Helping farmers create group-owned farm businesses

Project Overview

CNE13-105
Project Type: Sustainable Community Innovation
Funds awarded in 2013: $14,996.00
Projected End Date: 12/31/2013
Region: Northeast
State: Massachusetts
Project Leader:
Faith Gilbert
The Greenhorns

Annual Reports

Information Products

Commodities

Not commodity specific

Practices

  • Education and Training: farmer to farmer, networking, participatory research
  • Farm Business Management: whole farm planning, cooperatives
  • Production Systems: holistic management
  • Sustainable Communities: social capital, social networks

    Proposal abstract:

    We believe collaboration in creating farm businesses can provide a solution to a number of the challenges faced by new farmers. Most resource-limited beginning farmers have difficulty accessing credit, start-up capital, and farmland to start their operation. At the same time, owners of larger operations are having difficulty transitioning their farm to a single farmer. Our organizations have encountered many beginning farmers looking to work as a team to combine their enterprises on a single farm property. This model, in which multiple farmers co-manage property to host their enterprises, could be a powerful tool for keeping farmland in the hands of farmers and easing the challenges to new farm businesses. However, forming a group business can be a complex process that can require working outside traditional lending models, adapting or hybridizing one or more legal structures, and setting up clear operating documents to ensure effective collaboration. In response to the requests for information our organizations have received, and the lack of existing resources for developing this type of business, we will compile a publication that groups of farmers can use to form a group-owned farm business. We will address the main concerns in the development process, including creating operating documents and a legal structure, accessing financing, and leasing or purchasing land as a group. We will conduct an outreach effort to bring this information to farmer groups wishing to collaborate, and advocate for this model among farm support agencies as a viable business structure that can benefit farmers, farmland, and rural communities.

    Project objectives from proposal:

    PVGrows is an independent network, with many contributing organizations. CISA provides staffing and oversight, and each partner contributes time and other resources to specific projects. Strong collaboration through PVGrows has allowed local lenders, foundations, and agricultural organizations to work together to build new funds, begin to mobilize individual investors, and steer food system businesses to appropriate existing sources of capital. This project will build on and continue that record of collaborative action.
    Creating a fund of this size and complexity requires strong facilitation and leadership, balancing the needs of all nine partnering organizations. SARE’s support will allow CISA to play a larger facilitation and planning role during this demanding final phase of fund development.

    Previous Efforts:
    Planning for a community loan fund began four years ago. The first stage was the creation of PVGrows, a broad network of food systems practitioners and entrepreneurs, which now includes 500 members. The second stage was the creation of the $750,000 PVGrows Loan Fund. This fund has served as a three-year pilot project to assess local borrower needs and to establish strong relationships between the nine partnering organizations. The Finance Working Group meets monthly to implement the fund, and has loaned out $300,000 to date. Through the pilot fund, we identified additional needs and missed opportunities, including business technical assistance, more flexible loan terms, and involvement of a wider range of community members in financing local foods businesses development. PVGrows partners are addressing the need for additional business technical assistance through a variety of activities outside the scope of this proposal.

    Current Activities and Next Steps:
    Now in the third stage, PVGrows partners are actively planning for the creation of a community loan fund, which would include investment dollars from a large number of small investors, rather than large investments from a handful of foundations and lenders. Six months ago, the potential impact of local investment in local food was documented in Shuman’s document, “The 25% Shift.”
    The next step in this project is a period of intensive planning and decision-making by the diverse partners in the PVGrows Loan Fund. Organizing and facilitating this planning stage is the work outlined in this proposal. This work will result in a clear implementation plan, answering questions to define the critical design features of the community capital fund, such as:
    1. Size
    • How many investors?
    • Total fund size goal?
    • Annual size goals?
    2. Fund location and management
    • Will the fund be housed at an existing institution, or will a new organization be created?
    • Relationship to existing loan fund, and plan for transition.
    • Identify tasks required for launch and ongoing fund management, and create plan for supporting these tasks in the short and long-term.
    3. Outreach, marketing, and publicity
    • Plan for outreach to investors and to potential applicants, including discussion of appropriate staffing for each activity and the potential for synergy between outreach efforts.
    4. Role(s) of partners
    5. Timeline and milestones
    • Identification of measurable milestones for success, including target total investment amounts; target breakdown by size of investment; number, size, and types of applicants (for example, farm businesses, start-ups, businesses providing market services such as distribution); number of jobs created or maintained.
    • Creation of an implementation timeline
    • Creation of a plan for tracking progress towards these milestones.
    6. Creation of new legal structures (completing this portion of the work is not a part of this proposal, but will be funded by another PVGrows partner.)

