By Karen Anderson (as originally published in the September/October 2011 issue of City Palate)
Why would anyone want “slow money”? As a culture we’ve been programmed to hope for fast money. Woody Tasch is the author of Inquiries into the Nature of Slow Money – Investing as if Food, Farms and Fertility Mattered. In his book, he poses hard questions, like why modern money markets ask us to take our money away from local businesses to invest it globally. He’s witnessed the impoverished farms and abandoned main streets that the emphasis on global investment has wrought, and he’d like to help turn that around.
Tasch is a former chairman of Investors’ Circle, a non-profit network of more than 200 angel investors (affluent people who provide captial for business start-ups) in the U.S. He helped it raise over $130 million for businesses committed to improving social and environmental well-being. Though he himself was a proven and ethically sound investor, Tasch felt that wasn’t enough. His nonlinear brain began connecting the dots, and he concluded that unless the earth’s soil is wealthy (filled with minerals, topsoil and microorganisms that make it rich), all the socially conscious money in the world won’t save the planet.
So in 2008, he founded Slow Money, a consortium of people interested in devoting a percentage of their money to investing “new sources of capital (in) small food enterprises, organic farms, and local food systems,” to quote slowmoney.org. Tasch was a fan of the Slow Food movement, and he saw that organics and farmers’ markets were the fastest growing sectors of the food economy. He also noted that while there was an increased awareness of the value of the good, clean and fair food touted by Slow Food, there was also a need for capital for small to mid-size farms to grow enough to meet the surge in demand.
Tasch coined the term “nurture capital” for investors using a Slow Money strategy to convey their difference in intent from the traditional venture capitalist. The nurture capitalist nurtures the land and values a sense of place; the venture capitalist has traditionally exploited land and resources for profit. Simply put, Tasch and the Slow Money movement believe, if everyone invested a bit of his or her capital in local farms and soil, slowly, place by local place, the earth could be healthy again.
Slow Food movement founder Carlo Petrini, in the forward to Inquires into the Nature of Slow Money – Investing as if Food, Farms and Fertility Mattered, sums up the common goals of the parallel movements as follows:
At the base of the economy is soil fertility. If we use money like synthetic fertilizer, we will get artifical growth, which can only last for a while, but which lacks sustaining relationships with the earth. If we use money like manure, we may have a chance to create an economy built on lasting, healthy relationships. We may create a new breed of investors who refuse to accept unnatural returns.
Slow Money’s goal is that one million people will invest one per cent of their portfolio in local food systems in this decade. The organization has 2,000 members and 12,000 supports in the U.S., and last year alone claims to have raised $4 million in nurture capital for small food enterprises. Its website lists investment vehicles that are as sophisticated as registered social finance funding, where accredited investors can place $500,000 for seven years, and as humble as the Cooperative Loan Fund of New England, where investors give a minimum of $1,000 to support local cooperatives.
At a recent appearance in Calgary, Tasch said that a return of five percent on investment over 20 years might be the financial forecast for those willing to invest in Slow Money ventures. While the movement seems to be building some momentum in the U.S., non-commodity mid-size niche farms in Alberta still struggle to find financing.
Mary Ellen and Andreas Grueneberg own the Greens, Eggs and Ham farm in Leduc. Production on their 10-acre niche product, organic poultry and produce farm has stalled at around $225,000 per year because of financing issues. The Gruenebergs have documented a demand that suggests their production could grow to $1 million annually. In a recent interview they explained their predicament this way:
“As small producers providing high quality, healthy, locally produced food direct to the consumer, we do not fit existing paradigms about agriculture that our provincial and federal agriculture departments, conventional and agricultural lenders have been locked into for decades. As a result, we cannot access the capital we need to meet the growing demand for our products. We believe that Slow Money could provide operating capital and some funds for infrastructure. We would be able to hire sufficient labour for production, purchase seed and feed, and increase our ability to process and store all the flocks of birds we could market.”
The Gruenebergs and dozens of other farming entrepreneurs like them are at a crossroads. Their challenge is to find a funding mechanism for their style of business.
The financial community will demand that farmers be transparent in their financial accounting, demonstrate strong branding of their product, and present detailed documentation of demand, just as it would of any entrepreneur in any other sector. The answer to the financing mechanism might be as simple as finding friends and neighbours who are willing to invest via a simple promissory note. The investment vehicle in this scenario is simple, but farming investments would still be considered high risk.
Meanwhile, the Gruenebergs have set up a Facebook page and have founded Slow Money Alberta. They are using their farm and another farm to attract potential “locavestors” as they are being called by Amy Cortese in her just-released book Locavesting: The Revolution in Local Investing and How to Profit From It. The Facebook page says Slow Money Alberta will offer 6% for a 10-year $10,000 investment or 3-1/2% for $5,000 over five years to be paid in produce. The details are available in pdf format on the Facebook page. They are also willing to explore a pooling structure of finance for an organized group or cooperative where the investor’s risk is decreased but the farmers still have access to needed financing.
What can Alberta’s eaters do to help?
Albertans interested in supporting a strong local food system can spread the word about Slow Money Alberta. They can volunteer the skills needed – such as contract writing, web design and sharing contracts for possible investors – to get thsi grassroots organization off the ground. They can ask financial advisors about their knowledge of local food investment opportunities. An examination of the Gruenebergs’ situation, for example, could lead to the conclusion that they are working on a novel model within their industry, they have a strong brand and a proven track record, and that the potential for growth is worth the investment in their company.
Maybe the money farmers need doesn’t have to be slow in coming. Maybe the use of social media will help connect the right dots. Maybe Slow Money will be trendy enough for TV and we’ll see iconic reality TV star W. Brett Wilson and his riskybusiness.tv include ground-breaking Alberta farms like the Gruenebergs’ Greens, Eggs and Ham as their featured investment. Chances might be slim, but farmers, like all good entrepreneurs, are optimists, and they are open to financing, no matter the source.