Local Food Producers Want More Flex With USDA Loans

By Bob Allen

A group of Northern Michigan growers wants to scale-up a local food network that would serve not just farmer's markets, but also schools, restaurants and stores. That's going to take a whole new layer of investment in things like trucks, forklifts and coolers.

Those kinds of loans are not always easy to come by, but they do have the ear of a federal administrator who pumps billions of dollars into new agricultural ventures.

Judith Canales is the new administrator in charge of rural development at the U.S. Department of Agriculture.

She recently spoke to a room full of people at Black Star Farms. She says she's flush with cash from the farm bill, and from energy programs, to spend on local food systems. And she wants to know how the USDA could better serve the needs of local farmers.

"This is the time to speak up," she says. "When you're at that stage of a new program this is how you can mold it in a different way or you can tweak it or improve it."  

She hears back a burst of ideas. But the main thing this group asks of the USDAis for a little more flexiblity... especially about who can qualify for grants and loans.

For instance, Nikki Rothwell and her husband Dan Young started a new business making hard cider. They used a commercial loan to build their cidery north of Suttons Bay. Now they're kind of at a standstill. They'd like a grant to buy some better equipment. But they don't qualify because they don't grow the apples themselves. They buy from neighbors.

But if the USDA could loosen the rules a little bi, Dan Young says he would build the business.

"I would buy packaging equipment without a doubt," he says. "I mean we have, I want to say, rinky-dink bottling equipment. And packaging equipment is pretty expensive. It's pretty complicated machinery."

Dan and Nikki are adding value to apples grown by their neighbors by turning them into a new product. And that's a crucial point in understanding efforts to get local food into local hands.

Typically, when a grower ships his produce out of the area he gets a rock bottom price. And all the next steps as the food moves from field to table add value and take a bigger cut of the profits.

Those advocating local food want to see more of it going into schools, restaurants and stores. But they also want to see more of the profits circulate through the local economy.

That's not going to be easy.

Right now, large scale suppliers mostly bring in food from across the country. So a local network needs a convenient way to make locally grown food more accessible.

And that would be a building, a kind of local food central, where the produce can be cleaned, sorted, packaged and stored.

grows Jim Bardenhagen grows fruits and vegetables up in Leelanau County. Right now he's getting some of his produce into fresh markets. But he doesn't want to have to schlep a bushel of produce to every customer across three counties. He'd rather put his foodstuffs into a central location where, for example, the schools could place an order.

"What they better could do is order their potatoes, apples, cherries and squash from a distributor that takes more product than just one bushel," he says. "And that's what we're seeing. Is we're having trouble getting our hands around that next step and get it funded.

Bardenhagen and others want the USDA to let some of those off-farm business opportunities qualify for start-up grants. And they also want the agency to sweeten the local match.

Typically, the local person has to put up half in cash. They say a 25-percent-to-75-percent split would spur a lot more activity.

Don Coe, owner of Black Star Farms, says in the current economic climate banks are extremely cautious in financing new ventures. So the USDA plays a crucial role.

"What the USDA is able to do is provide some loans of last resort for people who have the vision, the energy, and are making their own personal commitments to businesses," he says. "And so they are an incubator, starting businesses that otherwise would not have the resources to start themselves."

The question is: Can a huge federal agency be nimble enough to support some of the creative ideas of a region with a pretty good idea of where it wants to go.