Crowdfarming Our Way Out Of The COVID Food Crisis

Empty grocery shelves in cities while rural milk is dumped and swine are euthanized is a good clue that our food system needs improvement. Source: Wikipedia.org

Sometimes it takes an emergency to understand what is important in life.

With recent news stories about dairy farmers dumping milk and meat processing facilities shutting down, it is starting to dawn on urbanites and their suburbanite cousins that something pretty important happens to food sometime before it shows up on the shelves of the local grocery store.

I have written previously (see How Far Can A Fish Fly?, Agriculture Is Broken) about the weaknesses inherent to long, complex food supply chains, and many of the ventures that excite me the most involve rationalizing the process of food provision.

That’s why I was excited when I received an email from Dan Miller, the founder a “crowdfarming” start-up called Steward. Steward provides small- to medium-scale sustainable farms an online platform that allows them to find capital and grow and run their businesses.

Steward’s founder, Dan Miller, riding a tractor on an urban farm in Detroit, Michigan. Source: GoSteward.com

Miller told me his original impetus for getting involved in agriculture came about through his real estate investments. After graduating from the University of Pennsylvania’s Wharton business school, Miller co-founded Fundrise, a commercial real estate crowdfunding platform.

Some of the investments he was involved with at Fundrise were to restauranteurs that complained about the difficulties they were having in finding high-quality, locally produced ingredients. Miller started interviewing urban farmers about their businesses, and these discussions convinced him that there was a large and important group of entrepreneurs in desperate need of increased access to capital and other professional services.

While there is plenty of funding available to American agricultural concerns, there are a lot of strings attached to it. Most funding is reliant on government subsidies and loan programs and the underwriting process is rigid and bureaucratic. What’s more, federal programs are set up to support farms that compete on increasing economies of scale, not on providing resilient, sustainable, local food supplies.

Steward’s main business is to provide a crowdfunding platform to provide capital to small farmers who would find it almost impossible to access from conventional sources. Among Steward’s first sixteen investees include an Amish dairy farmer, an Oregonian CBD producer, and two urban farms in Detroit, Michigan ( one of which has since taken over the other).

A bucolic scene at Beiler’s Heritage Acres, an organic grain and dairy farm that provides heirloom grains, eggs, and dairy to restaurants and markets across Pennsylvania. Source: GoSteward.com

Individual investors commit capital — with a minimum investment of only $100 — to the Steward Farm Trust, which pools the capital and underwrites loans to the farmers while issuing investors a dividend-paying stock. The Steward Farm Trust acts as a principal investor, conducting initial due diligence and ongoing servicing and oversight, but also acts as an agent on behalf of the crowdfuding principals.

One of the things that impressed me the most about Steward’s approach is the degree to which Miller’s company is literally invested in the farmers’ success. Steward’s VP of Agriculture is Aaron Newton, a veteran farmer from North Carolina who ran a farm incubator for five years before joining Steward. Newton is at the head of the “Farm Stewards” program, which is a team of farmers that act as mentors to Steward investees.

Miller said that as he began to know the investees better through the Farm Stewards program, he began to see opportunities to provide growers with more than just capital. To relieve the burdens of perennially understaffed and overworked farmers, Steward has stepped in to provide help in grant writing services, bookkeeping help, and ecommerce implementations. These services represent a win-win-win offering: farmers run a tighter ship with less stress, investors have increased confidence the companies in which they’re investing are run professionally, and Steward forms stronger relationships with their investees while generating extra income from the new services provided.

Steward is focused on funding farmers that use “regenerative” agricultural practices. These practices emphasize using a variety of natural means (e.g., crop rotation, increased biodiversity) to increase the productive capacity of the soil itself while decreasing the use of costly chemical inputs.

A test garden at The Rodale Institute, the US non-profit that coined the term “regenerative agriculture.” Source: Shuvaev via Wikipedia.org

While the concept of regenerative agriculture might strike you as the sort of thing favored by avocado-toast munching, muddle-headed hipsters, huge multinational corporations like Dannon, General Mills, and Kellogg’s are all providing financial incentives to farmers incorporating these techniques into their businesses.

The reason is simple — consumers are becoming increasingly aware of the inherent weaknesses of our agricultural system, increasingly sensitive to the effect of agricultural practices to climate change, and increasingly willing to spend more for local foods grown sustainably in a way that provides added resilience to the effects of climate change.

Steward’s Dan Miller knows, as I know, that society needs a new paradigm for allocating capital to businesses that will help our civilization survive and thrive over the next 100 years. Intelligent investors take note.

Originally published at https://www.forbes.com.

Passionate about harnessing the power of the free market to solve humanity’s biggest adaptation challenge.

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