Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Financing Food Hubs
& Other Healthy Food Enterprises
Jim Barham – USDA Rural Development, DC
Malini Ram Moraghan – Wholeso...
Presentation Overview
Financing Food Hubs:
 Clarifying the Food Hub Concept
 Financing and Stages of Business
Developmen...
Local/Regional Food Systems
Food Hubs
Aggregating Distributing Marketing Local Food
Regional Food Hubs
USDA Working Definition
A business or organization that actively manages the
aggregation, distribution,...
Regional Food Hubs
 Actively linking producers to markets
 On-farm pick up
 Production and post-harvest handling
traini...
*Based on a working list of 302 food hubs identified by the USDA’s Agricultural Marketing Service (April 2014)
Regional Fo...
7 12
26
44
53 55 58 63
75 87
101
119
153
184
215
256
286
298
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
Gro...
Regional Food Hubs by Legal Status*
Food Hub Legal Status Number Percentage
Privately Held 144 48%
Nonprofit 87 29%
Cooper...
Regional Food Hub Models*
Farm to
Consumer
39%
Farm to
Business
29%
Hybrid
32%
*Based on a working list of 302 food hubs i...
Sources of Capital for Food Hubs
(and Other Healthy Foods
Enterprises)
Dafina Williams January 16, 2015
11
About Opportunity Finance Network
• Financing Fund
• $100 million in OFN financing to CDFIs
• Public Policy
• Advocate ...
About CDFIs
What is a Community Development Financial Institution?
Private, mission-centric financial institutions
Focus o...
About CDFIs: Types of Lending
Small Business and Microlending
Healthy Food Financing: Food Deserts
Nonprofit Organization ...
CDFIs and Healthy Foods Financing
Financing available all along the food system
 $90 million in financing to CDFIs from U...
CDFI Financing of Mid-Tier Food System
Enterprises
15
Challenges for Borrowers
 Poor or no credit history
 Collateral sh...
Other Capital Sources for Mid-Tier Food
System Enterprises
Public
Federal
 Community Economic
Development Program
 Feder...
OFN Resources
17
Resources
 OFN website www.ofn.org
 CDFI Coverage Map http://ofn.org/cdfi-
coverage-map
 CDFI Locater ...
Regional Food Hubs
 Actively linking producers to markets
 On-farm pick up
 Production and post-harvest handling
traini...
Stages of Business Development
Concept &
Planning
Proof of
Traction
Survival &
Success
Growth
What is our idea?
What do we...
Stages of Business Development
Concept &
Planning
Proof of
Traction
Survival &
Success
Growth
High Risk,
No return funding...
Capital Stacking
Source: Oregon Capital Scan: A Line is Drawn. University of Oregon’s Business Innovation Institute, June ...
GrowNYC - Nonprofit with 35 years of experience helping
family farms and ensuring a supply of fresh, healthy produce for
a...
9/12/2012
 XXX
 XXX
 XXX
Food Hub Financing
–GREENMARKET CO. Start-up/Early Growth Stage–
Snapshot of Greenmarket Co.
 Established 2012
 6 full-time and 4 part-time employees
 $650,000 gross sales for 2014
 W...
Some of the Funding Streams
 Planning stage: USDA Farmers Market Promotion Program (FMPP)
and USDA Healthy Urban Food Ent...
Stage of Business Development
- USDA Grants for Food Hubs -
Planning
Implementation
Growth
 Rural Business
Enterprise Gra...
Examples: CDFIs and Mid-Tier Food
System Enterprises
Greensgrow – Philadelphia, PA
 Nonprofit urban farm, retail nursery,...
La Montañita Cooperative – Albuquerque,
New Mexico
 Food Aggregation and Distribution Center; Retail
 Organized as Coope...
OPEN DISCUSSION
Your Turn!
Moving Food Along the Value Chain:
Innovations in Regional Food Distribution
By Adam Diamond & James Barham – USDA Agricul...
 Food Value Chains: Creating
Shared Value to Enhance
Marketing Success – joint project
between USDA and the Wallace Cente...
