August 2, 2011

By Ellie Winninghoff

What would it be like to invest in-not just eat from-the veggie farmers, cheese artisans and ranchers at the local farmers' market?

When Woody Tasch published his book, Inquiries into the Nature of Slow Money: Investing as if Food, Farms and Fertility Mattered, and launched Slow Money (http://www.slowmoney.org) to catalyze the flow of capital to enterprises that support soil fertility and local communities, he captured a collective imagination. But while "voting with your fork" is one thing, actually figuring out how to invest in the local food economy is downright challenging. Small-scale farming is not exactly a high profit venture, nor is it what a fiduciary like a pension fund would consider "prudent."

Yet last autumn, an Albuquerque, N.M.-based food co-op called La Montanita launched a microfinance fund for local farmers. The fund is already being emulated in Bellingham, Wash., and is being studied elsewhere. Its structure could well become a model nationwide. Not only does the fund's mechanism cut the cost of loans to farmers, it reduces risk for investors and establishes incentives for the entire to community to collaborate. And unlike most pro-active, do-good "impact investments" (see http://www.fa-mag.com/component/content/article/14-features/6918-the-new-candy.html), this effort relies on grassroots investors.

"We wanted everybody to be able to invest in the local food system," says Robin Seydel, manager of La Montanita Fund. "We didn't want just the large accredited investor."

The focus on grassroots and non-accredited investors could be key to raising the funds necessary to restore the nation's soil--a key to our survival, warns MacArthur Fellow and University of Washington professor David Montgomery in his groundbreaking book, Dirt: The Erosion of Civilizations.

Richard Heinberg, senior fellow at the Post-Carbon Institute and author of Peak Everything, has warned that rising fuel prices virtually guarantee higher food prices and food shortages-something that suggests that investment in local foodsheds (food that can be produced in a certain bioregion) will be vital.

The money for grassroots-level investing is out there to be tapped. According to "Money for Good," a provocative study conducted by Hope Consulting (http://www.hopeconsulting.us) based on in-depth focus groups of affluent individuals (with incomes of $80,000-plus,) there is $120 billion available from individuals for impact investing. Even the wealthy, however, preferred to invest in amounts of $10,000 or less.

Localvores

La Montanita's story began in the mid-80s when more stores began to offer organic food and the co-op had to figure out how to compete. After reading Jim Collins' book, Good to Great, which urges companies to determine what they do well and take it to the next level, management concluded that its competitive advantage was its relationship with local food producers. To boost sales of local food, the co-op invested $150,000 in a strategic foodshed program.

Today, the co-op has 17,000 member-owners and serves 900 local food producers growing 1,500 local products. Revenue was $27.5 million in 2009, the most recent available figure. Of that, 20% of sales came from locally-grown food.

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