By Marlena John
At the Slow Money National Gathering, there was a lot of talk about sustainable food systems, local food sheds, healthy soil and healthy people.
There was also a lot of talk about how challenging it is to attain these ideal food systems. Small farmers often run into trouble finding financing. The question is, when traditional financing doesn’t offer support, where do small, local farmers go? How can these farmers grow their businesses and support their families when they only receive six to fifteen cents on the dollar for their products? The drive, passion and aspiration are there, but in so many instances, the money is not.
Enter Gary Nabhan, an author, professor and pioneer in food systems. Dressed in a suit jacket, white button-up shirt, and a cowboy hat, Nabhan argued that the nutritional cliff is the real fiscal cliff, citing that $1.3 trillion are spent every year on band-aid treatments for diabetes, which affects 25.8 million people in the United States.
He spoke of the necessity of structural diversity for food financing so that we can bring fresh, healthy, local, sustainable foods to communities throughout the country. Nabhan gave an example of an organization that he works with – Borderlands Habitat Restoration Initiative. The organization is focusing on food chain restoration, soil fertility and biodiversity restoration in one of the poorest counties along the Mexico – U.S. border. This area is considered a food desert, where people have little or no access to fresh, healthy foods.
Borderlands Habitat Restoration is an L3C (a low profit limited liability company), which is a hybrid organization, somewhere in between non- and for-profit. The goal of an L3C is to acquire a mix of funding from various sources, starting with investments from foundations called Program Related Investments (PRIs). In Borderlands Habitat Restoration’s case, they receive financing for a $2.5 million land deal from non-profit land conservation trusts and foundations, local and angel investors, and government. After completing the deal, the organization will repay loans through co-locating nine green micro-enterprises while creating fifty new jobs. Gary Nabhan is not claiming that L3C’s are the answer, but that they are one way to help diversify the structure of food enterprises and financing.
There are many innovative finance instruments available today. For example, the type of food enterprise that is producing new jobs, producing and providing healthy foods in underserved communities is a prime candidate for social impact bonds (SIBs). SIBs are funded by private investors, generally foundations, who want to invest in a non-profit or for-profit social venture. Over time, the venture is evaluated on how much, if any, impact it has. Investors are then paid back by the government depending on how much impact has been generated. This could work for an organization such as Borderland Restoration that is trying to create jobs, reduce obesity and diabetes, and revitalizing communities. If successful, these initiatives would ultimately save the government and taxpayers money in healthcare costs, unemployment and welfare. Other alternative food financing options could be through community development finance institutions (CDFIs), crowdfunding, community supported lending, the Slow Money lending program, the Whole Foods Local Producer Loan Program or small ag-focused non-profit lending programs like CA FarmLink in Santa Cruz.
The need for diversity in food financing was echoed by many of the speakers, including Tom Philpott, Food and Agriculture Correspondent for Mother Jones. He spoke of a local food movement that is completely underfunded and has huge gaps in infrastructure that are holding back expansion. When farmers can’t get traditional funding, they need to seek out alternative sources. However, most of the time, they either don’t have access to such alternatives, or don’t know where to go. So, if we want our local food movement to grow and expand across the nation, it’s up to all of us to create the opportunities for that to happen. Check out Slow Money’s website for ways that you can get involved in creating a healthier food system.