Meeting Minutes – October 15th, 2015
A definite seasonal shift, after an extended Indian summer, marked our October SMM gathering. We were grateful to have a special visit from Dave Miller of Iroquois Valley Farms, based in Illinois, for both our pre-meeting focus group and main presenter slot.
As Bonnie opened our gathering, she first queried the group about the difference between B Corps and a Certified B Corporation (in honor of Dave’s connection to a Certified B Corporation). She shared the following definitions: A Benefit Corporation is a for-profit corporate entity legislated in 28 states that includes positive impact on society & the environment in addition to profit as its legally defined goals. They differ from traditional C corporations in purpose, accountability and transparency, but not in taxation. “B Corps” is to business what “Organic” or “Fair Trade” certification is to ag products. There are over 1000 companies in 33 countries and 60 industries working to redefine success in business and these terms clearly are important attributes of a new economy.
She then expanded on a theme from our Fall newsletter that related to the move from startup to growth stage in many for-profit and nonprofit food system businesses that have begun in the past five years, including our own SMM network. In this stage, new forms of attention to structure, management and focus are required along with capital needs and technical assistance.
Bonnie also mentioned that while some network participants would like to have a more exclusive focus on for-profit presenters at our gatherings, our Steering Committee has confirmed the value of both for-profit and nonprofit endeavors that relate to building a local food system and the needs for partnering and interdependence that will strengthen all involved and allow greater chances for dynamic paradigm shifts.
Iroquois Valley Farms: A Corporate Approach to Helping Organic Farmers Expand
All chairs were filled to hear David Miller, CEO and Co-Founder of Iroquois Valley Farms, share the story of how a 10-person family initiative in 2007 has grown to currently involve over 200 investors from 28 states supporting the expansion of 25 organic farms in 7 states from Illinois to Maine. Iroquois Valley, located south of Chicago, is where the action began in response to an expressed need for financing of an organic farm needing to expand in the midst of conventional commodity farm territory.
David shared the history of the effort, including how the goal of inducing the “highest health impacts in our food system” translated into the decision to support certified organic farmers, as certified organic offered a recognized 3rd party system by which to measure impacts. Land and facilities were targeted as the most expensive financing need. The decision to organize as a private corporation balanced the need to amass capital from willing investors with the nimbleness of offering a quick response to the needs of farmers upon request. The company still maintains its “reactive and adaptive intentions.”
Iroquois Valley does not amass land on speculation. Rather it acts in response to requests from established organic farmers to seize opportunities to secure land base when opportunities arise. The company works in partnership with organic farmers (70% of their tenants are millennials) to secure this land via 100% financing with a lease arrangement in mind that is designed to break even on costs. A pre-commitment letter secures the relationship and terms prior to a land purchase. The farmer is responsible for $750 in closing fees. Iroquois Valley pays its mortgages and operational expenses from lease revenues. The intent is not to become land barons. After 7 years, farmers are “vested” and may purchase all or part of the land that they lease at fair market value. So far 3 farms have purchased 30-80 acre parcels that they had previously leased.
Leases are based on a 3.5% base return to the company, often paired with a variable crop-share tier based on the profitability of the farm. This variable tier is the opportunity for the company to be profitable. In several instances, Iroquois Valley has stepped up to make drainage and/or building improvements on purchased land in partnership with the farmer. A higher rate is charged for such improvements. Using this model, a $5000 “profit” was realized by IVF after 8 years in business.
The first 100 investors had no exit plan. This helped build trust with the farmers that the capital was committed. Now investors may take $100,000/year after 7 years as long as they are under 5% of their capital investment/year. No dividends have been paid in 9 years of operation. Several investors have used IRA funds, which will eventually require some minimum distribution by law.
Iroquois Valley Farms is growing (Phase 3 post-2014 targets 1000+ investors). Both new accredited investors and established organic farmers who have land they would like to secure are being sought. For accredited investors, fee-based financial advisors are the marketing tool.
Current opportunities to invest include “Young Farmer Land Access Notes” at 5, 7 or 10 years (returns ranging from 2.5-3.25%). Equity investments are also available. For more information, contact your investment advisor or visit www.iroquoisvalleyfarms.com.
