People-Powered Finance for People-Powered Food

April 12 2012

Bertie at work in the new polytunnel

Cultivate Oxford’s Blog

Food growing is remarkable as an economic activity for its egalitarianism. Princes and paupers, the super-rich and subsistence farmers all can dally in the basic transformation of sunlight, rainwater and soil into food. The seeds for 20 courgette plants cost under £2 from a high-street store, each plant producing an abundance of crops throughout the season. Seeds can be saved and swapped and bartered, which is why corporate attempts to claim exclusive intellectual property rights over plant genotypes meet with such fierce resistance from those for whom the act of growing is their means of survival.

Nonetheless, finance is a considerable barrier to new entrants to farming like us. Rapidly growing Community Supported Agriculture (CSA) initiatives now numbering at least 80 across the UK provide one model for overcoming this by harnessing the power of the many. Classic CSA involves a partnership between farmer and the community in which consumers pay up front at the beginning of the season for ‘a share in the harvest’. The farmer has her cashflow problems removed so she can spend on seed, inputs, irrigation and labour without the risk and expense of a bank loan, and customers are delivered a fresh boxful of whatever fruit and vegetables are produced on a weekly basis.

When we were designing Cultivate’s business model we wanted to push the CSA model further. As well as growing organic produce, we wanted the enterprise to work specifically on addressing the problem of getting local produce to more people. In many cities like Oxford there is a gap in the local food economy when it comes to the logistics of getting food from field to fork. Small producers are largely on their own, unserved by any wholesalers who operate at their scale and with their ethos. Instead of offering a box scheme CSA which is basically a solution for revenue flow barriers for small producers, we asked our community for capital investment to start addressing some of the challenges of getting good food to more people. Our first attempt at doing this in an innovative way takes the form of the VegVan, a mobile greengrocery built in the back of a converted panel van, which will do the rounds of neighbourhoods, schools and businesses in and around Oxford, stocked with fresh fruit and veg from our farm and other small producers locally.

This is very different to a box scheme because our more than 200 investors who have between them contributed £80,000 of start-up capital will not receive a single vegetable for their money. Our revenue comes from the sales from the VegVan and deliveries to restaurants and caterers. In 3 years time when our business plan projects that Cultivate will break even financially, investors can request to withdraw their share capital (perhaps to reinvest in another new social enterprise!) and they will receive a small rate of interest if the business does well. However, the interest rate is below current levels of inflation, and it’s fair to say that our investors are probably not motivated by financial return. So why have they done it? Primarily in order to see this project happen. This is an example of true social investment where the rewards will be found in our community rather than on the bank balance sheet. People really want to see a more resilient and interconnected local food economy and they’re prepared to put money behind that vision.

But a second reason is at least as important – people invest to be part of something. Cultivate is a co-operative ‘community benefit society’ in which all members are involved in governance. Unlike regular investment where your say in the business depends on how much money you invest, Cultivate’s model is based on ‘one member – one vote’, a democratic system in which people, and not their economic clout, are the basis for decision-making. Because they are investing for social benefit, rather than for financial reward, this is a real example of ‘engaged equity’ – they have a reason to be interested and involved in everything that Cultivate does and whether or not we are collectively achieving what we set out to do. It’s been inspiring in the three month period over which we’ve been running our community share offer, that so many people have come forward with so much enthusiasm and energy, as well as start-up capital. In an age dominated by political austerity, government cuts and political apathy, it shows that positive, grassroots social change is still alive and well.


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