine) can influence a farmer’s planting.

With such inconsistency, how is the growing demand being met? “Sometimes barely,” Strychar said. He’s seeing new mills being built in Canada but in the U.S., there are just a handful of mills that process (almost entirely Canadian) oats, and he doesn’t see that changing. He said some companies are exploring putting their oat milk production in Canada, too.

California-based Califia Farms sells oat milk made from “North American” oats, said CEO Dave Ritterbush, who acknowledged that the majority of those come from Canada. During the 2021 drought there, Califia did buy more oats from U.S. farms, and Ritterbush said it didn’t see any dips in supply, though he says processing can be a bottleneck.

“If you were hearing about oat milk shortages a couple of years ago, it wasn’t the lack of oats,” he said. “It was the lack of processing capacity.” Califia Farms makes its products in California and New Jersey. Oatly also has a plant in New Jersey and one in Utah, with a third opening in Texas this year.

Farm Policy

While crop insurance is available for oats, farmers aren’t always aware of it, said Lauren Asprooth, a PhD candidate in geography at the University of California, Davis. And without stronger prices, it’s not typically worth the investment anyway.

“A much more important policy lever here would be to require [corn and soy producers to plant] a third rotation in order to receive federally subsidized crop insurance” in the first place, she said, adding that expanded incentives for conservation practices, including diversification, would also help.

The 2007 Renewable Fuel Standard, which increased demand for corn for ethanol, also incentivizes growing corn in fields that might otherwise be financially viable with a third crop like oats, she said. Congress could change that, Asprooth added, which would bring down the price of corn and help make oats pencil out.

Another strategy is state or federal tax incentives for food companies and grain processors to source domestically. Asprooth points to Michigan, where breweries and distilleries can slash their tax bill when they source local grain.” Asprooth heard from one broker who said food and beverage companies were showing a “growing interest in the geographic origin of grains from a food and flavor standpoint.”

Still, most farmers don’t make planting decisions based on the end use of a crop. They do the math and calculate what’s best for business.

Iowa farmer Plagge wants oats to work for more of his neighbors. So, he’s considering bringing processing closer to home.

“We’re thinking about building a mill for food-grade oats,” he said, “to supply the higher-end consumers that want the sustainability story, the high-quality product, and [the] domestically sourced product.”

A mill would likely cost several million dollars. This spring, Plagge scouted out possible funding partners, which may include some local agriculture and rural development programs at the U.S. Department of Agriculture. His goal would be to process about a million bushels of oats per year—enough to support about 15,000 acres. That shift would likely entice some of his neighbors to add oats to their rotations, and it could carve out a niche for Iowa oats in the specialty foods sector.

While Canada’s dominance in the U.S. market would remain unchecked, 15,000 more acres of oats would help those farms, the environment, and even the food companies that could spend less on shipping their products and label them domestic and, perhaps someday, more sustainable.

“We can grow oats here, we know growers want to do it,” said English, who is helping Plagge find appropriate grants. “We just need to help make it viable for them and support them.”