Jonah Fertig / Maine Farm & Sea Cooperative
Maine Farm and Sea Cooperative is a food service management cooperative that will:
-Supply and serve local Maine fruit, produce, meats, dairy, eggs, seafood, grains and value-added foods;
-Manage food service at fair prices for Maine universities, school, hospitals and institutions;
-Create jobs for Mainers in a resilient food system that protects our environment.
We are bidding on the University of Maine System’s Food Contract to bring it back into the hands of Maine people. This $12.5 million annual revenue contract is up for bid and the UMaine System has committed to 20% local by 2020. Maine Farm and Sea Cooperative is committed to reaching 20% local in our first year of operation and expanding beyond that. We will partner with the Maine food system to create stable markets so that we can expand our supply and infrastructure.
We are owned and operated by farmers, fishermen, distributors, food producers, food service workers, and Maine residents. We are building ownership across the food chain to provide institutional food service that will benefit all Maine people. We encourage people to become community-owners of the cooperative and to build this movement to transform our public university’s food program.
For more information and to become an owner: www.mainefarmandsea.coop
David Miller/ Iroquois Valley Farms
A 10-person family initiative in 2007 has grown to involve over 200 investors from 28 states supporting the expansion of 25 organic farms in 7 states from Illinois to Maine. (Read more in the focus group notes above).
Contact: John Steven Bianucci, Director of Impact
Iroquois Valley Farms, LLC: Growth Stock for the Next Generation
Dave Herring / Wolfe Neck Farm
Wolfe’s Neck Farm is a nonprofit organization based in Freeport, Maine dedicated to promoting sustainable agriculture, education, and outdoor recreation while preserving its 626 acres of open space and historic buildings. This working saltwater farm has a rich history of farming innovation and includes hundreds of acres of forest, saltwater marsh, pasture lands, over four miles of Casco Bay coastline and an award-winning oceanfront campground.
The mission of the Wolfe’s Neck Farm (WNF) Organic Dairy Research and Farmer Training Program is to increase the production of organic milk in the Northeast while improving the sustainability and profitability of organic dairy farms and fostering the next generation of organic dairy farmers. In 2014, WNF secured a major grant of $1,693,000 from Stonyfield and the Danone Ecosystem Fund to support the launch of this important new program.
FMI: Contact Dave Herring email@example.com
Noah Wentworth and Flora Brown/ Frinklepod Farm
Frinklepod Farm began in 2012 on four acres of fallow fields on busy Log Cabin Road in Arundel, Maine. Our aim was to grow chemical-free, nutrient-dense produce that would sustain and inspire others. We run summer and winter CSAs, manage a farm store, and host workshops. A character in the children’s book, “Uno’s Garden,” the Feathered Frinklepod, inspired our name. The book speaks to the need for a balance between humans and nature.
For the last year we’ve been designing a new project, called The Pod, that will enable us to provide nutritious food and programming across all four seasons. A super-insulated greenhouse, combined with crop storage rooms, will generate a diverse selection of produce for CSA members and other customers. A shared-use commercial kitchen will house a cooking school and support small-scale food producers. Groups and individuals may rent our conference room for meetings and events, and the cafe will serve affordable snacks and meals
We’re designing The Pod with a business partner and with assistance from a Maine Farms for the Future Phase 1 Business Planning Grant. We are currently in the process of conducting market research, meeting with experts and potential collaborators, and writing a business plan. We are also looking for additional grants, donations, loans, and investments with the intention of beginning construction by late 2016.
Jessica Angell/Cabbige: Cabbige is bringing business intelligence tools to small, diversified farms, enabling them to improve their business, and connecting them to the mainstream food supply chain. There are ~1M small farms ($50-500K revenue) in the US, many of which struggle to achieve and maintain profitability. Cabbige provides easy-to-use, simply designed business tools, including a pricing tool, sales channel analysis, and product profitability analysis, to help them increase revenue and profitability.
