can alternave financing strategies foster farm and food ......can alternave financing strategies...

CanAlterna*veFinancingStrategiesFosterFarm

andFoodSystemInnova*on?An

ExploratoryComparisonofArizonaandNew

Mexico

By Gary Paul Nabhan, Matthew M. Mars, and Julia Glennon

June 2016

Green Paper #3 Center for Regional Food Studies

University of Arizona

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Introduc*onRecently,scholars,ac0vistsandprac00onershaveunderscoredtheneedforfurtherinvestmentintransi0oningnotjustagriculturebuten0refoodsystemstomoresustainableprac0ces(DeLonge,MilesandCarlisle2016;Pons,LongandPomares2013;U.E.2013;Tasch2009).Manyfarmersandfoodentrepreneurswishtotapintotheemergingpoten0alforAmericancroplandsandlivestockherdstomeetmorelocalizedmarketsthroughdistribu0onandprocessingsystemswithlowercarbonfootprints.Thesepoten0allyre-localize-ablemarketswererecentlyes0matedasbeingashighas90%ofU.S.fooddemand(ZumkehrandCampbell2015).Consequently,earlystagefarmersandfoodentrepreneursareincreasinglyseekingawiderrangeoffundingsourcestoincreasethepropor0onof“locally-producedfood”withrespecttototalfooddemandwithintheircommuni0es.Inresponsetothistrend,foodsystemscholars,communitydevelopmentplannersandfarmersthemselvesaredevelopingagreaterinterestinexaminingtheefficacyofemergentfundingsourcesandnovelblendsoffoodandfarmfinancingstrategieswiththehopeoftechnicallysuppor0ngandcrea0velyfinancingearlystagefarmersandfoodentrepreneurs(Schwartz2013;Wadud2013).Itisclearthatmanyearlystagefarmersarekeenlyinterestedintheeconomicandsocialvalueofpar0cipa0nginthe“localfoodsector”withinthelargerNorthAmericanfoodssystem,eventhoughtheseconceptsremainhotlycontestedandcri0quedinacademia(DePuisandGoodman2005;Gray2013).Nevertheless,manycommuni0eshavedecidedtofocusonthedirectsourcingandmarke0ngoffoodproductswithinaday’sdriveoftheirproduc0onsites.Thesedecisionsarebeingmadebasedonthean0cipatedvalueofcapturingthroughdirectmarke0ngapor0onoffood’sretailvaluethatnowgoestomiddlemen;ofachievingmul0pliereffectswithintheircommuni0es,andofan0cipa0ngthatlocalfoodproduc0onmayleadtoenhancedfoodsecurity,socialconnec0vityandenvironmentalresilience(Heweb2010;Tasch2012).

LasMilpitasFarm,TheCommunityFoodBankofSouthernArizona,Tucson,AZ

Forourpurposes,“localfoodandfarminginnova0ons”areconsideredtobethenovelaswellasthepoten0allyimpacdulandtransferableapproachesbeingini0atedbylocalfoodentrepreneurs,ac0vists,founda0onsandimpactinvestorsandotherstakeholdersthataimtocontributetomoresustainablefoodsystems.Theimpactsofsuchinnova0onsmayrippleoutfarbeyondbenefitstotheviabilityofasinglebusiness,inwaysthats0mulateposi0vefoodsystemschangeatthecommunityandregionallevels.Localfoodentrepreneursincludethoseactorswhooperateindependently-owned(andtypicallysmallerscale)farmsandranches,marketgardens,farmersmarkets,communitysupportedagricultureshares(CSAs),produc0onanddistribu0onhubs,andprocessingsites(e.g.,bakeries,breweries,mills),aswellasotherretailoutlets.Wealsoincludeamonginnovatorstheleadersoffoodbanks,communitykitchens,andschoolandcommunitygardens,mostofwhichoperateunderthemanagementofnon-profitorganiza0ons.

Inthispaper,weexploreseveralestablishedandnovelfundingapproachesbeingpursuedbyentrepreneursopera0ngwithinAZandNMlocalfoodsystems(LFSs).Whilesomeofthesefinancingstrategiesares0lltoo“new”todeterminewhethertheyareanymoreeffec0veinfosteringinnova0onthanwhatconven0onalfinancingoffers,wearguethatearlyaben0ontotheseemergingtrendsisnecessary.Likemanyinnova0onsdescribedattheearlieststagesofdevelopment,theirpoten0alimpactisdifficulttomeasure.Nevertheless,theseac0vi0esmaybedispropor0onatelysignificanttothefutureofLFSsrela0vetothecurrentmagnitudeofinvestmentinthem.

