Why Contracts Are Essential in Organic Grain Sales
Selling organic grain is not as straightforward as selling conventional grain at an elevator, where pricing and quality adjustments are often standardized. In the organic grain market, unclear contracts, inconsistent pricing adjustments, and slow payments are common challenges that can put YOU at a disadvantage. Many organic buyers have been known to accept deliveries without immediate quality verification, only to later claim that the grain does not meet specifications. This often results in unexpected discounts deducted from the final payment, sometimes with little to no communication until the check arrives. Additionally, delayed payments can create financial strain for farmers who rely on timely income to manage expenses and reinvest in their operations.
These issues are not unique to one buyer but are widespread across the organic grain industry, where transactions are often handled differently than traditional grain sales. Unlike selling to an elevator, where grain is weighed, graded, and priced immediately, organic grain buyers frequently negotiate terms individually, leading to greater risk for the grower if expectations are not clearly defined upfront. Without a well-structured contract that specifies quality standards, pricing, delivery terms, and payment deadlines, farmers may find themselves in disputes over quality, receiving lower payments than expected, or waiting months to be paid.
To protect growers from these risks, formal contracts should be a standard practice in organic grain sales. A well-written contract provides transparency, ensures both parties agree on quality and pricing expectations, and reduces the likelihood of unfair deductions or disputes. Additionally, incorporating steps such as pre-approved grain samples and documented delivery inspections can help establish trust and accountability in transactions. By setting clear terms in writing, organic growers can secure fair payment for their crops and create a more predictable and long-term marketing process.
Organic Grain Growers Checklist for Selling to Buyers
Pre-Sale Preparation
✅ Research the Buyer – Check past experiences, ask other farmers, and ensure the buyer has a good reputation. ✅ Obtain a Written Contract – Do not rely on verbal agreements. Ensure all details are in writing. ✅ Define Quality Specifications – Specify acceptable moisture, test weight, foreign material limits, and any other grading factors. ✅ Determine Discount Schedule – Get in writing how much will be deducted for deviations from specifications. ✅ Set a Payment Schedule – Include clear payment terms (Net 15, Net 30, etc.) and penalties for late payment. ✅ Require a Pre-Approved Sample – Send a sample to the buyer before the deal is finalized and get a written quality approval.
Before Delivery
✅ Keep Records of Grain Quality – Document test weight, moisture content, and any lab results before shipping. ✅ Take Photos of the Grain – Have visual proof of quality before it leaves the farm. ✅ Confirm Delivery Details – Date, time, location, and any special unloading requirements. ✅ Clarify Inspection at Delivery – Require written acceptance of the load upon delivery to avoid later disputes.
Delivery & Inspection
✅ Request a Third-Party Inspection (If Necessary) – If there are concerns, get an independent inspection at delivery. ✅ Obtain a Delivery Receipt – Ensure the buyer acknowledges the grain’s arrival and confirms quality in writing. ✅ Document Any Quality Concerns Immediately – If issues arise, get a signed report at the time of unloading.
Payment & Dispute Prevention
✅ Track Payment Due Dates – Follow up if payment is delayed beyond the agreed timeframe. ✅ Dispute Any Unfair Discounts Promptly – If deductions occur, request documentation and negotiate if necessary. ✅ Consider Partial Upfront Payment – For large transactions, negotiate for partial pre-payment or escrow arrangements.
Additional Protections
✅ Keep a Paper Trail – Maintain emails, contracts, test results, and photos in case of a dispute. ✅ Clarify Liability for Rejections – If the grain is rejected, determine who covers the cost of returning or reselling it. ✅ Work With a Lawyer (For Large Sales) – For significant transactions, having a legal review can prevent future issues.
Last year USDA put out the call for grant applications for the Organic Market Development Grant program. This was a chance to apply for up to $3 Million in grant funds with a match or up to $100,000 for equipment with no match. The Organic Market Development Grant (OMDG) program supports the development of new and expanded organic markets to help increase the consumption of domestic organic agricultural commodities. The program focuses on building and expanding capacity for certified organic production, aggregation, processing, manufacturing, storing, transporting, wholesaling, distribution, and development of consumer markets. OMDG aims to increase the availability and demand for domestically produced organic agricultural products and address the critical need for additional market paths.
