Pairing local foods with innovative investing

by Jan Joannides, Executive Director, Renewing the Countryside


As little as five years ago, when Renewing the Countryside was promoting local farmers and a sustainable food system in Minnesota, people asked: Is there really a demand for local foods? Today, the demand is clear. The local-food movement is alive and well in Minnesota. Farm-to-school programs are growing. Mainstream grocery stores are promoting local products. And food councils are popping up across the state.

Today the question on people’s minds is: How do we grow the supply of sustainably grown local foods?

We are fortunate, in the north central region of the U.S., to have a strong base of seasoned, sustainable farmers who are willing to expand their operations. We also have a number of new farmers interested in filling the gaps. Other entrepreneurs see opportunities in processing and distribution. However, many of these people struggle to pull together the resources and financing to move their operations to the next level.

Featherstone Farm in MN invested in new energy infrastructure.
Photo: http://featherstonefarm.com

As has often been the case for new or sustainable farmers, financing from traditional banks and farm credit agencies is not often available for “alternative” crops or practices, or at least without substantial collateral. But practical financial options must exist for sustainable farmers if they are to meet the growing demand for local, accessible, sustainably grown food. We think that more farmers will stay in business and new farms will get launched if we can develop a network of lenders and investors with cash ready to invest in land, livestock, equipment, or a new product line.


Where do our personal investment dollars go?

At the same time, when saving for retirement or college, many of us in the Heartland send our money to the coasts to be invested in what, for many, seems like a black box. We are often dependent on a few large investment companies, often identified by our workplace or our bank. We know little about how the money is invested or the values of the companies who are receiving the money. While socially responsible investment funds are an option, these still take money out of local communities and use rather simplistic criteria to choose where the money is invested (i.e. weapons and tobacco are bad, but high fructose corn syrup and poor working conditions are OK). Local farms and small agricultural businesses, so vital to long-term health and security, never see a penny of this investment.

Even if we wanted to invest in our local communities—and more and more of us do—there have not been very many mechanisms for doing so beyond buying locally, making donations, and volunteering.

Ideas for innovative investing

The Slow Money movement has created a national dialogue in regards to how we, as individuals, invest our money – especially in regard to food. “Slow Money” is a term coined by Woody Tasch, who wrote a book of the same name. Tasch had been the financial director at a large foundation where he was disturbed that the mission and goals on the grantmaking side of the foundation were at odds with its investment strategies. The foundation made grants that helped improve community health and social equity, but the primary criteria for investing their funds (which provided the interest that they used to make grants) was the rate of return—regardless of where the money was invested. Tasch set out to change that within his foundation and then began talking about this issue more broadly.

The tenets of Slow Money that resonate within the sustainable agriculture community and local foods movement are:

• Invest in real places, people and enterprises close to home, starting with food
• Invest patiently and with a long-term goal of building healthy enterprises, communities and ecosystems
• Measure success by the world we create and the health of our soil, not just by profit
• Fix our economy from the ground up

Slow Money-style mechanisms are currently at work in the sustainable agriculture community and are on the rise. Every year in Minnesota alone, thousands of people purchase CSA (community-supported agriculture) shares. People invest at the beginning of the season with the understanding that they will share the rewards (boxes of food) and the risks (less food if the season is bad).  But research suggests that there are opportunities to expand the number of innovative financing strategies. What better way for an ethically minded consumer to make both a difference and, perhaps, a decent return than by investing in a farmer? It’s already happening all over the country, and in our own backyards. Recently we have seen:

• A sheep farm and artisan-cheese enterprise raise hundreds of thousands of dollars from friends and community members to save their farm from foreclosure;
• A mid-sized fruit and vegetable farm raise $160,000 in loans from CSA members, food co-ops, and friends to install solar panels on their buildings; and
• A direct-market farmer raise enough upfront capital from his customers to increase the size of his beef herd.

 It is important to note that this is not only happening at the individual farm level. In 2007, when flooding hit southern Minnesota and Wisconsin farms, the community of eaters that shop at natural food stores rallied support and raised hundreds of thousands of dollars to help the region’s sustainable food producers who were devastated by the floods.

While not farm- and food-focused, a group of banks in Minneapolis and St. Paul have developed Socially Responsible Deposit Funds (SRDF). A customer can designate that her money, whether in a savings account or CD, be part of the SRDF. These funds are then used to provide loans to small, community-based businesses. They receive the same interest rate as their non-local counterparts within the bank, but customers are assured the funds are assisting local businesses.

