Good Food Economy Digest
Rural Minnesota region pulls itself up by food and farming bootstraps
People building strong places with local and regional food
Good Food: Healthy, green, fair, and affordable
In This EditionWe go to Central Minnesota, where a five-county economic development strategy uses local food sales to tourists and cities to build rural health and wealth.
Central Minnesota’s Resilient Region effort is related to the national Partnership for Sustainable Communities. Initial funding from three federal agencies (HUD, DOT, EPA) launched a number of innovative planning efforts. Support for similar investments can help spread the learning and benefits.
“It takes about five years before bigger buyers will say, ‘OK, now we’ll do business with you.’”
Central Minnesota farmer Tom Smude speaks from direct experience.
His sunflower cooking oil business is now in the black, with retail and food service distribution across Minnesota and four neighboring states. Bankers and neighbors thought he was “absolutely nuts” when he turned in 2011 to markets for Minnesota-grown and –made foods. His original plan, to produce bio-fuel from sunflowers, tanked with global oil prices.
The same five years of growth at Smude Sunflower Oil have seen a related economic evolution in the five counties where his farm is based. In fact, the smallest, yet most critical piece of Smude’s startup financing came through Central Minnesota’s recent re-focus on local food and farming for new health and wealth.
Five years into implementation, Central Minnesota’s Resilient Region strategy, like Smude’s “off the wall” business idea, also is building converts and confidence.
It’s a fairly logical self-help plan, said Cheryal Hills, executive director of the Region Five Development Commission.
The citizen-led Resilient Region plan that Region Five facilitated from 2009 to 2011 focuses on local foods, farming, and the arts as levers, or “economic engines. The goal is to lift up this rural area challenged by out-migration, poverty, and diet-related chronic disease. The strategy is to leverage strong tourism demand in a couple of Region Five’s counties to stimulate commercial and community development the entire region needs.
“The opportunity we have in local foods is to take product from our agricultural communities and sell it to the resorts here and to highly populated areas, where people love it and are more likely to pay for it,” Hills said. “We use those sales as stimulus to make fresh and local food more available, raise disposable incomes in our agricultural communities, and work on a regional scale to address needs and opportunities.”
Main Street Lives
Brenda Thomes is the city administrator for Long Prairie (pop. 3,400), in Region Five’s southwestern Todd County. Like many rural communities, Long Prairie’s historic downtown is plagued with vacant buildings. Thomes said a new independent grocery store in one of those storefronts, Mi Pueblito market and café, which Region Five helped finance, is filling a real economic development need.
“If you want to get younger families into an area, you have to not only look at having fast food restaurants, but also farmers markets and places people can walk to for fresh foods and other things they need,” she said. “It also makes it easier for our industries here to attract people to come work for them.”
Thomes is describing a new trend in economic development called “placemaking,” It’s about retaining, creating, and attracting businesses by making towns and cities more attractive places to live.
Placemaking is also helpful for tourism, said Kris Vonberge, executive director of the Little Falls Convention and Visitors Bureau..
“I call it destination building,” she said.
Vonberge is excited about a group of residents and investors moving forward with plans to locate a new cooperative grocery store in downtown Little Falls that will stock fresh and local foods.
“I want people to spend money in town, and that can happen if it’s more of a full town, with more things to do and buy, like food,” Vonberge said.
Mo Durheim, vice president and senior lender at Farmers and Merchants State Bank of Pierz, is encouraged by the co-op grocery store plan in Little Falls.
It’s the type of larger volume opportunity that can give people with local food and farm ideas a chance at real livelihoods, he said.
“These are our friends and neighbors,” Durheim said. “I’d like to see this (local food and farming sector) evolve where those who have an interest can succeed, where they have an avenue to build something for themselves.”
Region Five is working to support this vision, unanimously supported in Resilient Region planning, by building the business ecosystem in which those livelihoods can grow. A core element is a retailing, distribution, and processing hub called “Sprout.” Region Five has facilitated and supported its growth from an idea in 2009 to a startup group of 15 suppliers in 2012 to more than 60 now.
