Localvor agriculture leads to wave of entrepreneurs
Author: Art Edelstein
Article from www.vermontbiz.com
Vermont’s newest business startups are coming from a surprising sector of the economy not related to technology, manufacturing or tourism. The state, which boasts the highest percentage of people who buy locally grown food, is seeing a surge in small farmers. They say the growing cost of food shipped from California and elsewhere, coupled with concern about America’s use of gasoline and an overall concern for food safety is spurring local agriculture.
While dairy farming remains the most important sector of the state’s agricultural economy with 85 percent of the gross farm income, local food production is on the upswing. Vermont grown foods are now visible at local supermarkets and cooperatives, at farmers markets, farm stands and in the explosion of CSAs (Community Supported Agriculture). As a result, an increasing number of people are opening small farms to produce the foods Vermonters want to purchase. The industry is sometimes referred to as sustainable agriculture or the localvor movement.
“It’s interesting and exciting to see the reemergence of a lot of local food production,” says Agricultural Commissioner Roger Allbee. He sees several localvor hubs in Hardwick, the Intervale in Burlington, St Johnsbury and White River Jct. emerging from this new industry.
Currently the state has 6,500 farms and counts anyone grossing over $1,000 annually as a farmer. The majority of food producing farms in the state other than dairy have less than 50 acres and the majority gross less than $50,000, said Allbee.
Currently the state’s dwindling dairy census shows 1,096 farms. Dairying is a $2 billion business. Allbee has no figures for the aggregate dollar value of sustainable agriculture.
The growing number of small farms, said Allbee is the result of “a reemergence of people actively involved in wanting to have access to local foods, There’s a sense of community, wanting to know where their food comes from.”
A national farm census seems to support the growth of small local food farms. A Department of Agriculture report from early February says “the number of farms in the United States has grown four percent and the operators of those farms have become more diverse in the past five years,”
The census figures “show a continuation in the trend towards more small and very large farms and fewer mid-sized operations. Between 2002 and 2007, the number of farms with sales of less than $2,500 increased by 74,000. The number of farms with sales of more than $500,000 grew by 46,000 during the same period.”
The same census counts 36 percent of farms as “residential/lifestyle farms, with sales of less than $250,000.”
Helen Jordan the Market Development Coordinator at the DOA confirms that small scale farms and direct to consumer sales are rising but cannot confirm any numbers as the department doesn’t track indirect sales. These can include sales to cooperatives, supermarkets, or restaurants. Thus, the localvor movement could be considerable.
“It’s an underestimate of local food growth because it doesn’t track what we see as the greatest in percentage growth. We observe this trend but don’t have the numbers.”
According to Jordan, there is a discernable growth in several sectors of this aspect of agriculture even without exact figures. The direct to consumer sales field of relationship based marketing such as farmers markets, and CSAs, she said, is “rapidly expanding.”
“We have as many CSAs as farmers markets and also farm stands as well as direct from farm sales such as raw milk,” said Jordan of the increase in local food production.
NOFA (Northeast Organic Farmers Association) in Richmond confirms that there are now 74 farmers market in the state, an 8 percent increase over 2007. There are also 74 CSAs.
The type of people now entering small farming, according to Jordan, are those who “do it as a lifestyle thing with one spouse working elsewhere. But there are folks making real money off of this and we will see more of this in the future. This becomes part of a lifestyle.”
As local food production expands, it is filling slots previously filled by imported foods. There is an increase in farm to school sales in the state. Also, some suppliers, such as Champlain Orchards, now supply supermarkets like Shaw's and Hannaford’s. Jordan says stores are reducing transportation costs and making food recalls easier to identify. This has the potential for greater food safety and is a hedge against rising gas prices.
As local agricultural food production expands the state is emphasizing a Taste of Place program. This is a long used program in Europe but new to the US. Jordan says the geochemistry of our soil produces a specific flavor that a producer can charge a premium for. An example to follow would be the branding of Champagne from France.
Taste of Place requires understanding heritage, cultural tradition, taste factors, and a system of standards to authenticate the claims, said Jordan.
Currently artisan cheese and maple syrup are part of the program but it could expand to apples, spirits and wines as these product lines expand in Vermont. This currently is an active initiative but it’s in its infancy.
“There are lots of people capitalizing on consumer demand for local food,” says Sam Fuller at NOFA. He sees considerable growth in farming. In 2008, he said, there were 543 certified organic producers in Vermont, a three-fold increase from 1998 when there were 179 certified organic producers. Many other organic farms exist without certification.
Currently 20 percent of dairies are organic with 200 organic dairy farms a number that has grown from 33 in 1998. Acres in certified production is now 90,410 while in 1999 that figure was 15,967 acres showing a six-fold decade increase.