Texas organic producers have excelled in their efforts, submitting a multitude of grant applications, and the results are now in. Below, discover the exceptional organic projects that have been chosen to enhance organic agriculture in Texas for the foreseeable future.
Promotion of Organic Yaupon Tea as a Domestic Alternative to Imported Tea Distributed to The Foodservice Industry
Recipient: Yaupon Holly Tea, LLC, Cat Spring, TX
This project aims to increase the American consumer awareness of organic yaupon tea as a replacement for imported tea via the food service sector. An Organic Yaupon Marketing Plan will increase opportunities for consumer exposure to organic yaupon tea while also allowing for additional customers, buyers, and parties to participate in the domestic organic yaupon tea industry. Yaupon is a caffeinated plant native to North America and rich in polyphenols and antioxidants like imported tea. By using a hybrid of traditional tea preparation methods, organic yaupon tea has an almost indistinguishable flavor profile from imported green and black tea served in both hot and iced tea. Cat Spring Yaupon has created a cohesive marketing and outreach plan to increase the amount of organic yaupon tea served in restaurants, cafes, hotels, and spas. This plan incorporates the opportunity to promote and support additional organic yaupon producers through the American Yaupon Association while also supplying to tea companies who would otherwise be selling imported tea to their food service customers. This will also allow restaurants to substitute imported tea on their menus with organic yaupon tea thus giving their customers and guests an opportunity to sample and fall in love with the incredible domestic organic yaupon tea.
Diversifying Organic Supply Chains for Small Producers in the Rio Grande Valley
Recipient: Triple J Organics, LLC, Mission, TX
Triple J Organics is a minority-owned certified organic citrus orchard in Mission, Texas established in 1995. Triple J manages 25 acres of certified organic citrus groves, primarily of Ruby Red grapefruit and early season oranges, as well as Navel Oranges, Meyer Lemons, Tangerines, and Tangelos in smaller quantities. This project will increase consumption of locally produced organic orange juice in the Rio Grande Valley and increase the profitability and long-term viability of Triple J Organics through special purpose equipment purchases that allow Triple J to process 32,000 lbs. of “waste”, or seconds, oranges into fresh juice and deliver it safely to customers in the Valley. The project will target school districts as potential customers, as well as supermarkets, restaurants, health food stores, daycare facilities, and eldercare facilities as needed. Beneficiaries include Triple J Organics, local schools and businesses who purchase the new product, as well as other organic citrus growers in the Valley who may be able to cooperate and aggregate to produce a higher margin value-added product.
Steelbow Farm: Expanding Access to Local, Organic Produce in Central Texas
Recipient: Steelbow Farm LLC, Austin, TX
Steelbow Farm is seeking to broaden its delivery range and increase local food access and supply chain resilience by procuring a delivery vehicle. The overarching purpose of the proposed project is to expand access to local, organic produce by eliminating the current constraint of distance and delivery radius, while simultaneously addressing the growing demand for product in the current marketplace. Currently, Steelbow Farm has demand for their product that exceeds their capacity because they do not have a vehicle and therefore have a limited delivery range. This bottleneck is hampering Steelbow Farm’s ability to rise to the organic market demands. They believe access to this equipment would drastically improve access to organic produce, as they could radically increase their customer base and range. For context, currently, within Travis County, only .06% of food is produced locally. The Austin and Travis County areas are seeing a decline in the amount of vegetable farms and farmland, which are disappearing at an alarming 16.8 acres a day. Amidst these startling statistics, this business is thriving and demand for their produce is extremely high. Steelbow Farm wants to be able to meet the market demand and fill the gap within the local food system. As organic vegetable producers, they are striving to increase the percentage of local food consumed within their community.
