Community Food Enterprise: Local Success in a Global Marketplace

Post Carbon Institute Fellow for Local Economies
Via Energy Bulletin

Article Excerpt
It’s time to connect the headlines between persistent unemployment in the United States and growing food insecurity. The next Obama stimulus package should focus on how local food can address both simultaneously.

A study done two years ago found that a 20% shift of retail food spending in Detroit redirected to locally grown foods would create 5,000 jobs and increase local output by half a billion dollars. A similar shift to Detroit-grown food by those living in the five surrounding counties would create 35,000 jobs – far more than ever will come out of the multibillion-dollar bailout of the auto industry. The experience of microenterprise organizations around the country suggests that each of these jobs can be created for $2,000-3,000 of public money–a tiny fraction of the price of the last stimulus.

To some skeptics, locavorism is a cute hobby only embraced by Prius-driving environmentalists in rich countries. Libertarians like those at the Cato Institute argue that the best way to localize is to open Walmarts in every community. Progressives like Peter Singer of Princeton University ask, “If you’re living in a prosperous part of the United States, what’s really ethical about supporting the economy around you rather than, say, buying fairly traded produce from Bangladesh, where you might be supporting smaller, poorer farmers who need a market for their goods?”…

Originally published January 25, 2010 in The Huffington Post

Report Excerpt
From the executive summary of Community Food Enterprise: Local Success in a Global Marketplace, by Michael Shuman, Alissa Barron and Wendy Wasserman

The local food movement is now spreading globally, yet is not well understood. To many, local food is exclusively about proximity, with discriminating consumers demanding higher-quality food grown, caught, processed, cooked, and sold by people they know and trust. But an equally important part of local food is local ownership of food businesses. This report is about the full range of locally owned businesses involved in food, whether they are small or big, whether they are primary producers or manufacturers or retailers, whether their focus is local or global markets. We call these businesses community food enterprises (CFEs).

Some dismiss the recent rise of local food and CFEs as just a passing fad. We see it as the natural consequence of the improving competitiveness of CFEs. Not only are CFEs getting more market savvy, but they are also taking advantage of the growing diseconomies of global food businesses. Long, nonlocal supply chains, for example, are increasingly vulnerable to rising oil prices. It’s true that CFEs face special challenges from their modest scale—in leadership, finance, secession, and technology, to name a few—but they are also developing impressive ways of overcoming them.

This report provides a detailed field report on the performance of 24 CFEs, half inside the United States and half international. We show that CFEs represent a huge diversity of legal forms, scales, activities, and designs. From these case studies, we address four questions:

  • What strategies are community food enterprises deploying to heighten their competitiveness?
  • What are the major challenges facing these enterprises and the ways they are overcoming those challenges?
  • How well are these enterprises meeting the triple bottom lines of profit, people, and planet?
  • To what extent are successful CFE models capable of being replicated worldwide?

Many economists and economic developers are resolute about helping companies in their jurisdictions “go to scale.” What our case studies reveal is that CFEs actually are “going to scale” but using unusual strategies consistent with their community character. We identified 15 such strategies:

  • Hard Work—CFE entrepreneurs like Judy Wicks, who for 25 years practically lived in her restaurant, the White Dog Café in Philadelphia, compensate for their limited resources with exceptional industriousness.
  • Innovation—Lance Nacio, of Anna Marie Seafood in Louisiana, developed an appropriate technology to flash freeze shrimp onboard his fishing vessel and deliver an exceptionally fresh product. Sylvia Banda, founder of Sylva Professional Catering Services Limited and the impresario of local food in Zambia, invented and now manufactures for local farmers the Sylva Solar Food Dryer.
  • Local Delivery—The Oklahoma Food Cooperative is showing how, through an Internet-based distribution system, fresh food can be delivered regionally at roughly a quarter of the cost of mainstream food distribution.
  • Aggregation—Locally owned businesses need not be small. Large producer cooperatives owned by local members, such as the Cooperative Regions of Organic Producer Pools (better known as Organic Valley), have improved the competitiveness of 1,300 farmers across North America by aggregating their market power. A nonprofit, Appalachian Harvest Network, also has helped aggregate 70 former tobacco farmers to grow and sell organic fruits and vegetables collectively.
  • Vertical Integration—The annual sales of Zingerman’s Community of Businesses in Ann Arbor, Michigan, have mushroomed to nearly $30 million through a strategy of “growing deep.” Rather than create a nonlocal chain, Zingerman’s has stayed local and created eight businesses that localize its inputs and diversify its food products and services.
  • Shareholder Loyalty—Like other consumer cooperatives, the Weaver Street Market has learned that broad local ownership increases the commitment of its 13,000 members to do their shopping at its supermarkets.
  • Speed—Lorentz Meats in Minnesota provides affordable, mid-scale processing that enables family-scale ranchers to fulfill specialty meat orders with lightning speed.
  • Better Access—Greenmarket in New York City demonstrates how CFEs are increasingly reaching low-income consumers living in “food deserts” with relatively inexpensive fresh food.
  • Better Taste—Emphasizing quality over quantity, Akiwenzie’s Fish in Ontario, run by a Native American family, sells award-winning smoked fish at farmers markets in Toronto.
  • Better Story—One similarity between the White Dog Café and the Cabbages & Condoms restaurants in Thailand is their menus, both of which contain extensive descriptions of where the good served comes from and who exactly was involved in growing, raising, and processing it. Such stories enhance consumers’ experience, and the market value, of local food.
  • Better Stewardship—Many CFEs are becoming commercially successful without compromising their
    social performance, and have turned their superior social performance into compelling competitive advantages. The loyalty of consumers who buy strawberries from Swanton Berry Farm is deepened by their awareness that 100% of the farm’s employees are members of the United Farm Workers union.
  • Better Service—The Self-Sufficient Organic Farm School in Paraguay, a high school for future farmers and CFE entrepreneurs, prides itself on giving—and teaching—exceptional service through its 16 student-run food enterprises, which help underwrite the institution.
  • Revitalizing Local Economies—CFE entrepreneurs tap growing consumer interest in “buying local” to support local economies. The Intervale Center built a municipal compost company for Burlington, Vermont, and is now close to its goal of supplying 10% of the city’s food locally.
  • More Community Spirit—CFEs touch consumers’ desire not just for good food but also for memorable experience and fun. One way the Mavrovic Companies have become ground zero for organic grain, bread, and meat production in Croatia is through its Eco-Center, which is an all-in-one research facility, education center, and community gathering place.
  • More Social Change—Locals and tourists in Thailand descend in great numbers to one of a dozen Cabbages & Condoms restaurants and resorts not only for the excellent food and hospitality but also because the net revenues, currently about $2 million per year, support the country’s oldest public education campaigns concerning AIDS, safe sex, and reproductive rights.

To analyze the social performance of CFEs, we used a comprehensive survey-based tool designed by a nonprofit called B Lab. We found that each CFE put considerable investment into achieving social goals beyond private profit. Seven community impacts in particular stood out for us:

  • Greater Income—Driven by fairness, most of our CFEs are striving to put more income into the pockets of their farmers, workers, or suppliers. Kasinthula Cane Growers Limited in Malawi, for example, uses fair trade premiums not only to support its 282 sugar farmers but also to help their communities access clean drinking water, electricity, and medical services.
  • Training—CFEs enrich their communities’ entrepreneurial resources through concerted workforce training. With 80% of its employees in their 20s, Cargills in Sri Lanka provides free, in-house classes to every employee through its Albert A. Page Institute of Food Business.
  • Ecology—Unlike global companies that often exploit, exhaust, and then abandon a resource base, a CFE is tethered to a community’s assets in perpetuity. The Ajddigue Women’s Argan Cooperative in Morocco is thus committed to replenishing the fast disappearing argan trees through an aggressive replanting program.
  • Local Economy—CFEs pump up their community economies by hiring locally, buying local inputs, and engaging in and contracting for local value-added production. The Panchakanya Agriculture Cooperative in Nepal, for example, is helping its women farmers grow organic fruits and vegetables using local inputs.
  • Charitable Contributions—Local businesses typically contribute more to charity per employee than do global businesses. Some of the most successful CFEs in the United States—White Dog, Zingerman’s, and Weaver Street—actually have started their own community foundations. Sunstar Overseas Limited in India uses the fair trade premiums it earns from global basmati rice sales to support infrastructure improvements in its farmers’ communities.
  • Women’s Empowerment—Almost all our CFE examples are empowering women. The leaders and members of the Ajddigue Women’s Argan Cooperative and the Panchakanya Agriculture Cooperative are exclusively women. Dulce Gozon has become a powerful female leader of the National Ongoing Growers’ Cooperative Marketing Association in the Philippines.
  • Global CFE Solidarity—Most of our CFEs believe in local food as a movement, and are committed to supporting other CFEs worldwide. The African American farmers of the Indian Springs Cooperative in Mississippi, for example, have reached out to producer cooperatives in Africa…