ThePerceivedNeedtoAddressCurrentDilemmasinFoodandFarmFinancingAtfirstglance,theso-called“locavore,”orfoodre-localiza0onmovementappearsinsufficientlystructuredtomeetamoresubstan0alpropor0onoflocalfooddemand,letalonesupportlocalfarmersandfoodproducers.Thispopularimagestemsatleastinpartfromthemovementpresen0ngitselfasanadhoc,decentralized,grassrootsini0a0vethateschewsobtainingfromthegovernmentorfromconven0onalfinancialins0tu0onsthefundsneededforexpansion(Cobb2011).Thereisalsoapresump0onthatmostfoodrelocaliza0onac0vi0esarecurrentlybeingfueledlargelythroughthepersonal(orinherited)wealthofinnovators.Thistruism,whichishardeitherdocumentordismiss,maybemisleadingconsideringnearlyalllocalizedfoodandfarm-basedenterprisesseekstart-upandgrowthcapitalaswellastechnicalandbusinessmanagementsupportfromavarietyofsources(MakowerandFleischer2003;Pons,LongandPomares2013).AsSchwartz(2013,1)hasdocumented,“OnereasonthateconomicdevelopmentinruralAmericalagsbehinditsurbancounterpartisthepersistentlackofventurecapitalforruralentrepreneurs.”Despitetheexpresseddesireofagrowingnumberof“youngagrarians”tojointheranksoflocalfoodandfarmingentrepreneurs,theUSDepartmentofAgriculture(USDA)hasrecentlyindicatedthatthefinancialobstaclesbeingfacedbythoseenteringfoodandfarmingbusinesseshaveneverbeenhigher(USDAERS,2013).Commercialbanksholdapproximately40%ofconven0onalfarmdebtintheUnitedStates,whiletheCongressionally-backedFarmCreditSystem(FCS)holdsanother42.5%(Monke2015).TheFarmServiceAgency(FSA)isathirdconven0onaloutletthatfarmerswholacksufficientcreditsome0mesturntowhenseekingloans.AccordingtoMonke(2015),FSAloansmakeupapproximately2.3%ofthena0onalfarmdebt.Thissta0s0cally-basedoverviewofthena0onalfarmdebtdoesnot,however,takeintoaccountno-interestloansfromrela0vesorfromother,moreunconven0onalsourcesoffinancialsupport(e.g.,crowd-fundingcampaigns).Ourownfieldworkandprofessionalac0vi0esindicatethatfarmersandlocalfoodentrepreneursareincreasingconsideringleveragingunconven0onalsourceswhenstar0ngandgrowingtheirenterprises.Why?Beginningfarmersandotherlocalfoodentrepreneursnowmorethaneverearnlessmoney,dependmoreonothersourcesofincome,receivefewersubsidies,andfacefargreaterobstaclestoaccessingcredit(Ross2013).Furthermore,amongthemorethan1,000membersoftheNa0onalYoungFarmersCoali0onsurveyedin2011,78%ofrespondentsiden0fiedlackofcapital,whichwasformerlyacquiredmostly(some0mesen0rely)fromconven0onalsources,asbeingtheirbiggestchallenge(Shute2011).Unfortunately,libleisknownaboutthekindsofunconven0onalsupportbeingsoughtbythesmall-scalefarmersandearlystagefoodentrepreneurswhoaredrivingthere-localiza0onoffoodsystems.Inthispaper,webegintodescribetheimportanceandaccessibilityofsuchunconven0onalsourcesoffunding(andassociatedlendingmodels)throughacomparisonbetweentheAZandNMLFSs.Difficul0esinaccessingcredithavehadpar0cularlyharshconsequencesforlocalfoodentrepreneurs,especiallythosewhoarenewfarmers.Withthe2008-2011GreatRecession,themarketforfarmcreditaswellasphilanthropicsupportforsustainableagriculturedrama0callydeclined.Surveyresearchhasmorerecentlyfoundthat85%ofallfarmers(bothbeginningandevolving/restructuring)arenowfacinggreaterdifficultyinaccessingcredit,with70%ofsuchrespondentsclaimingthattheircommercialloanrejec0onrateshaverisen(Ross2013).Concurrently,theUSDA’sFarmServiceAgency(FSA),whichyoungfarmershaveomenturnedtoforcreditwhentheprivatesectorfailsthem,recentlyreporteda56%increaseindemandforfarmloanservices.DespitetheU.S.bankingindustryholding$127.4billioninfarmloansin2010,MichaelDimockofRootsofChangeremindsus“thatthecriteriaforsuchloansisfarlessfavorabletosmall,beginningandorganicfarmers”(Pons,LongandPomares2013,11).Unfortunately,thesedifficul0escomeata0mewhen400,000millionacresoffood-producinglandsintheU.S.arelikelytobetransferredtootherownersoverthenexttwodecades(Ross2013).

