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New investment would boost local food

Financing to be studied for sustainable system

By Kathleen Gallagher of the Journal Sentinel

Madison could be a laboratory for a new kind of municipal bond that would finance farmers, production and other pieces of a local food system.

That's one of the ideas that a group of about 100 farmers, food entrepreneurs, investors and others will discuss Monday when they gather at an invitation-only session to brainstorm ideas about financing and rebuilding a local food infrastructure in Wisconsin and the Midwest.

"We're very early in this exploration, but we think it has enormous potential," said Woody Tasch, chairman and president of the Slow Money Alliance, Brookline, Mass.

The slow-money concept promotes socially responsible investing in support of local farmers, cooperatives and production facilities in exchange for a moderate return.

The Midwest Slow Money Institute is the fifth such conference Tasch's organization has held in the United States. The conferences will culminate in a national gathering in September at Santa Fe, N.M.

Along with municipal bonds, Tasch said, other funding ideas include: providing seed capital for a regional slow-money fund family; creating new vehicles to make it easier for foundations to invest in local food systems; and setting up a fund to help expand the size and number of community-supported agriculture outlets, where members buy a "share" of a local farm in exchange for a basket of produce each week.

"The goal is to talk about how best to build the local food movement and support financially small farmers and food producers," said Grant Abert, a Madison-area investor and philanthropist and chairman of the event's host committee. "What slow money is all about is creating financial intermediaries that would invest in these small, local food and agricultural enterprises."

Participants in the event include: Tory Miller, co-owner and executive chef at Madison's L'Etoile restaurant; Mike Bedessem, chief financial officer at Organic Valley Family of Farms, La Farge; and Margaret Bau, cooperative development specialist at USDA Rural Development, Stevens Point.

Despite a growing awareness of problems in an agricultural system that relies on shipping food to consumers thousands of miles away, little capital is going toward local food systems, said Tasch, who is chairman of Investors' Circle, a nonprofit network of angel and venture investors and others that says it has put $130 million into 200 early-stage companies and venture funds focused on sustainability. He also is author of "Inquiries into the Nature of Slow Money: Investing as if Food, Farms and Fertility Mattered."

The types of financing that participants at the institute will discuss would likely provide investors with "single-digit rates of return and the satisfaction of knowing your money has gone to your local food system," Tasch said.

That probably won't appeal to traditional venture capital investors, for example, who seek returns of 20% or more for the high risk they take. But Tasch says a growing number of individuals worried about the quality of their food and the health of the land should be interested.

"I think a generation from now, no healthy portfolio will lack an investment in local food systems," he said.

The challenge is that the vision must have a financial plan and business model that justify borrowing money, said Ken Kerzner, a Chicago municipal finance consultant.

Parts of the slow-money concept likely would qualify for tax-exempt borrowing, said Kerzner, who is attending the Madison event.

"If there's an idea here, I'd love to see it come to fruition," he said. "But I don't want people to get overly excited, particularly because of the challenges of this economic environment."


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