Imagine redirecting all or part of your personal or community resources to those who need them most while also providing avenues for meaningful connection to the local economy. We currently have a unique window of opportunity to identify new investment pathways. The low rate of returns on investments, anti-Wall Street sentiment, and growing interest in local foods may provide the right conditions for radical change.

 

 

What innovative strategies are you seeing in your community to finance diversified farm and food based business?

 

Will we, as a society, be able to shift at least some of our assets away from the dominant model of investing in the stock market?

 

 

Resources

 

Pons, E. and Long, M. Promoting Sustainable Food Systems through Impact Investing, 2011.

 

Tasch, W. Inquiries into the Nature of Slow Money: Investing as if food, farms and fertility mattered, Chelsea Green, 2008.

 

Shuman, M. Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity, Chelsea Green, 2012.

 

 

Visit RUPRI at http://rupri.org and the RUPRI Rural Futures Lab at http://ruralfutureslab.org

(Local) Food for Thought: A Value Chain in Action

By Natalie Woodroofe, 30 Mile Meal Project

For the last two years I’ve been collaborating with non-profits and entrepreneurs in Appalachian Ohio to expand our local foods economy. My work centers on developing a regional brand that promotes local food producers and related businesses and increases consumer awareness and support for these enterprises.

The 30 Mile Meal Project—the most local of locavore initiatives in the U.S.—currently partners with 135 farmers, processors, specialty food producers, farmers and retail markets, food events, and eateries within a thirty mile radius of Athens, Ohio. Underwritten by the Athens County Convention & Visitors Bureau, and with significant program support from ACEnet, the Project provides marketing tools (logos, taglines, etc.) and a web-based searchable map that assists locals and visitors in locating these partners.

Our blog provides an up close look at the people, farms, and businesses we work with. We host a calendar of events and a Facebook page, keeping folks up to date on what’s happening and organize showcase events, including 30 Mile Meal Month (July) and Restaurant Week. The Project owes much of its success to the hundreds of people who have been widening and deepening our food system over the last 25 years.

So What Does a Local Foods Economy Look Like?

A robust local foods economy provides consumers with less traveled food, greater traceability, increased food security, and the pleasure of supporting our friends and neighbors. It also increases the food dollar share that goes directly to the farmer or producer, keeping more of the food dollars spent circulating within a region. Here in Southeast Ohio, enterprises within our food value chain generated nearly $40 million in revenue for farmers, processors, restaurants and retailers in 2011.

Sustainable food systems seed the usual supply chain with financial, social and environmental values as the chain travels from production to waste and back again. The chart below illustrates the evolving model in our region.

Change agents

The arrows indicate the connections and flow back and forth between the components of the value chain. At the center are those that work individually and collaboratively to support the system. Our Change Agents are predominately nonprofits with missions centered on some aspect of local food economies, access and justice. Key players include:

• Appalachian Center for Economic Networks (ACEnet) which operates a kitchen incubator and provides a range of entrepreneurial and market access supports;
• Rural Action’s sustainable agriculture and zero waste programs;
• Community Food Initiatives’ (CFI) Donation Station program which provides people with limited resources access to fresh local foods, while supporting local farmers;
• Appalachian Staple Foods Collaborative that is scaling up localized production of bean, grain, oil seed and perennial nut staple foods; and
• Athens Food Policy Council, comprised of movers and shakers across the value chain.

Producers & technical assistance, training and education 

Our food production comes from 1500+ farms as well as community, institutional, school and home gardens. Support for farmers on Good Agricultural Practices, season extension, high tunnel growing, and organic practices is provided through Rural Action, County Extension Offices, and Ohio Ecological Food & Farm Association. 

ACEnet focuses on value-added product assistance (see the Food Venture Center below). Consumer education in foodways, including canning and other methods of food preservation, is provided by CFI and the Athens County Extension Office.

Processing

Processing requires significant investments in infrastructure, and we are fortunate to have ACEnet’s Food Venture Center. The Food Venture Center, a kitchen incubator, currently has 197 value added producer tenants who generated $28 million in annual sales during 2011 and created 137 full-time/self-employment jobs, and 991 part-time jobs.

ACEnet's Food Venture Center

Shagbark Seed & Mill Company contracts with regional farmers to grow beans and grains, mills the grains, and utilizes local entrepreneurs to produce pastas, breads, chips and crackers from these crops. Plans are underway to process oils from locally grown seeds. Shagbark is also assisting The Wingnuttery, a start-up nut processing operation.

Snowville Creamery processes milk from grass fed cows, and pays its farmers a premium above government mandated market prices, and its workers, a living wage. The region also includes several on farm cheese-making operations, as well as breweries and winemaking operations.