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Ar*cula*ngaWorkingHypothesistoExplainShiHsinFarmandFoodFinancingWesuggestthattheongoingconstraintsassociatedwithconven0onalfinancingmaybeforcingbeginningfarmersandotherearlystagelocalfoodentrepreneurstobecomefarmoreresourceful,relyingonnovelsourcesofsupporttoadvancetheirstart-upandgrowthac0vi0es.AsSlowMoneyfounderWoodyTasch(2012)hassuggested,beginningfarmersandearlystagelocalfoodentrepreneursarenowexperimen0ngwithfinancestrategiesthat“buildconnec0vityandresilienceintheircommuni0es”andinvolvetheblendingofotherwisedis0nctfundingmechanismsandresources.AsTaschhasobserved,“[localfoodentrepreneursare]comingtogetheracrossfiduciaryboundaries--angelinvestors,mission-relatedinvestors,impactinvestors,[founda0on]programofficers,philanthropists,entrepreneursandfarmers--weareexploringopportuni0esforanewkindofconnec0vityandresilience”(Tasch,2012,3).However,therela0veeffec0venessoftheseandothertypesofalterna0vefundingstrategiesininadvancingandsustaininglocalfoodinnova0onremainsuntested.Concurrentwiththeprecedingemergenceofalterna0vefinancingstrategies,localfoodentrepreneursaremorefrequentlyaligningthemselveswithfoodnon-profitsandgrassrootsalliances.Insomecases,theyarealsoincreasinglypar0cipa0ngin“hybrid”for-profit/non-profitstructuresthroughwhichtheycanaccessabroaderandmorediverserangeofsupportoftheini0a0onandimplementa0onoflocalfoodinnova0ons(Rippon-Butler,etal.2015).Such“hybridity”insocialentrepreneurshipisbeingop0mis0callybutcau0ouslyobservedforthenewopportuni0esitmaybringtoawidersectorofthepublic(Molina2010;ThompsonandDoherty2006).Wediscusssuchhybridityandproviderelevantexamplesfurtherinthepaper.Weproposethatlocalfoodentrepreneursareincreasinglyrecognizinganeedforaccesstoabroadermixofeconomicsupportforthedevelopmentandlong-termprofitabilityandfinancialsustainabilityoflocalfoodenterprises.Ingeneral,thefivesourcesoffinancialsupportlocalfoodentrepreneursaremostlikelytodrawuponbeyondfamilyresourcesare1)philanthropy,2)governmentloansandsubsidies,3)convenBonalloans,4)alternaBve“SlowMoney”-stylefinancing(e.g.s.,crowdfunding,pre-purchased“shares”inproductsorequity,localsocialventurepartners),and5)family-orcommunity-basedmicro-lending(Shuman2000;Tasch2009).

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Here,wehavechosentwoadjacentstatesintheU.S.Southwest,AZandNM,forourcomparisonasapreliminaryscopingofthevalidityofthisproposal.Thisselec0onisbasedonoursensethatdespitetheirmanygeographicsimilari0es(seeTable1),theseneighboringstatesinvolvedifferentpoli0calcondi0onsandformalpoliciesthatshapetheavailabilityoffundingforstart-upsandsubsequentlythetypesoflocalfoodinnova0onthatarepursuedwithin.Weusestate-levelsta0s0csfromeachstateasindicatorstoexploretheextenttowhichfourofthefivesourcesofsupportarebeginningusedbylocalfoodentrepreneurs.Thefimhsource,whichisfamily-orcommunity-basedmicro-lending,isnotoriouslydifficulttotrack(Wadud2013).Thus,weexcludedthissourceoffinancialsupportfromoursetofindicators.

Seedstandatafarmersmarket

Unfortunately,nosingle,readilyavailabledatabaseexiststhatannuallytrackstheamountofsupportallocatedfromeachofthefourfundingsourcesinthetwostates(ortoourknowledgeinanystate).Inordertohelpovercomethislimita0on,wedrawuponadiversesetofdatabasesthatintheaggregatebegintoillustratetheblendingoffundingandotherresourcestosupportlocalfoodentrepreneurshipandinnova0onwithineachstate.Weintendforthisini0alsetofindicatorstoprovisionallyfunc0onasasimplifieddiagnos0ctoini0atecomparisons(Girardin,BockstallerandVanderWerf1999).Wethusencourageothersustainablefoodsystemsscholarstocon0nuallyexpandandrefinethemetricsthatcanreflect,informandsupportlocalfoodsectordevelopmentacrossmanystates,notjustAZandNM.Thefourindicatorsoffinancingpabernsandtrendsoflocalfoodinnova0onarenotfullydevelopedorwidelyusedelsewhere.Accordingly,thereremainshealthyskep0cism,par0cularlywithinbusinessschoolsandconven0onallendingins0tu0ons,abouttherelevancyandefficacyofnon-conven0onalfinancingstrategies.Skep0cismoverthelong-termviabilityofnon-profit/for-profithybridstructuresandsimplecrowd-fundingpladormsinsuppor0ngandsustaininglocalfoodinnova0onispar0cularlystrong(Pons,LongandPomares2013).Tobeclearfromtheonset:wedonotwishtoimplythatnovelfundingapproachesandblendingstrategiesarenecessarilyanylessriskynormoreaccessibleorusefulinandacrosslocalfoodsystemsascomparedtoconven0onalop0ons.Therearealsoobviousdispari0esinaccesstoeconomicandpoli0calsupportthatconstrainorhindereachstate’scapacitytoadvanceself-relianceandfoodsecurityinanecologicalandagriculturalsensewithinthisglobalage(Schuman2000;WilkinsonandPickeb2009).Forexample,inU.S./MexicoborderstatessuchasAZandNM,therela0velypooraccesstostategovernmentalsupportandtofinancialcapitalmaybeamongthemanyreasonsthesestatescon0nuetobeplaguedbyalarminglevelsoffoodinsecurity(seeTable2).