    Partnership is critical to the success of this project. CISA, the lead agency on this grant, will not single-handedly develop a plan for the community loan fund; instead, we’ll support the development of the fund through facilitation of the existing network of partners. We are well-positioned to achieve this goal because of the partners’ experience working together on the finance-related activities of PVGrows; CISA’s role as fiscal sponsor and staffing host for PVGrows; and the broad engagement of farmers, food system entrepreneurs, community members, and agricultural and community loan professionals through the PVGrows Network and CISA’s long history in the Pioneer Valley. In addition to the members of the PVGrows Finance Working Group, we have identified project advisors who will provide expertise in specific areas, including farm business owners, job creation, financing for sustainable agriculture, and urban communities and food access.

    The Slow Money Working Group is a complementary, but much smaller task. Since the group was launched seven months ago, 157 PVGrows members have expressed interest, and 65 of them have participated in our the group’s first two meetings. The meetings are designed to create matches between investors and investmentready businesses. CISA will continue to play an active role in this working group, which is led by its members.
    We expect the group to continue convening approximately 3 times per year.

    Planned activities using SARE funding:
    1. Plan, convene and facilitate monthly meetings of the PVGrows Finance Working Group to create community
    loan fund implementation plan.
    2. Identify additional resource people with specific expertise willing to work with Finance Working Group on
    creation of the implementation plan.
    (Invitations accepted by August 15, 2013)
    3. Build key partnerships with other local and regional financing efforts, such as the Fair Food Network, to share expertise and resources
    (Partnership plans created by September 15, 2013)
    4. Identify additional outside advisors, including food system business owners, bankers, and other community
    lenders to review implementation plan prior to finalization.
    (Reviewers identified by October 1, 2013)
    5. Research existing community and food-focused funds and summarize information for partners.
    (Summaries completed by October 1, 2013)
    6. Convene community focus groups to provide input on marketing, outreach and investment terms for community investors
    (Two focus groups held by December 1, 2013)
    7. Create implementation plan, loan review criteria, marketing and fundraising plan, and plan for outreach to
    applicants.
    (Plans and criteria drafted by April 1, 2014 and finalized by May 15, 2014)
    8. Summarize “lessons learned” to benefit similar efforts in other regions.
    (Created and disseminated by May 30, 2014).

    Planning for marketing and outreach are a critical piece of the work outlined in this proposal. In order to succeed, a community loan fund must reach and engage several audiences:
    1. Investors, including both traditional investors and local residents who want to support a stronger local food system but have not previously made any business investors.
    2. Existing local food system businesses, such as farmers, processors, value-added businesses, and those providing services such as distribution.
    3. Potential local food business entrepreneurs.

    In addition, the work outlined in this proposal will be a valuable model for others interesting in food system financing across the United States. Reaching these colleagues is also important to us.

    Luckily, CISA and PVGrows are well-positioned to reach these audiences. The existing PVGrows Loan Fund is collaboratively directed by nine organizations, including the Massachusetts Department of Agricultural Resources, each with a network of constituents. CISA, for example, has 343 local food and farm business members, including 220 farms. The PVGrows Slow Money Working Group includes many local investors. We have strong working relationships with several other organizations with a constituency of local food supporters, including food cooperatives, community farms, and community-supported-agriculture farms. The PVGrows Network includes a listserv of members and holds two annual forums which attract more than 200 food system professionals. These networks will help us reach local investors of all sizes and existing and potential food businesses.

    Members of our team are also active participants in the national conversation about financing for local food systems, including Sustainable Agriculture and Food Systems Funders and Slow Money. We are building fruitful partnerships with regional and national projects such as the Fair Food Network.

    We will use these strong relationships to disseminate the information gained through this project to interested parties both locally and across the nation. In addition to these active and direct channels, we will announce the availability of this information through local media, the farm press, listservs and partner newsletters.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.