Enhancing Organic Dairy Production and Market Access in Texas
Recipient: Armagh Fine Foods LLC dba Armagh Creamery, Dublin TX
The primary goal of this project is to enhance and expand the production capabilities of the Armagh Creamery organic farming and dairy operations. By acquiring essential equipment, the project aims to achieve increased efficiency, product diversification, and expanded distribution. This equipment will enable us to venture into new product lines, including heavy cream and butter, expand production of existing products, and streamline the production process, reducing the workload on current employees and enhancing overall efficiency for creating new butter product lines. The acquisition of a delivery vehicle will significantly improve distribution capabilities, allowing us to reach local retailers and drop locations in Central, North, and West Texas. This expansion will promote the availability of organic dairy products to a wider consumer base. The specific objectives of this project are two-fold: 1) to scale yogurt production to the full daily capacity of 10,000 units per day, two days a week. This increase will enable us to supply more retailers throughout Texas and cater to the growing demand in the direct-to-consumer market and 2) to expand raw milk and cream production to 600 gallons a day for 3-4 days a week, resulting in a weekly output of 1800 to 2400 gallons. This expansion will further support the direct-to-consumer market and provide ample resources for the planned heavy cream and butter product lines.
Expanding Capacity and Improved Quality of Organic Cotton
RKH Gin LLC, dba Woolam Gin is a primarily woman owned ginning facility that has processed organic cotton for 33 years, being the first United States to do so. It is located in a high poverty area in Lynn County, Texas and serves other high poverty areas including Dawson and Terry Counties. Woolam Gin is seeking a grant award to purchase and install equipment to expand the services and improve processing to increase production of organic cotton for farmers which will improve overall market production of the beneficial product. The overarching project purpose is to improve efficiency, therefore improving outcomes for farmers and the organic market. The equipment will increase production from 25 bales an hour to up to 40 bales an hour. The increase in processing will improve the housing time of cotton in the warehouse which will improve the grades and facilitate earlier entry into the marketplace, benefiting farm producers, processors, and consumers. Faster processing will improve turnaround for the farmer and further increase production possibilities. The primary partners and collaborators of the project will include participating organic farmers, the project manager, project supervisor, gin manager and other supporting human resources workers. This grant award will create improved markets and expand processing capacity which in turn will enrich market availability and further development of production resources and production.
Texas Organic Market Development & Promotion
Recipient: Texas Department of Agriculture, Austin, TX
The Texas Department of Agriculture (TDA) will use a multi-faceted approach to promote local organic producers in the produce, grains, dairy, and fiber markets. Though these industries are each unique in their production, the issues they experience are similar. These challenges include, but are not limited to, lack of knowledge among consumers of each industry’s availability/benefits, existing gaps between producers and buyers that result in barriers for growth, and an absence of public resources that assist organic farmers from promoting themselves more efficiently. Through this project, TDA will increase local consumer knowledge, support activities to develop new markets, increase demand for domestically produced organic agricultural products, and provide additional market paths for organic farmers in Texas. Goals of this project include: 1) increase public knowledge of Texas organic agriculture industry, 2) provide opportunities to improve market share and sales of local organic producers, and 3) build new connections between Texas producers and potential buyers to accomplish these goals. TDA Marketing will produce new marketing materials targeted for the organic industry, assist organic producers with attending trade shows relevant to their respective industries, facilitate business to business interactions, and run a social media campaign that highlights each industry. These activities will strengthen the relationships between Texas organic crop/product producers and buyers, as well as better inform the public on the availability and benefits of Texas organic products. These relationships would aid in ongoing efforts to strengthen the supply chain issues, build on current opportunities with Texas agriculture associations, assist historically underserved communities, and increase demand for locally produced organic products. To further assist the organic industries of Texas, TDA will assist in the production of the Field View Organics program. This program aims to identify organic operations across the state and mark them for aerial spraying companies to help prevent potential chemical drift or contamination of organic crops. By supporting this initiative, TDA will protect the current organic producers across the state and alleviate potential concerns for new members wanting to enter the industry.
Here is the entire list of projects funded by USDA for the entire country. This list should give you some ideas for submitting an application for the next grant program that come along! Organic Grant Winners
Texas A&M AgriLife Organic 