Distribution/marketing

The region’s local food enterprises are promoted through two brands:

• 30 Mile Meal serves as an umbrella brand for the food producing, selling and serving community and
• Food We Love brand, launched in 2000 by ACEnet, for specialty foods and farm products.

The brands leverage economic impacts and motivate behavior changes towards local purchasing by producers, retailers and customers.

Distribution/transportation

Getting food to markets can be daunting for small producers. Snowville Creamery distributes dairy products across Ohio and as far east as Washington, D.C. Its trucks frequently carry other producers’ foods to Columbus and other larger markets, utilizing ACEnet’s Food Ventures Center to cross-dock products. Rural Action recently acquired a refrigerator truck that aggregates producer lots and delivers them to restaurants, colleges, and hospitals in Ohio and West Virginia.

Distribution/sourcing

Consumers and restaurants have many ways to source their food. For those in need, CFI’s Donation Station provides fresh local foods for pick up twice a week by 35 social service agencies and community-based nonprofits. In 2011, over 60,000 pounds of food was distributed via the Donation Station. CFI, through its Edible Athens initiative, has also identified fruit and nut trees in the city of Athens that can be gleaned by the public.

The Athens Farmers Market is one of the nation’s best, operates year-round and has the highest use of EBT benefits in the state. Nine other seasonal farmers markets are spread across the region.

Wares at the Athen's Farmers Market

We have three CSAs (Community Supported Agriculture) that serve the local population and the Columbus area. The Athens Hill CSA partners with other local producers to provide baked goods, cheeses, milk and other foods not grown by the CSA operator.

The Chesterhill Produce Auction, supplied by Amish and other local farmers, is a welcomed option for those seeking larger amounts of produce for preserving or institutional use. Rural Action also operates Country Fresh Stops, a program that brings fresh produce to convenience stores in underserved areas designated as food deserts by USDA. ACEnet has forged relationships with major grocery operations and many of our regional producers wholesale their products to Kroger and Whole Food stores throughout the Midwest. Several locally owned food markets also carry local products.

The Consumption component includes the various consumers of local foods - individuals, restaurants, schools, medical and correctional institutions, businesses, and feeding programs.

Waste and nutrient management refers to the traditional and innovative ways in which farm and food waste is managed and often recycled through on-farm management, solid waste districts, and restaurant and institutional composting. Jackie O’s Pub and Brewery not only grows many of the vegetables and herbs used in its menu, it also uses spent grain from its brewery operation for their pizza crusts and gives the rest to a local farmer to augment his cows’ feed. The Brewery then purchases the farmer’s meat for its kitchen.

Now in the early stages of development, The Compost Exchange is a privately owned Class II compost facility that collects coffee grinds from local eateries, leaves from the city of Athens, and other agricultural waste with the aim of producing specialty soil amendments that will nourish the next cycle of crops.

Next Steps: Helping Other Regions Build Local Food Economies

The impact and the collaborative nature of our value chain draws interest from others that are building regional food systems. We provide technical assistance to other regions wanting to launch their own 30 Mile Meal and are currently working with folks in Youngstown and Licking County, Ohio and Huntington, West Virginia.

In July, we hosted our first Real Food • Real Local • Real Good Institute, three days of workshops, panel discussions, networking and off-site tours. Seventy eight people from 7 states participated. Many of our 30 Mile Meal partners shared their expertise as farmers, restaurateurs, processors, value added producers and nonprofit leaders.

The Institute affirmed our sense that we have another "home grown" product we can offer: our collective wisdom in how to build and nurture a local food system. We can share the challenges, possibilities and lessons learned, as well as on-site opportunities to "see it for yourself". If you are interested in technical assistance to build or strengthen your food system, contact me (30milemeal@gmail.com).

Reclaiming our food systems not only connects growers, businesses, and consumers, it builds community resilience, job opportunities, and expands farmland preservation, food safety and environmental accountability. Eating primarily within our own food systems, we nourish ourselves and a more sustainable future.

• Do you have the capacity to map your food system?
• What are the ‘low hanging fruits’ that could be harvested to energize your region in strengthening your local foods value chain?

Natalie Woodroofe is a consultant currently managing the 30 Mile Meal Project. She previously served as the founding director of the Women’s Rural Entrepreneurial Network and as the Association for Enterprise Opportunity’s Rural Initiatives Director, overseeing two national Rural Learning Clusters funded by the W.K. Kellogg Foundation.

Images provided by the author.

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