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September 29, 2004
Blueberries, Bats, and Barns: How Community Investing Aids Small Family Farms
    by William Baue

The Community Investing Program of the Social Investment Forum and Co-op America honors nine community investment organizations for assisting small family farms.

Kentucky's 90,000 family farms are faced with a dilemma: marijuana, the state's primary cash crop (according to the National Drug Intelligence Center and other federal offices), is illegal, and the second-biggest cash crop, tobacco, is a killer. Creative and entrepreneurial farmers wishing to expand outside of traditional commodity crops, however, face stonewalling from mainstream banks that do not support out-of-the-box thinking.

Enter the Mountain Association for Community Economic Development (MACED). This Berea-based community development financial institution (CDFI) is committed to making loans to "viable and yet unbankable" ventures through its Agricultural Diversification Lending Program. For example, it supports the Bluegrass Blueberry Growers Association, an organization that uses the colored turf traditionally associated with the state as a bridge to promote a similarly-colored crop more often associated with Maine. The association has grown to 100 members since its 2002 inception, thanks in part to MACED.

MACED is one of nine organizations being honored by the Community Investing Program, a joint project of the Social Investment Forum (SIF) and Co-op America, for supporting small and family farms through community investment.

"Small farming is moving into a much more entrepreneurial space, where a focus on organics and niche markets are becoming more and more popular," said Jean Pogge, chair of the Community Investing Program and senior vice president of mission-based deposits for ShoreBank, a leading community investment bank. "Community investing helps provide the needed capital and information; it now plays a key role in the growth and success of small farmers throughout the country."

The story of Wally Holmgren, owner of the Oregon-based organic dairy farm Holmgren Dairy, exemplifies how community investing benefits small family farming in ways that traditional banks do not. After buying a new farmstead, his family sought to grow its herd to graze the increased acreage, build a new barn to replace a dilapidated one, and renovate the milking parlor to increase efficiency.

"I went down to the local bank and they basically laughed at me--they had no interest in financing anything for our family," Mr. Holmgren said. He had a similar experience at the bank that held the mortgage on his farm and land. "Then I remembered an individual who had come out to visit the farm from ShoreBank Pacific."

"You can't imagine my surprise when, in my first phone call to them, they said yes: 'Come over--we'll help you figure this out and make it work,'" Mr. Holmgren said.

Shorebank Pacific provided financing for the new barn and milking parlor renovations as well as taking over the mortgage for the farm and land from the former mortgage-holder that refused the capital improvements loan.

Shorebank Pacific, whose portfolio includes about 1.8 percent (just over $1 million) in organic farm loans, also supports Columbia Blossom Orchards, which produces grapes as well as stone-fruit crops such as peaches, nectarines, and cherries. The orchards use natural insecticides, namely swallows and bats, instead of synthetics, which can harm the bees needed to pollinate the fruit.

Also honored were two organizations supporting women- and minority-owned businesses, another priority of community investment. Sylvia Vergora, a Hispanic woman who produces organic preserves, jams, syrups, and vinegars on La Carreta Farm, received assistance from the New Mexico Community Development Loan Fund (NMCDLF).

Laini Fondiller, who started Lazy Lady Farm in 1988 with one goat, one-and-a-half acres of organic vegetables, and a small flock of sheep for meat and wool, received a $30,000 loan from the Vermont Community Loan Fund (VCLF). This loan was part of a $40,450 project to construct a new cheese-making facility and purchase additional equipment. The farm, which produces award-winning organic cheese and conducts cheese-making classes, uses solar electricity to add to the sustainability of the enterprise.

The VCLF, which made $165,158 in farm loans representing 11.3 percent of its business loan volume and 3.6 percent of its overall loan volume for the first seven months in 2004, also supports a Community Supported Agriculture (CSA) equipment-sharing program. CSAs, which provide produce directly to local consumers who own shares, often have trouble raising the capital necessary to purchase necessary equipment, such as tractors. Equipment-sharing solves this problem in a way that furthers the collaborative spirit of the enterprises.

Sid Stutzman, owner of Stutzman's Vegetable Farm, explains how a grant from the Maine Farms Program "Farms for the Future" program run by Coastal Enterprises, Inc. (CEI) and the Maine Department of Agriculture, helps create a similar collaborative effect.

"The farmers that used to be considered rivals are now working with us, buying and selling with each other," said Mr. Stutzman.


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