In recent years, motivated by a growing concern regarding worsening environmental impact, a number of growers and other agriculture enthusiasts have turned toward small farm setups. In fact, according to the 2007 census, these small outfits, which emphasize sustainability and a commitment to eco-friendly growing methods, account for 91 percent of all farms in the U.S.
Yet, as Freakonomics pointed out, many of these farms simply are not sustainable in and of themselves, and many struggle with generating enough produce to keep pace with basic costs. Writing for Salon, farmer Jaclyn Moyer noted that there is little in the way of profits in small farming, and she usually only makes $100 week in personal revenue.
All this comes at a time when consumers are seeking out more sustainable food sources. According to a 2013 report by Phil Lempert – founder of Supermarketguru.com – over 39 percent of consumers feel what he calls “green guilt” from wasting foods. So, how do small farmers operate in a way that allows them to meet consumer demand and still generate enough revenue to keep these enterprises viable? As the Denver Post reported, one Boulder, Colorado group is hoping to address this by introducing crowdfunding into the small farming industry.
Crops and crowdfunding
The crowdfunding idea – to utilize donations from a larger group of people – is the brain child of the Boulder nonprofit Slow Money. Normally the organization works by teaming up with entrepreneurs to invest money into small farms or other food-centric businesses. According to Slow Money founder Woody Tasch, most of the clientele they work with donate upwards of $5,000 a piece. However, he’s found a growing number of people want to help out despite personal economic limitations.
“We’ll have meetings with 200 people, and you’ll have maybe 20 angel investors and maybe 20 people who have $2,000 from their IRA to invest,” Tasch said. “The other 160 were all potential crowdfunders.”
That’s why Tasch and his employees came up with a new campaign, Beetcoin. By visiting the Slow Money website, people can buy what Slow Money call Beetcoins – these are tax-deductible donations worth a minimum of $25. By early November, Slow Money is hoping to raises at least $50,000, which it will then give away to eight Boulder area food businesses and various charities. Some potential beneficiaries include Westwood Food Cooperative, Kitchen Coop – which rents out commercial kitchen space – and the Mountain Flower Goat Dairy.
According to the Post, the top three winners will all split a bulk of the proceeds, which will be lumped together into three-year, no-interest loans. After each company or group has paid back its respective loans, that money will then be rolled into future Beetcoin campaigns. Tasch said that for most farms, interest rates on bank loans run between 3 and 5 percent, though some go as high as 9 percent. In defending the no-interest loans, Tasch said investors need to make smarter decisions to get money into the proper hands – real-to-life farmers.
“It’s not just about coming to a nice restaurant to eat a nice meal, which is a good thing, and it’s not just about donating to a food bank or belonging to a CSA,” Tasch said. “We have to take some of our investment capital away from the the global system that is going awry in many ways and put it to work as near we are as we can – loan it to a farmer, invest in a farm-to-table restaurant, invest in a creamery or in a food-distribution business.”
Since 2009, Slow Money clubs nationwide have donated over $38 million to small farmers and other sustainable food operations.
In the last year or so, a few farmers in the greater Denver area have been given no-interest loans from various companies. Don Lareau and his wife Daphne Yannakakis run Zephyros Farm, a small operation where they grow 1,000 varieties of all-organic flowers. Lareau said that he can’t go to the bank and get a loan because most financial institutions don’t want to take the chance on small farms as the profit margin is far too great.
With their $22,500 loan – which they received from local investment group 2Forks Club – the couple were able to buy a 16-foot refrigerated truck for transporting their floral goods. If all goes to plan, they’ll pay the money back by the end of 2015. In the long-term, though, the couple know they’ll have improved not only their own lives but those of fellow farmers.
“The awesome thing about this, as I pay it back, the club can take the money and loan it out to my neighbor who wants to start a pig operation or a vegetable distribution company,” Lareau said.