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Table1:GeographicSimilari*esbetweenAZandNM

GeographicalAbribute AZ NM

Yearofstatehood 1912 1912

Sizeinsquaremiles 113,998sq.mi. 121,589sq.mi.

%ofhouseholdsthatspeakalanguageotherthanEnglish

20%ormore 20%ormore

Legalresidentpop.,2010 6,392,017 2,059,179

Ruralpop.,2010&%oftotalpop.

668,977(10.1%) 673,686(33.5%)

Percapitaincomein2008 $34,339 $33,389

Rankinhouseholdfoodinsecurity&childhoodfoodinsecurity,2008

13thworstamongallstates 5thworstamongallstates

Rankinpoverty,2010 2ndpoorestamongallstates 3rdpoorestamongallstates

Povertylevel,2012 18.7% 20.6%

Sources:hbp://www.census.gov/compendia/statab/rankings.html;hbp://www.agcensus.usda.gov/Publica0ons/2012/Full_Report/Census_by_State/.

AppliedResearchMethodologyDrawinguponconceptsfromhumanorganiza0ontheoryandsocialentrepreneurship,(Leadbeater,1997;Molina2010),weaimtoaggregatedatafrommul0plesourcesspecifictoAZandNM.Thesedataprovideabaselinecapableofbeginningtotrackrecenttrendsinfundingfromphilanthropicsources,governmentalagencies,conven0onalfinancingins0tu0ons,andalterna0ve“SlowMoney”-stylefinancingpladorms.(Aswenotedabove,theassessmentofreservoirsofpersonalandheritablewealththatmaygointofoodsystemschangearebeyondthescopeofthispaper.)Wealsoaggregatedatapertainingtofundingtrendsthatmaypoten0allyinfluencelocalfoodinnova0onwithinAZandNMsincethebeginningofthenewmillennium,withapar0cularfocusontheperiodfrom2007through2014,whenbothstateswerestronglyaffectedby“theGreatRecession.”Weundertaketwoanalysesfundamentaltoiden0fyingthepabernsoffundingandinnova0onwithinthelocalfoodsectorsofeachstate.First,weexplorethesourcesandblendingoffundingandotherresourcesthatAZandNMcommuni0esandtheirlocalfoodentrepreneurshavesuccessfullyemployed.Second,weconsiderindicatorsofthecurrentinnova0onsthatmaydiversifyorstrengthenfoodproduc0onanddistribu0onforthebenefitofin-statepopula0ons.Wehaverelieduponbothgovernmentalcompila0onsofsta0s0csanddatacollectedfromonlinesourcestoes0matethenumberofins0tu0onsorbusinessesinvolvedinapar0cularoffundingop0onand/ortypeofentrepreneurialinnova0on.BecauseInternetsearchescanbeunreliable,wehavemadeeffortstoverifyorcorroboratedatafirstfoundonlinethroughin-person,telephone-and/oremail-basedcommunica0onswithrepresenta0vesofthedatasources.Thesetofindicatorsusedhereisprovisional,andnotnecessarilycomprehensiveoridealformonitoringlocalfoodsectorinnova0onsineverystateorcommunity.However,thedatacontainedwithinthesetofindicatorsarereadilyavailableon-lineandcanbefurtherrefinedinsubsequentstudiesthroughanitera0veprocess.Ratherthanbeingthe“lastword”onindicatorsforfoodsystemsinnova0onacrossthecountry,wefocusonAZandNMasapilotcasetoilluminateandbegintoillustratetheotherwiseoverlookedtrendofadvancinglocalfoodinnova0onthroughtheblendingoffundingandotherresources.Ingeneral,thedevelopmentofregionally-basedstandardizedmetricssuchasthatwhichwehavebeguntodevelopherehavethepoten0altohelplocalfoodentrepreneursandcommunityleadersstrategicallyleveragefundingopportuni0eswithinthespecificcontextoftheircommuni0es,states,andregions.

Table2:FoodInsecurityperTotalPopula7oninAZandNMHousehold Food Insecurity

2005-2007 2008-2010 2011-2013

AZ 12.0% 15.3% 15.6%

% change in AZ - +27.0% +20.0%

NM 15.0% 15.4% 13.2%

% change in NM - +26.0% -14.0%

Source:hbp://www.ers.usda.gov/topics/food-nutri0on-assistance/food-security-in-the-us/key-sta0s0cs-graphics.aspx#trends,HouseholdFoodSecurityintheUnitedStatesin2013.