The report also contains many case studies of the businesses it profiles which are also available to be downloaded separately.

Appalachian Harvest Network

“How can we create a system that puts money in farmers’ pockets and puts good food on the table in an environmentally sustainable way?” asks Anthony Flaccavento, the executive director of Appalachian Sustainable Development (ASD). His answer, for dozens of farmers in southwest Virginia and northeast Tennessee, has been a program called the Appalachian Harvest Network (AHN).

AHN has helped local farmers transform their old rows of tobacco, once their signature crop, into thriving organic fruit and vegetable fields. And it has brought these farmers into a new distribution system with major retailers and grocers in the region. AHN values action over research and opens new economic opportunities for local farmers. “We had the ‘wrong’ demographics for sustainable and organic,” says Anthony, “but there was also a real need to support farmers and improve health behaviors. We have taken an organic and sustainable food desert and plowed ground and cultivated a bit. In this region, we are used to being behind the curve. But we were ahead of the local food movement and growing national consciousness about local and fair and organic food.”…

Ajddigue Women’s Argan Cooperative

As a doctoral student at Mohammed V University in Rabat in the mid-1980s, Zoubida Charrouf studied argan trees. These indigenous flora, which grow in concentrated clusters only in the arid semi-desert climate of southern Morocco, look like gnarled wild cousins of the domesticated olive tree. The trees produce nuts, and inside each nut are a few almond shaped pods which, when crushed and processed, yield an oil that is valued for its taste and flavor across Morocco. The argan tree is a relic of the Tertiary age—an ancient species that formerly spanned most of North Africa. Today, due in part to overharvesting for timber and livestock grazing, its range is limited to southwestern Morocco, prompting UNESCO (United Nations Educational, Scientific and Cultural Organization) to make the area a biosphere reserve in 1998. The argan tree has a deep root system that is resistant to drought and helps prevent soil erosion, critical ecological functions in the semi-arid lands north of the Sahara. The oil of the argan fruit has been eaten by Berbers in Morocco for centuries, and is today used across Morocco in couscous, salads and for dipping breads. Rich in vitamin E, phenols, and carotenes, the oil was traditionally used to treat skin conditions and has more recently found favor in the cosmetics industry. Despite its current cachet, argan oil remains one of the world’s rarer oils.

Zoubida was fascinated by the argan’s biology, ecology, sociology, and economics. She saw how important the argan tree had become to the region of southern Morocco and was impressed that women were primarily responsible for harvesting its oil for their own food and cosmetics. She also was alarmed that the tree was rapidly disappearing. Zoubida wanted to figure out a way to preserve the argan tree and to empower women economically while they harvested it. Zoubida founded the Ajddigue cooperative in 1997 to mechanize argan oil production and thereby widen the market for the oil, generate new work opportunities to local women, and provide new protections to the argan groves. Originally considered a marginal business, the cooperative today has 60 Moroccan woman members and continues to grow…

The entire report can be downloaded here.

Community Food Enterprise: Local Success in a Global Marketplace (article and report excerpts) | Energy Bulletin.