USDA’s Food Hub Portal
www.ams.usda.gov/FoodHubs
A catalogue of USDA's research findings, resources,
and support for food ...
www.usda.gov/knowyourfarmer
 Website: One-stop shop for financial
and technical assistance resources from
USDA to grow yo...
Know Your Farmer, Know Your Food:
- Resources for Navigating USDA -
www.usda.gov/knowyourfarmer
 Farm Microloans
 Farm Storage Loans
 Organic Cost Share
 Grass-fed Verification
 Environmental Quality
Incentives Pr...
Includes data on:
 USDA-funded local food projects
 Farmers markets, food hubs,
and other “context data”
gathered by USD...
Explore Options, Partnerships,
and Opportunities
Find Resources to Fit the Need
www.usda.gov/kyfcompass
Jim Barham
USDA Rural Development
Washington, D.C.
202-690-1411
James.Barham@wdc.usda.gov
www.usda.gov/kyfcompass
www.usda...
Upcoming SlideShare
Loading in …5
×

Southern SAWG - Food Hub Financing

2,626 views

Published on

Presenation given at the Southern Sustainable Agriculture Working Group (SSAWG) conference in Mobile, AL in Jan 2015. Presentation includes information on types of capital resources available to finance food hubs and related local food enterprises.

Published in: Business
  • Be the first to comment

Southern SAWG - Food Hub Financing

  1. 1. Financing Food Hubs & Other Healthy Food Enterprises Jim Barham – USDA Rural Development, DC Malini Ram Moraghan – Wholesome Wave, IL Dafina Williams – Opportunity Finance Network, PA Southern Sustainable Agriculture Working Group Conference Mobile, AL January 16, 2015
  2. 2. Presentation Overview Financing Food Hubs:  Clarifying the Food Hub Concept  Financing and Stages of Business Development  Community Development Financial Institutions (CDFIs)  Snapshots at Each Development Stage  Your Turn!
  3. 3. Local/Regional Food Systems Food Hubs Aggregating Distributing Marketing Local Food
  4. 4. Regional Food Hubs USDA Working Definition A business or organization that actively manages the aggregation, distribution, and marketing of source- identified food products primarily from local and regional producers to strengthen their ability to satisfy wholesale, retail, and institutional demand.
  5. 5. Regional Food Hubs  Actively linking producers to markets  On-farm pick up  Production and post-harvest handling training  Business management services and guidance  Value-added product development  Food safety and GAP training  Liability insurance  Aggregation  Distribution  Brokering  Branding and market development  Packaging and repacking  Light processing (trimming, cutting, freezing)  Product Storage  “Buy Local” campaigns  Distributing to “food deserts”  Food bank donations  Health screenings, cooking demonstrations  SNAP redemptions  Educational programs  Youth and community employment opportunities
  6. 6. *Based on a working list of 302 food hubs identified by the USDA’s Agricultural Marketing Service (April 2014) Regional Food Hubs
  7. 7. 7 12 26 44 53 55 58 63 75 87 101 119 153 184 215 256 286 298 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 Growth in the Number of Food Hubs (2001-2013)* At least 145 food hubs have started in the past five years (2009-2013), as well as at least 83 in the past three years (2011-2013) *Based on a working list of 302 food hubs identified by the USDA’s Agricultural Marketing Service (April 2014)
  8. 8. Regional Food Hubs by Legal Status* Food Hub Legal Status Number Percentage Privately Held 144 48% Nonprofit 87 29% Cooperative 61 20% Publicly Held 7 2% Informal 3 1% *Based on a working list of 302 food hubs identified by the USDA’s Agricultural Marketing Service (April 2014)
  9. 9. Regional Food Hub Models* Farm to Consumer 39% Farm to Business 29% Hybrid 32% *Based on a working list of 302 food hubs identified by the USDA’s Agricultural Marketing Service (April 2014)
  10. 10. Sources of Capital for Food Hubs (and Other Healthy Foods Enterprises) Dafina Williams January 16, 2015
  11. 11. 11 About Opportunity Finance Network • Financing Fund • $100 million in OFN financing to CDFIs • Public Policy • Advocate for Opportunity Finance • Knowledge Sharing • Industry conferences and research • Strategic Communications • Brand development and marketing tactics • Strategic Consulting • Expertise for investors, partners and CDFIs Leading national network of CDFIs investing in opportunities that benefit low-income, low-wealth, and other disadvantaged communities across America.