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ResultsRankingAZandNM’sCurrentAgriculturalProduc*vityWithregardtofarmfinanceindicatorsofsuccessinagriculturalproduc0on,bothAZandNMwerein2013situatedinthemidtolower0erofallstateswithregardtothestatewidegrossreceiptsoffarms(USDAERS,2015).Specifically,AZwasranked32ndandNM34th.Table3providesfurtherdetailonthepercentagesoftotalagriculturalsalesbyproductcategory..

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Table3:PercentagesofTotalAgriculturalSalesbyProduct

Category AZ 2007 AZ 2013 NM 2007 NM 2013

Dried grains, legumes, & oilseeds

3.6% Data withheld 6.1%

4.9%

Vegetables, root crops, & melons

26.8%

20.5%

4.1%

3.8%

Livestock & poultry products

40.9%

44.3%

74.6%

75.8%

Fruit, nuts, & berries

2.9% Data withheld 4.9%

4.3%

Aquaculture 0.1%

0.1%

0.1%

0.3%

Note:Non-foodproduct-typesnotincludedinTable4.Sources:hbp://www.agcensus.usda.gov/Publica0ons/2007/Full_Report/Census_by_State/;hbp://www.agcensus.usda.gov/Publica0ons/2012/Full_Report/Census_by_State/.

Despitesignificantdifferencesinthebuyingpoweroftheconsumerbaseineachstate,Arizona’s2013cashreceiptsfromfarming($4,492,331,000)arenotmuchmorethanthoseofNM($3,962,026,000).(USDAERS,2015).Moreover,bothstateshaveremainedstableintermsofoverallfoodproduc0onwhenaccoun0ngforinfla0oneffectscausedbytheGreatRecession(seeTable4).Thisdifferenceincashreceiptsbecomesmuchmorepronounced,however,whenconsideringtheamountofdollarsgeneratedperagriculturalacreineachstate.Specifically,AZgenerates$173pereachofits26millionagriculturalacres,whileNMgeneratesonly$91pereachofits43millionsuchacres.Andyet,NM’sagriculturalproduc0vitypercapitais$1,924,whileAZproducesjust$702percapita.Asiscommoninotherstates,thereareasmanykindsoffoodproductsexportedfromAZandNMasthereareimported.ArizonaandNMhavealsorecentlyshownmodestfoodyieldincreasesperacre,butdiminishedacreagesinfoodproduc0on.Overall,bothAZandNMfoodsystemshave,todate,beenriddledmorebysocioeconomicthanenvironmentalconstraints.

IndicatorsofPoten*alforInvestmentInFoodSystemsWithintheStateBymostindicators,AZexhibitsagreateruseofentrepreneurialstrategiesandalterna0veSlowMoney-stylefundingoflocalfoodandfarmingprojectsthandoesNM(seeTable5).AccordingtotheKauffmanIndexofEntrepreneurialAc0vity(Fairlie,2012),AZwas0edfor9thinentrepreneurialac0vitywitha35%indexra0ngbetweentheyears1999and2001.Arizonaraiseditsra0ngsto44%in2009-2011tobe0edwithCaliforniaforthehighestra0ngintermsofinnova0veac0vi0esandthenumberofnewbusinessstart-upsregardlessofsector.Moreover,AZhad520startupsper100,000adultresidents,whichwasahigherra0othanthesecond-rankedCaliforniaandTexas.Addi0onally,theMetroPhoenixareawas0edforsecondinentrepreneurialac0vityamongthe15largestmetroareasin2011.NewMexicowasrankedthirdwitha41%indexin1999-2001.However,thisindexra0ngdroppedto28%in2009-2011,which0edtheStateforfimhinentrepreneurialac0vity.Withregardtotheentrepreneurialgrowthandstabilityofthelocalfoodsectorswithineachstate,theNa0onalRestaurantAssocia0onhasplacedAZintheleadamongstatesfor2015restaurantsales($11.5billion)andrestaurantjobs(273,700).However,NMisnotincludedamongthetopfivestateswithitsmeager$3.3billioninsalesand87,000injobs.Also,AZ’sfoodandbeveragesalesinrestaurantsarecurrentlyalmost3.50meshigherthanNM’s(Restaurant.org2015;TucsonBusinessLeadsandInforma0on2015),whichisnotsurprisinggiventhatAZhasroughlythree0mesthenumberofrestaurantloca0onsasdoesNM(9,024vs.3,265).Tosomeextent,thesesharpdifferencesmaybeabributedtotherespec0vepopula0onsizeofeachstate,aswealludedtoearlier.Addi0onally,AZabractsahigherleveloftourismbecauseoftheprominenceoftheGrandCanyon,na0onally-ratedcollegiatebowlfootballgames,professionalathle0cevents,andsoon.Unfortunately,theentrepreneurialspiritwithintheAZlocalfoodsectorhasnotbeenmatchedbycharitablegiving(seeTable5).Specifically,AZhasdismalrecordsincharitablegivingbyindividuals,aswellasinthepar0cipa0onofitsfounda0onsandcoali0onsinfundingagriculture,aswellasfoodandnutri0onalhealthprojects.Betweenthetwostates,onlyNM’sMaxandAnnaLevinsonFounda0onislistedasamongthecountry’sfimymostac0vefounda0onsingrant-makersaccelera0ngposi0vechangeinlocalfoodsectors(MaskowerandFleischer2003).Curiously,AZ’sonlyadvantageoverNMistheestablishmentofthesecondstate-levelSocialVenturePartnersorganiza0oninthecountryin1999,whichhascontributedmorethan$3.9milliontooverahundrednon-profitsinthestate.WhileArizonanowhastwochaptersofsuchsocialventureinvestors,nonecurrentlyexistinNM.