Sprout serves seven school districts (15,000 students), four hospital systems, and other restaurant, retail and food service accounts in the region. Its 2016 revenue is on target to exceed 2015 by 48 percent, said founding farmer and manager Arlene Jones.
Most of that goes to the growers, she said. “Seventy percent of our total revenue is cost of goods sold, which equates to direct funds back to our growers and their family incomes.”
Diversity and Development
One set of growers that Sprout buys from is the Agua Gorda Cooperative of Hispanic farmers out of Long Prairie. Agua Gorda’s sales to Sprout are important, said Jaime Villalaz, business development specialist with the statewide Latino Economic Development Center (LEDC) based in St. Paul.
“Sprout pays really good prices, transportation costs are lower, and the warehouse and cold storage space Sprout has are big benefits,” he said. Agua Gorda also plans to use new commercial kitchen space at Sprout’s headquarters in Little Falls to make value-added products like salsa.
Agua Gorda members first started farming on community garden plots at a local church, which expanded to welcome and include them. It was part of civic efforts to build cultural connections in a town that has grown from 1 percent Hispanic population in 1990 to one-third today.
Most came from the same Agua Gorda community in the Mexican state of Michoacán to work at a local meat processing plan. Now many are building businesses in Long Prairie alongside their Anglo neighbors.
The Agua Gorda Cooperative recently purchased a 54-acre parcel on the edge of town next to five certified-organic acres it leases from the city. In addition to Sprout, Agua Gorda supplies a tamale factory in Minneapolis-St. Paul with 45,000 pounds of tomatillos each year. It has also joined the larger Shared Ground Farmers Cooperative, which supplies Twin Cities’ restaurants and cooperative grocery stores.
The growth of farm enterprises like Agua Gorda feeds many other parts of the regional food system Region Five is working to build for community and economic stimulus.
Three hospital systems in the area, for example, now provide weekly boxes of local produce to food insecure families on a prescription basis. The hospital systems source the fresh produce through Sprout. The fresh food prescriptions add to the sales picture that is helping new food and farming businesses in the region start and grow.
Another bright spot in the sales picture is Sprout’s new Growers and Makers Marketplace.
The indoor market brings art vendors together with farm and food vendors. Local artists are also part of a team working to develop the market into a community gathering place, said painter Heidi Jeub.
“We want to do something authentic for the community that really brings people in,” she said. Music, classes, and cultural events are already underway.
Many of the families receiving fresh food prescriptions pick up their Rx boxes at the Growers and Makers Marketplace. While there, they learn about nutrition and cooking with on-site classes plus interaction with farmers.
“Peeling carrots with these kids and cooking whole and wholesome food is one of the greatest rewards for all the work it took to get here,” said Sprout manager Arlene Jones.
Five years in, Region Five is meeting many of its Resilient Region objectives. They range from healthier diets to fuel local children’s success in school to fresh paint on neglected Main Street buildings and new options for making a living in farming.
Perhaps even more significant is the faith and motivation that’s growing across the region as successes like Smude Sunflower Oil and the Agua Gorda Cooperative grow. Tom Smude, for example, now has five neighbor farms producing sunflowers for his growing business. Production is up to 800 acres now from a start of 30 acres in 2011.
Brainerd city councilman Chip Borkenhagen said the proof for him is in the community spirit that’s shining stronger than he’s ever seen it. “You can’t quantify it. You can’t financially translate it,” he said. “It’s just something you feel in the air, and goldarnit I’m feeling it!”
Good Food Economy Digest
Fishing Communities Find Economic Power Doing Business Together
People building strong places with local and regional food
Good Food: Healthy, green, fair, and affordable
In This EditionWe go to southwestern Oregon, where six port communities across three counties are building new regional wealth with more local links in seafood supply chains.
The Southwestern Oregon Food Systems Collaborative is using a new economic development framework called WealthWorks. It offers a process for developing “value chain” strategies that deliver what buyers want and what communities need. Check out the WealthWorks Northwest program that regional funder and mentor Rural Development Initiatives has put together.