  12. 12. About CDFIs What is a Community Development Financial Institution? Private, mission-centric financial institutions Focus on low-income, low-wealth people & communities Nonprofit and For-Profit status Depository & Non-depository Certified by the CDFI Fund (U.S. Department of Treasury) Profitable but not Profit-maximizing CDFIs “Stand in The Gap” Serving customers traditional banks cannot Financial Services for the unbanked or under-banked Patient lenders 12
  13. 13. About CDFIs: Types of Lending Small Business and Microlending Healthy Food Financing: Food Deserts Nonprofit Organization Financing Affordable Housing Residential Mortgages Education: Charter School Financing Healthcare: Community Health Centers Commercial Real Estate Consumer Finance: Alternative to Pay-day Loans Venture Capital 13
  14. 14. CDFIs and Healthy Foods Financing Financing available all along the food system  $90 million in financing to CDFIs from US Treasury  Traditionally retail-focused lending  Mid-tier sector has high growth potential Alternative to conventional lending  Flexible, patient capital  Well-suited to meet borrower needs  Business plan support and review CDFI lending to food-based businesses  Business stage determines financing tool  Facilitate collaboration between multiple lenders  Experience working in underserved communities 14
  15. 15. CDFI Financing of Mid-Tier Food System Enterprises 15 Challenges for Borrowers  Poor or no credit history  Collateral shortfalls  Lenders hesitant to finance start-up businesses  Capital often needed to start or expand business but cannot afford to take on significant debt Challenges for Lenders  Inconsistent credit quality for food-based businesses  Business needs are broad and diverse and loan sizes may need to be adjusted  Can be difficult to determine a reasonable pricing structure for small loans
  16. 16. Other Capital Sources for Mid-Tier Food System Enterprises Public Federal  Community Economic Development Program  Federal-State Marketing Improvement Program  Intermediary Relending Program  Value-Added Producer Grants State  Specialty Crop Block Grant  Michigan Good Food Fund  State Small Business Credit Initiative Local  Small Business Development Centers Private Financial Institutions  Local and Regional Banks  Community Banks and Credit Unions Foundations  RSF Social Finance Intermediaries  Nonprofit Development Companies  CDFIs 16
  17. 17. OFN Resources 17 Resources  OFN website www.ofn.org  CDFI Coverage Map http://ofn.org/cdfi- coverage-map  CDFI Locater http://ofn.org/cdfi-locator  CDFI Fund Capacity Building Resources  http://www.cdfifund.gov/what_we_do/FinancingHealth yFoodOptionsResourceBank.asp  Financial Resources Catalog  http://cdfifund.gov/what_we_do/FinancingHealt hyFoodOptionsResourceBank.asp Contact  Dafina Williams, Senior Associate, Public Policy  dwilliams@ofn.org  215-320-4318
  18. 18. Regional Food Hubs  Actively linking producers to markets  On-farm pick up  Production and post-harvest handling training  Business management services and guidance  Value-added product development  Food safety and GAP training  Liability insurance  Aggregation  Distribution  Brokering  Branding and market development  Packaging and repacking  Light processing (trimming, cutting, freezing)  Product Storage  “Buy Local” campaigns  Distributing to “food deserts”  Food bank donations  Health screenings, cooking demonstrations  SNAP redemptions  Educational programs  Youth and community employment opportunities
  19. 19. Stages of Business Development Concept & Planning Proof of Traction Survival & Success Growth What is our idea? What do we want to do and why? What is our goal? Pilot, test market Can we sell our product or service? Expand beyond 1 customer or a pilot test market Can we sell our product or service……. PROFITABLY? How will we grow, sustain?