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Table4:FoodProduc7onProfilesofAZandNMMarket value AZ 2007 AZ 2012 NM 2007 NM 2012

Total sales pre-inflation adjustment

$3,234,552,000 $3,732,113,000 $2,175,080,000 $2,550,147,000

Total sales adjusted to 2012 inflation rate

$3,581,685,000 $3,732,113,000

$2,408,510,180 $2,550,147,000

Source:USDAEconomicResearchService.2015.FarmincomeandwealthstaBsBcs.[on-line].RetrievedSeptember1,2015fromhbp://www.ers.usda.gov/data-products/farm-income-and-wealth-sta0s0cs/annual-cash-receipts-by-commodity.aspx#Pd052ce7ef5c141888760b4bd38125566_2_16iT0R0x3.

ArizonalocalfoodentrepreneurshavebeguntouseSlowMoney-stylefundingstrategiessuchascrowd-fundingthroughsocialmediapladormsfarmorethantheirNMcounterparts.OneindicatorofthisdifferenceisthegreateruseofKickstarter,IndieGo-go,andBarnraisertosupportfoodandfarmprojectsbyAZci0zensthanthoseinNM(seeTable6).Forexample,Arizonanshaveabempted238projectsonKickstarter,whereasNewMexicanshaveonlyabempted55throughJanuary,2015.Evenwhennormalizingthesedatatoaccountforthepopula0ondifferencebetweenthetwostates,thenumbersofabemptedAZKickstarterprojectsarethree-foldthatofsuchprojectsabemptedinNM.Whiletheemergentnatureofthesetrendslimitstheabilitytoconductsta0s0calanalysis,theunderlyingdataarenonethelessworthyoftracking.

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Table5:StateRankingsandAc7vityinCharitableGiving,EntrepreneurialAc7vityandCreditUnionPresence

State

Rank in charitable

giving, 2014

Rank in entrepreneuri

al activity, 1999-2001 &

2009-2011

Rank in restaurant job

& sales growth, in 2014-2015

Cities ranked in 150 best

for business, 2014

Rank in sustain. ag. & food systems

funding agencies

Credit unions & estimated

members

AZ 2nd worst 9th to 1st best 1st 8 Worst (no agencies)

62 unions,1.4-1.5 million

members

NM 5th worst 3rd to 5th best not in top 5 1 Low (2 agencies)

53 unions, .5-.6 million

membersSources:DatagatheredfromKaufmanIns0tute,SustainableAgandFoodSystemsFunders,cardreport.com,Arizona.coop.com,EnvironmentalGrantMakersAssocia0onandNa0onalRestaurantAssocia0on,throughtheirwebsites,reportsorpersonalcommunica0ons.

