Finding Money for a CSA Venture
I am so excited about starting a new business selling bulk vegetables from my large garden. I need some money to buy farm equipment and hire some people. I hope you have some ideas for me. —A.P., Providence Forge, Va.
No wonder you're excited: You have both good timing and a bit of luck on your side.
In terms of timing, what you're proposing (formally called "community-supported agriculture") is all the rage right now, as consumers become increasingly interested in purchasing fresh, local produce farmed sustainably.
As far as luck, the state of Virginia is particularly attuned to this trend and has developed several programs aimed at helping startup businesses like yours, says Linda Burcham, public information officer for the Virginia Cooperative Extension. "We're seeing a lot of interest and this market is hot right now," she says.
The emerging business model for community-supported agriculture involves individuals or families buying "shares" in a local farmer's harvest over the growing season, says Jonah Fogel, community viability specialist for the cooperative extension's northeast district. The grower gets customers' funds up front in exchange for agreeing to deliver a specified amount and type of produce each week or month over so many months. "Somebody might buy a $400 or $500 share and every week they get their delivery or they pick up their food at a specific location," Fogel says.
The farmer gets cash early to help fund expenses, and then during the season can concentrate on growing and delivering product, rather than billing customers and collecting money. "It takes the uncertainty out of the business cycle," Fogel notes.
Like any startup, you should have a business plan that helps you determine revenues, expenses, and pricing this first year and projects out where you'd like to take the business over the next few years. You'll also want to establish some kind of business entity, investigate state regulations governing food sales to the public, find out who your direct competitors are, come up with a marketing plan, and perhaps explore alternative business models.
For instance, Fogel says, some growers concentrate on artisan produce or niche products that they sell at farmers' markets. "This model drives high-value products and tends to result in high-level return on investment, so we're seeing a lot of this right now," he says. A "pick-your-own" model—where city dwellers or suburbanites travel to your property and harvest their own fruits and veggies—is another alternative.
Startup Resources to Consider
In terms of startup capital, he suggests you approach a microlending organization, a community bank with a flexible loan program designed for aspiring business owners, or a farm credit bank located in your area. The Virginia FAIRS Foundation (Foundation for Agriculture, Innovation, and Rural Sustainability) has a rural development grant program and a "virtual business center" that offers information on lenders and business plans.
Additional state resources you might investigate: The Virginia Dept. of Business Assistance provides startup workshops coordinated with community college courses and one-on-one counseling. It also offers a business information center and a one-stop resource for startups.
The state's Dept. of Agriculture and Consumer Services has a Web site, Virginia Grown, that provides marketing services for agricultural businesses. The Virginia Farm Bureau is online here. The Cooperative Extension has agents in every county who help educate agricultural businesses about sustainability and resources. Local offices are listed here.
Get to Know People
In terms of national resources online, Fogel recommends LocalHarvest.org and PickYourOwn.org. Like most local business, agriculture is relationship-driven, Fogel says. "It's real important for you to make friends with other growers, make contacts with other local producers, meet farmers' market managers, and look for associations in your area that you can join."