Organic milk sales in the past decade have, “hugely increased” and processors are growing as a result, notes Fuller. The result is that “in Vermont we have the highest per capita spending on local food.” Fuller attributes this to Vermont having “kept a culture and a history of our agricultural roots unlike many other states.”
Numbers point to the growing local food industry, says Fuller. The Burlington Farmers Market now garners $1 million in annual retail sales.
John Cohen of Westminster is chairman of the Vermont Farmers Market Assoc. He sees growth in local farming. The rise in farmers markets, he says, helps people “get their feet wet in farming, and for more established farms gives a direct venue.”
Cohen says more people are dabbling in farming. However, “people creating a new career are not as big a scale.”
While NOFA said there were 74 farmers markets in the state, Cohen puts the figure at 62. Some, like Burlington and Montpelier and Brattleboro are large, with 50 vendors or more. There is money to be made here. Cohen believes “at most of the markets a core make serious money and earn their income.”
Entrepreneurship And The Localvor Movement
No one who does small-scale local food production will say their job is easy or a path toward riches. However these businessmen and women say what they do follows the model most businesses pursue. These farmers want to work for themselves, have a vision of the future, and see what they do as part of a growing trend. For local food producers there is also the community aspect of their endeavor. They say they are working to slow energy consumption and to put quality food on the tables of their fellow Vermonters.
Cohen in Westminster is a vegetable farmer with eight acres under cultivation. He earns his living selling at farmers markets, by organizing a CSA and with wholesale accounts. At age 47 he is in his sixth year farming in Vermont after eight years behind the plow in New Hampshire.
One can make money because “farming is so entrepreneurial and there are so many micro niches.” What it takes, he says, is business savvy, sales and creativity. About 90 percent fail, a number he says is consistent with other start-ups.
Cohen knows farmers grossing $60,000, and some with five acres with greenhouses gross $180,000. Eighty-five percent of his income comes from farming. He leases his land and his business has grown 20 percent to 30 percent annually. He said the growth is due to: “the whole food safety and local food movement.” The localvor trend is because “people want it closer to home. This is where demand comes from.”
Also important to his business plan is “to provide a quality product displayed in a quality fashion.” Cohen sees farming as “a competitive business with some of the bigger markets having waiting lists to get in to sell.”
There is a lot of room for growth in his business. Cohen says of all the food eaten in Vermont, only 3 percent is grown here. “From a business standpoint, if growers can capture one percent even that will make a point in the economy of the state.”
Cohen sees a good future for localvor farming even as a part time supplemental income. “I think with the cost of energy if we are going to be able to feed ourselves there will have to be an investment in farming.”
Joey Klein operates the Littlewood Farm in Plainfield where he sells certified organic strawberries and vegetables. He is primarily a wholesale grower with 30 different crops including carrots, kale, and cherry tomatoes from the six acres he plants. He sells a third of his crop wholesale to the Hunger Mountain Coop in Montpelier and also a third of sales are pick your own strawberries. A final third of his sales is in a farm to table program that distributes to senior centers, day care, hospitals, and public schools.
“I’m expecting a flood of business this year,” he predicted.
Gross sales here are “under $100,000 but building.” Klein won’t get rich as there is “the potential to make a modest income with a lot of work.” He has seen this “become more realizable in the last four to five years as price and demand has gone up.”
Klein has been in the vegetable growing business 40 years and at his present location since the 1980s. He said the market for local and organic produce “has improved vastly” and the Hunger Mountain Coop “has become a driving engine.” Prices to the grower have gone up dramatically because the cost of food from California has risen and costs in general have surged. As a result he has been able to raise prices and increase his bottom line.
There is room for a lot more farms of his scale in Vermont, says Klein. But, he cautioned, the farmer has to be an entrepreneur to create new markets. He sees the growing number of younger farmers “good at doing that.”
Klein believes more young people, with or without a farming background, are entering local food production agriculture for both economic and philosophical reasons. He sees this as “the desire to be employed in a green industry doing something earth positive, and not as dependent on the ups and downs of the employment world,”
Klein sees his industry as “growing and viable and needs to be nurtured. We are under the radar and some would think our profits are not enough to bother with, but the desire to farm is still strong.”
Mimi Arnstein of Wellspring Farm a Marshfield CSA farm is typical of the type of person doing sustainable agriculture. This 37-year-old is a University of Michigan graduate with a degree in sociology. She said she was motivated “by the values exemplified by organic agriculture and motivated to own my own business.”
Like many entrepreneurs, Arnstein says she “loves the autonomy, the challenges where the sky’s the limit.”