We ran a small pilot of our pricing tool in New England during the 2014 growing season. Farms that used Cabbige saw an average 9.6% increase in revenue when they used the pricing tool’s recommended optimized price over their original price. Since then, we launched a nationwide BETA in June 2015 that includes the pricing tool, inventory management, reporting & analytics on crop and sales channel performance.
We have focused many of our marketing and outreach activities in Maine, because of its status as a leader in sustainable agriculture and food system reformation. We have developed relationships with MOFGA, Maine Farmland Trust, Coastal Enterprises Institute, UMaine Extension, and Maine’s Department of Agriculture to make Cabbige available to Maine farmers.
The Cooperative Fund of New England is celebrating its 40th year anniversary of supporting the cooperative economy in 2015. Since 1975, the Co-op Fund has made more than 700 loans totaling more than $37 million dollars. The fund currently has $15 million in investments and $14 million of loans outstanding with a repayment rate of 99.1%. CFNE was recently awarded a grant from the Broad Reach Fund to disburse funds to small & start-up cooperatives for technical assistance. Cooperatives receiving awards include: Fare Share Food Co-op, Gardiner Food Co-op, Market Street Co-op, New Roots Cooperative Farm, Eat Local Eastport Co-op and the County Co-op & Farm Store. Finally, the Cooperative Fund of New England just received a $2.25 million dollar award from the US Treasury CDFI Fund, with $1.25M of that for Healthy Food Financing Initiative – the only organization in New England to receive these funds, which will be used to promote & expand cooperatives’ abilities to provide healthy food access within their communities.
Chris Hamilton/Partridge Foundation Challenge
In 2013 MOFGA began an effort to endow its educational programs. We received a $1 million gift from the Partridge Foundation as seed money. Partridge also pledged another $1 million if MOFGA could raise a matching amount. I will provide an update on our exciting progress. We hope to secure all the necessary funds by the end of 2015.
Alex Linkow/Fair Food Network
Fair Food Fund provides financing and business assistance to good food enterprises that support small and mid-size farm viability in Maine and the Northeastern US. Earlier this year, we invested in Urban Farm Fermentory, a Portland, Maine-based producer of kombucha, hard apple cider, and mead featuring locally grown ingredients.We’re also supporting numerous technical assistance projects with local food businesses through our Consulting Corps program in collaboration with Slow Money Maine and CEI.
Paige Turney/Maine Office of Securities
Paige Turney spoke about updated resource materials on the Maine Office of Securities’ website: www.investors.maine.gov. She also provided a brief summary of the new crowdfunding law in Maine (Fund-ME). She asked that people feel free to contact her at (207) 624-8551 if they are formulating a plan to raise capital and need assistance.
Nancy Heselton/SM National: Beet Coin Campaign
Check out the Slow Money.org website and their October Beet Coin crowd funding campaign, which is related to a regional meeting they had in Colorado in September. There are 8 videos on the website highlighting the activities of businesses, coops and non-profits. If you make a donation, you can vote to choose which enterprise should receive the beet coin funds. The money raised will be split 80/20 between two top vote getters as 0% loans. Slow Money national is testing whether this is an effective way to highlight businesses’ needs and raise funds. It has the advantage of people being able to give ANY amount – small or large. If it’s effective, they may roll it out in other regions of the country associated with regional Slow Money meetings.
David Bright/dairy farmer needs in WA County
I’m looking for a way to provide about five organic milking cows for a small farm in Washington County. The farm in question is Rocky Ledge Farm in Perry, owned and operated by Herb McPhail. It’s a very small, one-person operation, one of the original farms that used to ship to Maine’s Own Organic Milk Company (MOOMilk). It’s also the eastern-most dairy farm in the United States.
The best option is for him to find funding to purchase five organic milkers (they cost between $1,200 and $1,500 each). This would give him a little more cash flow, the barn heat he needs, and keep his milk production steady as his currently-bred cows dry off towards spring. We are investigating a loan from the Sunrise County Economic Council, but obviously that will just increase his debt load. Ideally I could find him some kind of grant to help out, but at this point all options are pretty much on the table. Please feel free to contact me for additional information. David Bright 207-234-4226