Seven years ago, Aaron Longton and a few fellow commercial fishermen from the small community of Port Orford, on Oregon’s rocky southwestern coast, struck out on their own. They pushed off from the global commodity markets they had supplied for years, for less and less return. They set sail for new markets on the promise of an emerging direct-to-consumer business model called Community Supported Fisheries.
The move to offer consumers advance shares of their local catch was not just for economic survival. The founders of Port Orford Sustainable Seafood were also motivated by their belief that building a brighter future for their families and neighbors means finding more productive ways to live off their land and the sea beside it.
“This is what we have to work with,” Longton said of the rolling waves and abundant stocks of tuna, Dungeness crab, salmon, and more under his boat. “We’re adjacent to this great resource. We need to take that and make it work for us.”
His words are like a mission statement for a larger group of businesses, nonprofits, and institutions in the area that are taking a new and radical approach to this challenge. They aim to build more community wealth from the region’s rich natural resources. Their strategy is to build new locally owned, mutual-aid supply chains across great market gaps that have formed in the wake of the region’s near-total focus on global commodity exports.
The Southwestern Oregon Food Systems Collaborative unites six port communities across Oregon’s southernmost counties: Coos, Curry, and Douglas. The “value chain” approach it is taking to economic development is showing signs of success in a region still reeling from the collapse of its timber industry. The approach also shows real potential for transitioning so many other, mostly rural places now caught between past economies of resource extraction and future economies of resource conservation.
The Collaborative formed when Rural Development Initiatives, an Oregon-based nonprofit serving the Pacific Northwest, invited communities in the state to explore economic development opportunities using a new framework called WealthWorks.
It is a process for identifying specific market-driven opportunities, exploring the many supply chain links needed to meet them, and building the business-to-business relationships that can bring the benefits home. Historical commodity approaches basically converted the region’s timber, agriculture, and fisheries into financial capital, which mostly left the area. This approach values and targets other types of wealth-building capital as well, such as the natural capital of sustainable fish populations and the intellectual capital in new products and processes.
The group confirmed that a top-level value chain opportunity for coastal southwestern Oregon is surging demand for local, sustainably caught, and premium-processed seafood.
“We’re exploring a couple dozen different value chains within seafood,” said Michelle Martin. She is director of economic development at Neighborworks Umpqua, the Collaborative’s coordinating agency. It won a two-year “value chain construction” grant from Rural Development Initiatives.
“Each boat size, each species etc. has a different value chain,” she said.
Each also faces big challenges given the current industry structure. The mid-size range of seafood businesses is gone. The next generation of entrepreneurs, innovation, and investment is stranded. Growing demand for food that comes with fresher taste and less damage goes unmet. Deliberate development of supply chains across this middle, which serve people and places better, is what’s new and radical about the value chain approach.
Oregon’s industry landed 292 million pounds of seafood in 2014 worth $158 million. More than 80 percent is exported, however, and most of that is sold to just a couple of large international buyers. The catch travels frozen to places like China for processing before working its way back to Oregon dinner plates.
Cold storage, processing, distribution and other infrastructure that locals need to serve different market channels is now over-sized, far away, or falling apart. New opportunities that languish as a result range from sashimi grade tuna and salmon for Asian and domestic markets to local fish for tourism, an equally important regional industry. In the meantime, many essential facilities, like the public Port of Port Orford, from which Aaron Longton and crew operate, tread water.
“If we can’t keep this dock running, the collateral damage to fishermen here would be huge,” said office manager Katie Dougherty. As much as one third of the work force around Port Orford (pop. 1,200) is directly involved in commercial fishing, with a catch worth upwards of $3 million each year.
“It’s pretty dynamic how losing this dock would affect families and other businesses here,” Dougherty said.