Table6:FoodandFarm-RelatedKickstarterProjectsAZ successful projects, 2010-2014

AZ live projects, January 2015

NM successful projects, 2010-2014

NM live projects, January 2015

17 value-added food product micro-enterprises

3 value-added food product micro-enterprises

3 value-added food product micro-enterprises

1 value-added food product micro-enterprises

13 restaurants & micro-breweries

13 restaurants & micro-breweries

5 restaurants & micro-breweries

2 restaurants & micro-breweries

3 festivals- 1 greenhouse 1 farm project

1 seed school- 2 cookbooks -

1 gardening proto-type- - -

1 eco-ranch non-profit- - -

1 community garden- - -

1 truck mobile ag project- - -

Source:hbps://www.kickstarter.com/

Arizonalocalfoodentrepreneursarehighlyengagedintrackingalterna0vefoodandfinancingstrategiesthroughdiscussionsandini0a0vesconvenedbynon-profitorganiza0onssuchas“SlowMoney.”(K.Bahr,personalcommunica0ons,January2,2015.Regardless,theabemptsbyAZandNMlocalfoodentrepreneurstogainfundingthroughSlow-Moneystrategieshavethusfartranslatedtoonlyafewactualinvestmentsinfoodbusinesses.Specifically,AZhadtwolocalfoodventures(DoubleCheckRanchandHaydenFlourMills)includedamongthena0onalfinalistsfordonorsupportthroughtheSlowMoneyEntrepreneurs’Showcase,whileNMhadnofinalists.HaydenFlourMills,whichislocatedinthePhoenix,AZmetroplexarea,wasawardedtheSlowMoneyPeople’sChoicefavoriteforfundingonthebasisoftheamountofsocialmediasupportithadforitsnewfoodventure.Nevertheless,ofthe2,900na0onalSlowMoneydonorsthroughDecember2014,3%werefromNMwhileonly1%werefromAZ.WhileAZhas948individualsontheSlowMoneymailinglistcomparedtoNM’s441,AZs0lllagsbehindNMindonorsameradjus0ngfordifferencesinpopula0onsize(148vs.210subscrip0onsper1,000,000residents).ThisgreaterengagementofNMdonors(asopposedtoentrepreneurs)maybeinpartduetothefactthatSlowMoney’sna0onalopera0onswereheadquarteredinNMforseveralyearsandoneofitsna0onalconferenceswasheldinSantaFe.Incidentally,AZdidhaveslightlymorecontributors(five)tothe2014BeetCoincrowdfundingexperimentthandidNM(four).Ourexplora0onhasalsorevealedanemergingpabernofforminghybridizedfor-profit/non-profitstructuresthatblendsocialvalueswithprofit-drivenentrepreneurialstrategiesforadvancingfoodsystemschange.Inpar0cular,localfoodentrepreneursareincreasinglydevelopingand/orbenefi0ngfromhybridizedfor-profit/non-profitorganiza0onsthatenableaccesstofundingfromanever-wideningmixofpladorms,venuesandarrangements.ThisemergingpabernwasespeciallyevidentinAZ(seeTable7).Indeed,AZcanbeconsideredaleaderinlocalfoodfundinginnova0on,asindicatedbybeingoneofthefewstateswithanannualstatewideFoodandFarmFinanceForum,aswellasservingasthehostofoneofthebestabendedannualconferencesoftheBusinessAllianceforLivingLocalEconomies(BALLE).Itssecondlargestcity,Tucson,hasrecentlybeendesignatedasthefirstUNESCOCityofGastronomynorthofMexico,anhonorthatfoodac0vistssoughttos0mulatemoreinvestmentinitsfoodeconomy.WhilethislistprovidedinTable7maynotbecomprehensiveandcriteriaforinclusionareprovisional,weneverthelessfeelthatthesestructuresareripeforanalysisasfuturecasestudies.

10

Table7:HybridorComplementaryFor-Profit/Non-ProfitStructuresDiablo Burger & Diablo Trust Taos County Economic Development Commission Mobile

Matanza Meat Processing, Community Kitchen, Taos Land Trust & New Mexico Acequia Assoc.

Local Alternative, Inc., Leupp Family Farms & SEDI Regional Food Production and Security Project

Plants of the Southwest and the Kitchen at Plants of the Southwest

Hayden Flour Mills, Native Seeds/SEARCH, Barrio Bread

The Cooking Post of the Pueblo of Santa Ana and Tamaya Foods

Borderlands Restoration Nursery & Borderland Habitat Network Earth Care Youth Corps

La Montanita Co-op, Permaculture Credit Union & MoGro Mobile Food Service

Avalon Gardens, Food for Ascencion Café and Global Media

Mixing Bowl Community Kitchen & South Albuquerque Economic Development Center

Tohono O’odham Community Action & Desert Rain Cafe

-

Community Food Bank of Southern Arizona and Fed by Threads Clothing

-

Ishakashita Refugee Network, 7 farms, food and crafts sales

-

Borderland Food Bank, WIGWAM Market on the Move

-

Sources:InterviewsdonebyUniversityofArizonaSouthwestCenterstaffattheArizonaFoodandFarmFinanceForum,QuiviraCoali0on,SlowMoney,SlowFoodandNewMexicanOrganicFarmAllianceconferences,andar0clesinEdibleBajaArizona,EdiblePhoenixandEdibleSantaFe,2013-2015

