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.

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. 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. Local/Regional Food Systems
Food Hubs
Aggregating Distributing Marketing Local Food

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. 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. *Based on a working list of 302 food hubs identified by the USDA’s Agricultural Marketing Service (April 2014)
Regional Food Hubs

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. 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. 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. Sources of Capital for Food Hubs
(and Other Healthy Foods
Enterprises)
Dafina Williams January 16, 2015

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Capital Stacking
Source: Oregon Capital Scan: A Line is Drawn. University of Oregon’s Business Innovation Institute, June 2014.

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. 9/12/2012
 XXX
 XXX
 XXX
Food Hub Financing
–GREENMARKET CO. Start-up/Early Growth Stage–

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. 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. 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. 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. 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. OPEN DISCUSSION
Your Turn!

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.  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. 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. 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. Know Your Farmer, Know Your Food:
- Resources for Navigating USDA -
www.usda.gov/knowyourfarmer

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. 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. Explore Options, Partnerships,
and Opportunities

38. Find Resources to Fit the Need
www.usda.gov/kyfcompass

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!