It looks now, however, that the Port of Port Orford will not only stay afloat but also expand its services. Projections include 40 new jobs along with more revenue needed to secure the dock for the local seafood economy. The shift came about in part after the Collaborative introduced port authorities to some new entrepreneurial uses that an earlier plan, designed around the current industry structure, had not contemplated.
“We have more requests for space than we can fill right now,” office manager Dougherty said. Nine businesses are in line to locate at the planned 20,000 square-foot multi-use dock facility. It is twice the size of the port’s older cannery and will include new retail, tourism, and smaller-scale processing space in addition to meeting the growth needs of an existing commodity-market anchor tenant.
“(The Collaborative) put us in touch with these people and helped us understand what they want and what they need,” she said.
Newcomers include two fresh fish retailers and one entrepreneur who needs the unique access to fresh seawater the port provides for live fish sales. The company is already on site gearing up for marketing live sea urchins and cultivating the sea vegetable dulse (aka “bacon-flavored seaweed”) using a new aquaculture process patented by Oregon State University.
Port Orford is just one place where value chain thinking is beginning to shift local seafood industry reality. Many connections are still subtle yet groundbreaking in terms of who is talking together and how they are finding shared interest in addressing pain points and exploring different business directions.
Collaborative member Rick Goche said he sees it in new business activity and more people getting involved. Goche is a local fisherman and chair of the Oregon Albacore Commission. His Sacred Sea Tuna company has helped pioneer a domestic sales direction for the state’s tuna sector. “We went from just 5 percent to North American markets six years ago to 55 percent today” he said.
The Collaborative is bringing more people, ideas, and investment to the table, Goche said. “I’m seeing faces I don’t normally see.”
Finding local business solutions to local business problems is one of the ways people see the Collaborative working for them. An example is a new business now solving a major problem that fishermen, port operators, and seafood processors in the region all share.
“There is nowhere to take fish waste,” said Shaun Gibbs, economic development specialist with the South Coast Development Council.
One port faced crushing costs of investing in refrigeration just to hold mounting fish waste in addition to transportation and disposal costs. Another port was dumping its fish waste at sea. Now the startup company SeaCoast Composting takes fish waste from ports and processors in the area. It is developing a unique, value-added blend that also includes local dairy and forestry waste.
“I was excited to learn about this seafood group,” said owner-operator David Boyer. “They started connecting me. It’s pretty much a hub.”
The lack of cold storage is another big need spurring new value-chain conversations. It came up during “dockside discussions” the Collaborative held up and down the coast. The input has prompted local ports to take a closer look at investing in cold storage to serve an emerging set of customers.
“They’ve asked us to research demand in more detail,” said Shaun Gibbs with the South Coast Development Council.
Tuna commissioner Rick Goche believes the region could build a new generation of seafood businesses with cold storage investments. “The market for sashimi loins, for example, is growing in the U.S. But it’s slow because of limitations in refrigeration.”
“What’s needed is holding temperatures of -30 to -40 degrees,” he said. “Access to that kind of freezer capacity will attract people from a lot of different industries and a lot of different food products.”
How all of this builds lasting community wealth is something that Aaron Longton thinks about back in Port Orford.
“Having our port involved now is real positive,” he said of the new dock design and shift in business development perspective. It is opening opportunities in tourism and for fishermen to explore a business world beyond commodity markets.
Making that transition is difficult, he said. “Most fishermen are so removed from the market. They’re reliant on big buyers and have no relationship with the consumer on the other end.”
The middle ground is stirring though, he said.
The value chain work is connecting area businesses that have the potential to go farther together. It is also connecting with other assets like the “jewel of a marine reserve we have here in Port Orford.” He’s talking about the Redfish Rocks marine reserve, which his community worked with regulators to create.
The Port Orford Ocean Resource Team represents the grassroots action that made it happen. It is an example of fishermen and local residents stepping up to protect threatened breeding grounds for the future fishery rather than fighting government for the present short-term fishery.
Ultimately it is all connected, Longton said, with consumers and markets that are beginning to understand that “who fishes matters, and where you put your dollars when you buy fish matters.”
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