  20. 20. Stages of Business Development Concept & Planning Proof of Traction Survival & Success Growth High Risk, No return funding Grants, Savings, “Friends and family,” Crowdfunding High Risk, Flexible, Risk adjusted return Grants, Savings, Crowdfunding, Agency Loans (SBA, Eco Dev); Angels, VC Variable Risk Return driven Cashflow, CDFIs, Banks, Angels, VC, Private investors Less Risky Return driven Cashflow CDFIs, Banks, Larger private investment groups
  21. 21. Capital Stacking Source: Oregon Capital Scan: A Line is Drawn. University of Oregon’s Business Innovation Institute, June 2014.
  22. 22. GrowNYC - Nonprofit with 35 years of experience helping family farms and ensuring a supply of fresh, healthy produce for all New Yorkers Programs  Greenmarket – 53 farmers markets, with 230 participating producers  Youthmarkets – 13 teen run farm stands, created 70 youth jobs  Wholesale Farmers Market – $5 million in annual sales  Fresh Pantry – over 500k donated from Greenmarkets  YUM Food Box – 70,000 lbs of produce sold since its start in June 2010  Fresh Bodegas – 11 coolers installed with over $4k in local produce sales Greenmarket Co. – GrowNYC established a food hub in 2012 serving NYC food retailers, institutional buyers, and GrowNYC programs Food Hub Financing – Snapshot at Start-up/Early Stage–
  23. 23. 9/12/2012  XXX  XXX  XXX Food Hub Financing –GREENMARKET CO. Start-up/Early Growth Stage–
  24. 24. Snapshot of Greenmarket Co.  Established 2012  6 full-time and 4 part-time employees  $650,000 gross sales for 2014  Works with 50+ producers  100+ customers - grocery stores, restaurants, senior centers, and GrowNYC Youth Markets and Food Box program  Over 60% of sales to date have been to buyers serving low- to mid-income consumers Key Supply Chain Partner  City Harvest – initially utilized excess storage capacity at food relief organization’s warehouse.  Recently moved to their own 5,000 sq. ft. warehouse Food Hub Financing –GREENMARKET CO. Start-up/Early Stage–
  25. 25. Some of the Funding Streams  Planning stage: USDA Farmers Market Promotion Program (FMPP) and USDA Healthy Urban Food Enterprise Development (HUFED) Program  Implementation stage: Doris Duke Charitable Foundation, Deutsche Bank Americas Foundation, New World Foundation  Beginning expansion: City of NY grant – truck purchase; USDA Local Food Promotion Program (LFPP) – for working capital, marketing and sales. Food Hub Financing –GREENMARKET CO. Start-up/Early Stage–
  26. 26. Stage of Business Development - USDA Grants for Food Hubs - Planning Implementation Growth  Rural Business Enterprise Grants  Local Food Promotion Program  Specialty Crop Block Grants  Value-Added Producer Grants  Local Food Promotion Program  Specialty Crop Block Grants  Value-Added Producer Grants  Business and Industry Guaranteed Loans  Community Facilities Loans and Grants  Rural Business Enterprise Grants  Local Food Promotion Program  Specialty Crop Block Grants  Value-Added Producer Grants  Farm to School Grants  Community Food Projects Competitive Grants
  27. 27. Examples: CDFIs and Mid-Tier Food System Enterprises Greensgrow – Philadelphia, PA  Nonprofit urban farm, retail nursery, and food distribution business  Growth stage of business  17 years in operation  More than $1.1 million annual revenue  Sources of Capital  Revenue from earned income (93 percent)  CSA operation  Farm stand  Plant Nursery  Other (Direct to Restaurant, Community Kitchen)  Grants (7 percent)  Recent expansion to second Philadelphia location and Camden, New Jersey 27
  28. 28. La Montañita Cooperative – Albuquerque, New Mexico  Food Aggregation and Distribution Center; Retail  Organized as Cooperative  Mature stage of business  31 years in operation  More than $28 million annual revenue  Sources of Capital  Earned income from operations  Loans from Capital Impact Partners  Loans from local community bank  Community Investment Initiative 28 Examples: CDFIs and Mid-Tier Food System Enterprises
  29. 29. OPEN DISCUSSION Your Turn!
