Organic, local, sustainable food seems to be a growing trend in America, but it’s also a trend that almost inevitably means higher prices. When most people think of microfinance, likely what comes to mind are images of the developing world: very poor, rural people with nothing to offer as collateral receiving loans that might be considered ludicrously small someplace like Boulder. In a scaled economy, however, a microloan might be just a few grand given to a local business, and it might make all the difference.
“A lot of times, just a little bit of money can help someone be successful and sustainable,” says Paul McLean, vice president of purchasing for Whole Foods Market’s Rocky Mountain region. Vendors are often turned down when they apply for a traditional bank loan if they are unable to show several years of profitability. “One of the loans I’m working on right now is for a vendor who needs new roofs on their greenhouses, but they just don’t have the funds to fix them,” McLean says.
“Not so many banks love lending to farmers because of the volatility of our business; we might get a hail storm and be totally wiped out,” says Anne Cure, owner of Cure Organic Farm, on the east edge of Boulder. “It’s like putting all your eggs in one basket, then watching someone drop them out the window; you’re not going to get paid because there’s nothing to sell. That risk is just inherent in farming. We lease all of the land we farm on; we don’t own anything.”
Still, there is big money in organic farming. According to the 2011 Organic Trade Association’s Industry Survey, organic food and beverages accounted for $26.7 billion in sales nationally in 2010, up from $1 billion in 1990. There has been a 7.7 percent total growth over 2009 sales, with fruits and vegetables leading the growth at an almost 12 percent increase.
To maintain its competitive edge, Whole Foods Market, which has become synonymous with high-end organic food, offers struggling local suppliers something called the Local Producer Loan Program (LPLP), with which the company props up local sustainable businesses by offering loans conceivably as low as a few thousand dollars (to date the smallest loan is $18,000) and ranging up to $100,000.
Relatively new, burdened by little debt and buoyed by popularity, Whole Foods seems to be forcing traditional grocery stores to change their appearances and marketing or lose customers. As strong as the industry seems, however, organics still represent only 4 percent of the total domestic grocery economy of nearly $563 billion as of 2010, says data collected by the Food Marketing Institute.
“For John [Mackey, founder of Whole Foods] it was really important that we put this program in place to help our local partners,” McLean says. “When the economy was getting really difficult back there in 2007 and 2008, John was like ‘Man, we’ve got to do something for these local vendors. They want to get on their feet, they’re important to the local community, and they’re important to Whole Foods.’”
Sometimes a loan can be for something as simple as a truck to take food to the market or to a distributor, a ramp for trucks to pull up for loading, or a new greenhouse roof. All of the LPLP loans are set at 5 percent interest, and the payment plan is worked out to fit the business plan of the vendor, not the store.
“If they need seven years to pay off a loan, great, as long as it helps them continue to grow as a local producer or manufacturer of food here in Colorado,” McLean says.
Loans aren’t only reserved for farm owners. Pangea Organics, an award-winning organic skincare product company based in Boulder, received a small loan that helped founder Joshua Onysko move from making organic soaps in his garage to selling his products in 18 countries around the world and Whole Foods stores throughout the U.S. Pangea is now reportedly one of the fastest-growing organic skin care product lines in the world.
Good health and strong profits may not be the sole ethos of the locally produced, organic market. A strong sense of stewardship also seems to run through many of these businesses. Pangea, for example, helps non-governmental organizations like Women for Women International — an organization devoted to educating and empowering women affected by conflict — runs its offices exclusively on wind-generated power, and supports 45,000 acres of organic farmland worldwide.
Another LPLP loan recipient, Full Circle Farms, a farm cooperative effort, has partnered with Boulder County Open Space and other conservation organizations around the nation and in Mexico to help local farmers from going under by offering “artisan groceries” delivered to the doorstep. The farm co-op supports what it calls the “Good Food Life,” organic farming practices that connect the consumer to the landscape through conservation of open space, protecting wildlife and keeping money in the local community. Ideally, it will be the kind of model that engages in a pay-it-forward principle that sustains these businesses and others popping up in their communities.