Of Local Food and Finance
Paul Stomp, a beef farmer in Ottawa shared his story of local food and finance this Saturday at a Bring Home Food conference in Peterborough, Ontario. His story contains a great many lessons about local food, local finance and the possibility of a different, more intimate way of doing business.
When Paul set out to start his farm he sought seed capital. Finding no purchase through traditional means, he struck on another idea. A casual conversation with a lawyer friend of his led to a social finance innovation.
His friend encouraged Paul to write out a page and half outline of a bond he would like to issue to people interested in supporting his enterprise. Paul structured the terms of the bond in a way that expressed his best case arrangement. With a little help from his friend the bond structure was buttoned down. With it Paul approached colleagues, friends, and family to invite them to take out a bond with him to finance his start up. Paul made sure that each bond was small enough to enable most people to participate. Before long he had the money he needed to get started. It would appear that business has been healthy since.
One of the big gaps in local food is to ‘rebuild the middle’. Not only is there a need for more diversity in farming there is a need for more farmers. Small acreage farmers, cooperative farms, and independent conventional farms are all locally-rooted producers our food system needs to be sustainable. Local food processing and distribution is another need. Locally owned and run abattoirs, food processors, and distributors are complementary to making a local food system work. In many cases meat processing requires stock to travel to a centralized abattoir. It is then is redistributed, sometimes across the province, breaking the local link.
Rebuilding the middle will require a consumer commitment to do business locally as well as ways to finance the various enterprises in the middle. It’s likely these outfits will be as small as some of the farms whose food products they will move.
They too will need financing options. The lessons learned from Paul’s story then, are applicable to an entire array of localising efforts.
A familiar refrain amongst small investors; business people, teachers, civil servants, and hardworking people who have socked money away from all walks of life, is that they would like to be involved in local investments but have no clear pathway to participation.
With Occupy Wall Street sentiments circulating it is likely more people are, and will begin, asking how they can invest in something a little closer to home and has some personal meaning. Rebuilding the middle also means rebuilding the vehicles for intimate, local, and socially-driven investments.
Many people would like to participate in change or in new opportunities. Often the only thing they need is a clear pathway. Paul created one such pathway and on his own terms. That’s why his story has much to offer.
First, he didn’t get trapped by conventional finance or business patterns and boiler plates. On good advice he designed what he wanted to bring into being, created an investment vehicle that expressed his values, and secured financing in bites sized to suit the people he knew and wished to invite into his dream. He created something to suit his personal purposes. He broke free from the ‘matrix’.
Second, his bond arrangement was flexible. There are ways for him to pay off a bond early if he felt he no longer needed the money, and ways for his bond holders to get their money out if needed.
Third, his bond arrangement was simple: A page and a half.
And most importantly, his arrangement is incredibly intimate. His personal network and his word are the glue holding it all together. What better security can you have than a relationship and a man’s reputation? Neither of these can be accessed at a distance, you have to know the bond issuer and you have to be involved enough to know his reputation.
As re-localisation gains momentum this kind of ‘social finance’ holds great promise, in food and in other parts of our lives.
While there is no need to accept business as usual, there will be a need to connect with non-conventional lawyers and accountancies to build out an alternative.
Paul’s story is just the sort to lead the way. You can learn more about Paul’s farm and philosophy at GrazingDays.com.
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