The big return: Area companies are investing in local produce to grow the economy and profits

Daily Hampshire Gazette, January 22, 2014. By Richie Davis.

Three homegrown food purveyors are changing the way they do business.

The three — Real Pickles, Artisan Beverage Cooperative and New England Natural Bakers — may all have slightly different objectives and techniques for putting a new twist on the way they do business, but they’re all examples of a trend likely to continue in the coming year.

It’s an innovative model for growing the local economy, as well as growing more food locally in a way that sinks deeper roots in the region.

“CISA has been saying that the next step for the committed consumer is to invest in local products, but there are not a lot of options for doing that,” said Sam Stegemen of Deerfield-based Community Involved in Supporting Agriculture and PV Grows, a collaborative that’s been tilling the soil for local investment in the food economy.

PV Grows oversees a $750,000 loan fund that’s helped a Hadley malt operation and a distributor for farms around the region, and plans to unveil a new investment fund this year that would let people with $1,000 or more to provide capital for fledgling farm and food initiatives.

Working with the Slow Money PV Chapter, which is also dedicated to funneling investors to help the local food system, PV Grows will present a Pioneer Valley Entrepreneur Showcase from 4 to 7 p.m. Tuesday at the Hampshire College Red Barn in Amherst, providing examples of how local entrepreneurs like the Artisan Beverage Cooperative have worked to solidify Katalyst Kombucha and Green River Ambrosia in the local economy.

The two decade-old Greenfield businesses, making distinct lines of beverages, had shared facilities, equipment and workers routinely at the Franklin County Community Development Corp. food processing center on Wells Street, but decided to change their ownership structures to merge the two businesses into a single worker-owned co-op.

“We kept two complete sets of books, with charge-backs to one another if, for example, we used the Katalyst Kombucha crew to do bottling, with reimbursements, and it got messier and messier to force that to be two separate things,” said Garth Shaneyfelt, a Green River Ambrosia founder who is now among seven worker-owners of the combined co-op, which expects to sell more than $1 million worth of beverages — one based on a 2,200-year-old, cultured Chinese drink and the other honey-derived mead products — throughout the Pioneer Valley and as far away as Florida.

“It makes a lot of sense,” Shaneyfelt said. “We’re all owners and are directly invested, so these are solid jobs, and we all make the decisions about where we expand and what we’re doing with products. There’s a lot consolidation of beverage companies in general, and natural foods and even small alcohol producers, so we’re able to say, ‘This is something that’s staying here, we’re part of the community. It feels pretty solid.’ ”

The same attitude prevails at Real Pickles, where seven workers are now members of the new worker-owned cooperative formed from what had been a private enterprise. There, the original partners worked with the state Securities Division to raise $500,000 in capital from 77 investors to buy out the business in less than two months — less than one-third of the time allowed, said founder and general manager Dan Rosenberg.

So far, about half of the workers have decided to become owners.

Increasingly, he said, when entrepreneurs start food-related businesses these days — especially here in the Pioneer Valley — they’re driven not solely by a profit motive, but also by wanting “to make some improvements in the world.” They also have a social mission to keep jobs in the community for the long haul and to have workers have a say in how the business is run.

“If someone’s interested in building strong local and regional food economies, a worker cooperative is a great way to keep the business in the community and not ship off jobs,” said Rosenberg, adding that the change has also added to workers’ sense that they’re truly invested in the business.

That’s the case, too, at New England Natural Bakers, now a worker-owned business that’s kept a hierarchical decision-making process that’s inclusive of the 50 employees.

The company, with about $12 million in sales — about 70 percent of which are in private labels for supermarket chains along the Eastern Seaboard — took out a loan of several million dollars to finance a buyout of the 35-year-old business, and has seen “an even greater amount of loyalty” by workers, as demonstrated by their exceeding what Broucek calls standard labor efficiencies.

“The Pioneer Valley has always been a hotbed of natural food companies in various forms, and the folks who have been in the management and ownership level of these kinds of establishments in general have been of the persuasion that wages should be more equal, that workers should have more say to make sure things are fair.”

Stegeman said Tuesday’s showcase — also featuring Amherst’s new All Things Local Cooperative Market, Northampton’s River Valley Market Cooperative, a proposed Mexican restaurant that features local meats and other businesses seeking local investors — will illustrate ways entrepreneurs are finding innovative ways to attract investment from people so committed to the local food economy that they’re literally willing to put their money where their mouths are.

In the case of Santa Oaxaca Taco Shop, for which El Jardin Bakery owner Neftali Duran is seeking alternative financing, the Oaxaca native hopes to set up a limited-menu eatery, possibly with a pub, that’s sustainable, affordable and serves good food with an option for customers to choose local meats and other ingredients

“If people are willing to pay a little extra for local, so be it,” says Duran, who’s thinking such a “realistic, very simple taco shop” serving southern Mexican fare could work in Greenfield, depending on who he’s able to find as a partner.

Such are the possibilities, say food entrepreneurs, to keep it local.

“There are a lot of businesses out there doing what they need to do and saying, ‘We’re not going to get big loans, so we’ll get investors,’” Stegeman said. The classic “fast money” investment story is to sell the business after 10 or so years so investors can get their money back, he said, but that runs counter to the notion of a business with roots in the community, one that will remain true to a principled local-first mission even after the founding owners move on.

Shaneyfelt said that in this area, there’s a lot of support for alternative approaches that are aimed at preserving and strengthening the locally rooted economy.

“It’s a really viable alternate economic structure,” he said of the new Artisan Beverage Cooperative approach. “We’re still doing the capitalism thing, I’m still using Quickbooks, we’re still sending invoices, and taking in money and paying the bills. And we’re working with other cooperatives.”