She chose to farm in Vermont because she “had a hunch the state could support small scale agriculture and it does.”
Arnstein farms five acres of organic vegetables and flowers on a property of 185 acres. The farm is conserved with the Vermont Land Trust. This is her seventh year and she sells produce primarily through her CSA. Last year she had 130 family shareholders. People purchase a small share for $390 that feeds two people. A full share feeds four and costs $585 Both shares provide about 17 weeks of produce. The farm grows 40 types of vegetables.
The business provides Arnstein a full time salary with benefits and a retirement account. She also hires seasonal part time employees. “My financial goal is to make more money and pay my crew more,” she acknowledged.
Local food production is somewhat different from running other types of small businesses but she likes her job. “If we want to use a strictly financial model it may not be so good, but add in the environment and an agricultural landscape and community and social benefit, then the farms are absolutely successful businesses,” said Arnstein.
In the final analysis, she said, “If a business is not financially sustainable it won’t be a business.”
Arnstein sees what she and others like her do as part of “a groundswell of interest in environmentally sound business.”
The financial aspect is a challenge, she admits and agrees that, “the biggest challenge is making enough money to pay myself and staff well. You have to sell a lot of zucchini to make the budget balance.”
Bob and Lee Light recently received a loan from the Vermont Community Loan Fund based in Montpelier to expand the sales area of the farm stand and to be able to milk a few cows to sell raw milk. They have been dairy farmers who currently operate the Hollister Hill Farm and B&B in Marshfield. They sell organically raised and grass fed Beefalo beef, pork and poultry.
The Lights left dairy farming after 20 years because “others set the milk price. We wanted to continue to farm and set our own prices we want the retail dollar,” said Lee Light
In 2001 the Lights opened a small farm store on the farm in the former milk house. They are licensed by the State of Vermont and inspected by the state. Their animals are slaughtered in a state inspected facility.
“We feel it’s important to go through all the legal channels to set up a business,” said Lee Light. The couple also sells eggs, chickens and turkeys, maple syrup and honey at the retail price.
“We try to be competitive with supermarket prices on most items, but we get all the money.” Other access points for Light products are at local coops and farmers markets.
Light said it took five years to establish the business and last year the farm grossed $50,000. She is “very satisfied with the sales and we are expanding our store.”
Customers come from Montpelier, Barre and as far away as New Hampshire.
She calls local food production “a growing marketplace. People are interested in eating good food. People like seeing where their food is grown on the farm, and how the animals are taken care of and it educates their kids.”
She will begin selling raw milk soon because “it is becoming popular again, and we believe it’s healthy as non-processed.” Currently raw milk can only be sold from the farm not from stores or farmers markets.
Light believes the move to local food production will grow because “farmers are inventive people. The goal is to keep the farm running, they have to be innovative to keep operating.”
She sees many younger people getting into vegetable farming because of consumer demand for organic produce spurred by the use of Bovine Growth Hormones, GMOs and irradiated food.
Light is very upbeat about her business model. “We are being bullish, we want to stimulate the economy and we are optimistic. We provide jobs for people working on the farm.”
Small farmers like the Lights need to borrow money like any small business. One venue for funding is the Vermont Community Loan Fund based in Montpelier.
This private non profit lending body was founded in 1987 and has offered a business program since 1995, said loan officer Sam Buckley. The fund is 90 percent self-sustaining and currently has loan assets of $18 million.
VCLF, said Buckley, “looks for loans that hit mission points for us.” That will include supporting Vermont’s working landscape, agricultural businesses, forest products, and businesses located in downtowns.
The Lights got a loan to expand their farm store increasing its size and allow the Lights to milk some cows for raw milk.
Buckley said local agricultural businesses find conventional bank loans difficult to obtain. “We are a lender of last resort in some ways to folks who can’t get loans from banks.”
The fund makes its loans because it sees a trend in local agriculture. However, said Buckley, many of the farms actually borrow from their customers when they establish a CSA. “They get money from members so they don’t have to put themselves in a lending situation.” CSAs do borrow for the equipment expenditures not operating expenses.
The average loan here is $50,000 to $100,000 and the current rate of interest regular rate is seven percent although some loans for agritourism businesses are lower. Typically loans are made to renovate and expand a farm store, to build a farm stand, refinance equipment, and for working capital for value added products like a smokehouse.
“We expect to see growth in lending to agriculture,” said Buckley, “it’s an expanding business.
Commissioner Allbee said he sees a future for the localvor farmer in Vermont. “I see a rapid growth in the products to supply local markets in vegetables, meat, cheese production and local bottled milk. I also see a great deal of enthusiasm by young people to be farmers.”
Art Edelstein is a freelance writer from East Calais.