  30. 30. Moving Food Along the Value Chain: Innovations in Regional Food Distribution By Adam Diamond & James Barham – USDA Agricultural Marketing Service Regional Food Hub Resource Guide Food hub impacts on regional food systems, and the resources available to support their growth and development By USDA Agricultural Marketing Service and the Wallace Center at Winrock International The Role of Food Hubs in Local Food Marketing By James Matson, Martha Sullins, and Chris Cook – funded by USDA Rural Development Food Hub and Distribution Resources Electronic copies of these publications can be downloaded for free at www.ams.usda.gov/FoodHubs
  31. 31.  Food Value Chains: Creating Shared Value to Enhance Marketing Success – joint project between USDA and the Wallace Center  The report is designed to provide guidance to the reader on how food value chains are initiated and structured, how they function, and the benefits they provide to participants. New Report on Food Value Chains http://dx.doi.org/10.9752/MS141.05-2014
  32. 32. USDA’s Food Hub Portal www.ams.usda.gov/FoodHubs A catalogue of USDA's research findings, resources, and support for food hubs Food Hub and Distribution Resources National Food Hub Collaboration http://foodhub.info Map and list of known food hubs, current news, webinars, conference proceedings, print resources Food Hub Benchmarking Webinar on Thursday!
  33. 33. www.usda.gov/knowyourfarmer  Website: One-stop shop for financial and technical assistance resources from USDA to grow your local food enterprise www.usda.gov/knowyourfarmer  The Compass: How USDA resources are put to work in your community www.usda.gov/kyfcompass  The Compass Map: See what’s funded in your community and learn how others are using USDA programs USDA’s “Know Your Farmer, Know Your Food” Initiative
  34. 34. Know Your Farmer, Know Your Food: - Resources for Navigating USDA - www.usda.gov/knowyourfarmer
  35. 35.  Farm Microloans  Farm Storage Loans  Organic Cost Share  Grass-fed Verification  Environmental Quality Incentives Program (hoop houses/high tunnels)  Rural Energy for America Program USDAProgramsintheLocalFoodSupplyChain  Business and Industry Guaranteed Loans  Community Facilities Loans and Grants  Rural Business Enterprise Grants  Rural Business Opportunity Grants  Value-Added Producer Grants  Local Food Promotion Program  Conservation Reserve Program  Agricultural Conservation Easement Program  Conservation Stewardship Program  Environmental Quality Incentives Program  Business and Industry Guaranteed Loans  Community Facilities Loans and Grants  Rural Business Enterprise Grants  Rural Business Opportunity Grants  Local Food Promotion Program  Specialty Crop Block Grants  Farm to School Grants  Senior Farmers’ Market Nutrition Program  WIC Farmers’ Market Nutrition Program  Community Food Projects Competitive Grants  Farmers Market Promotion Program  Specialty Crop Block Grants Land Conservation Processing www.usda.gov/knowyourfarmer Aggregation/ Distribution Production Markets / Consumers  Rural Cooperative Development Grants  Small Business Innovation Research  Risk Management Education Program  Federal State Marketing Improvement Program  Conservation Technical Assistance  Beginning Farmer and Rancher Development Program  Sustainable Agriculture Research and Education Program  Agriculture and Food Research Initiative Research, Education, and Technical Assistance Programs – all along the supply chain
  36. 36. Includes data on:  USDA-funded local food projects  Farmers markets, food hubs, and other “context data” gathered by USDA agencies  Projects and resources from 9 other Federal Departments The KYF Compass Map www.usda.gov/kyfcompass
  37. 37. Explore Options, Partnerships, and Opportunities
  38. 38. Find Resources to Fit the Need www.usda.gov/kyfcompass
  39. 39. Jim Barham USDA Rural Development Washington, D.C. 202-690-1411 James.Barham@wdc.usda.gov www.usda.gov/kyfcompass www.usda.gov/knowyourfarmer knowyourfarmer@usda.gov Thank You!

×