11

IndicatorsofRecentLocalFoodInnova*onsinAZandNMHowdotheemergingpabernsofblendingthefoursourcesoffunding(alterna0ve,conven0onal,governmental,philanthropic)poten0allyinfluencelocalfoodinnova0oninonestateversusanother?Today,itappearsthatearlystagefarmersandfoodentrepreneursinruralareasareworkingharderthaneverbeforetoestablishmarketsandoverallsynergywithresidentsinnearbymetroareas.Whileourfocusbelowison“rural”foodproduc0on,itisomendonebyearlystagefarmersonorjustbeyondthefringesofmetroareas,inordertobebercapturesuchsynergies,assomeofthefollowingsta0s0csandexamplesindicate.IndicatorsofRuralFoodProducBonInnovaBon.Thereisampleexperimenta0onbylocalfoodentrepreneursinAZandNM,especiallyfarmersandranchers,whoaimtoreachagreaternumberofcustomerswithlike-mindedvaluesthroughthepromo0onoftheirfoodproductsusingeco-labelsandthird-party“bestprac0ce”cer0fica0ons.Withregardtoinnova0onsinruralfoodsproduc0onandmarke0ngthatcouldbetracked,NMclearlyexcelsineveryindicatorofcer0fiedorganicproduc0on(i.e.,plant,animal,dairy).Also,theNMDepartmentofAgricultureemployedstate-fundedorganicinspectorswellbeforethestatetransi0onedtousingUSDA/NOP-accreditedorganicstandards,whiletheAZDepartmentofAgriculturehasneveremployeditsownorganicinspectors.Arizonalocalfoodentrepreneursfavorinvestmentsin“cer0fiednaturallygrown”eco-labelingthatisfacilitatedthroughpeer-to-peerinspectorsoverthemoreexpensiveorganiccer0fica0onprocessthatismonitoredbystate-and/orfederally-authorizedinspectors.Also,AZfarmersandrancherssome0mesoffsetthecostsofeco-labelingen0relybyemphasizingdirectmarke0ngthroughlocalharvest.org,wheretheycanemphasizetheirownmixofcultural,ecological,andethicalprac0ces.ButasTable6suggests,AZisgrowinginorganiccropandforageacreageeventhoughthenumberofaccreditedopera0onshasbeendeclining.NewMexico,however,hasseenadeclineincer0fiednaturallygrownapplica0ons,anditsfarmersandranchersusetheeco-labelfarlessthantheirAZcounterparts.Wearecarefultonotethatthepor0onofcer0fiedUSDAorganicacreageinAZandNMrepresentsaverysmallofthetotalagriculturalacreageinbothstates.Moreover,theamountofcer0fiedUSDAorganicacreageincreasedbyaverymodest.1%inbothstatesbetweentheperiodsof2008-2010and2012-2014.Thus,cer0fiedorganicfarmingandranchingcontributesverylibletothetotalagriculturalproduc0oninbothAZandNM.Regardless,differencesbetweenthetwostatespertainingtolocalfoodinnova0onpabernsremainevident.

Inshort,weseeevidenceofAZandNMbeingondivergentfinancingtrajectoriesspecifictofoodandfarmstart-upsandinnova0ons.Thisapparentdivergenceraisestheques0on:Isthereanyindica0onthatoneortheotherofthesetrajectoriesmoreeffec0velymovesthe“needle”offoodsystemschange?Whilewedonotpretendtodiscerndirectcausa0on,wewishtoseewhetherdis0nc0vepabernscanbeiden0fiedthatcanlatercomeundercloserscru0ny.

ChileentrepreneursataNewMexicofoodfesBval

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Table6:Innova7oninOrganicCropandForageAc7vi7es AZ

2008-2010AZ

2012-2014%

changeNM

2008-2010NM

2012-2014%

changeOrganic farm & ranch activities

77 56 -27.3% 197 215 +09.1%

Certified USDA organic acreage 29,248

40,188

+37.4%

359,310

365,719

+01.8%

Percentage of total agricultural acreage that is certified USDA organic acreage

.1% .2% .1% .8% .9% .1%

Certified natural grown applications 13 17 +30.8% 12 7 -41.7%

Animal-welfare approved farms - 1 - - 9 -American Grassfed Association certified ranches - 1 - - 6 -

Sources:Datagatheredfromwww.localharvest.org;www.livestockconservancy.org;www.americangrassfed.org;hbp://www.agcensus.usda.gov/Publica0ons/2007/Full_Report/Census_by_State/;hbp://www.agcensus.usda.gov/Publica0ons/2012/Full_Report/Census_by_State/.

IndicatorsofFoodProcessing,DistribuBonandLocalMarkeBng.ArizonaappearstooutperformNMintermsofthemagnitudeofinnova0onasindicatedbyfarmersmarkets,micro-farmswithon-sitesales,CSAs,andcommunityaccesstocommercialkitchens(seeTable7).Becausetheseinnova0onsappealtomanyurbandwellers,thisfindingisnotsosurprisingonceoneconsidersthatAZhasthree0mesthenumberofurbandwellersasNM.Thedifferenceinthecombinedpopula0onsizesofthetwolargestci0esfoundineachstateisalsonotable.In2013,thecombinedpopula0onofPhoenixandTucson,AZwas2,039,116.(Thisnumbermorethandoubleswhentheen0remetroareasofthetwoci0esareaccountedfor.)Incomparison,thecombinedpopula0onofAlbuquerqueandLasCruces,NMin2013wasonly657,819.

Manythreadsinvolvedinalocalfoodsystem.Tucson,AZ

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Table7:FoodProcessing,DirectSalesandCommunityKitchenInnova7ons AZ

2008-2010AZ

2013-2015%

ChangeNM

2008-2010NM

2013-2015%

ChangeFarmers markets

72 83 +15.3% 63 66 4.8%

Micro farms24 32 +33.3% 15 10 -33.3%

CSAs

29 45 +55.2% 25 36 44.0%

Non-profit community kitchens1 6 +600.0

% 1 2 +100.0%

For-profit shared use and kitchen incubators 5 6 +20.0% 0 0 -

Sources:Datagatheredfromwww.farmersmarketnm.org;hbp://www.arizonafarmersmarkets.com;www.arizonacommunityfarmersmarket.com;www.farmers.localharvest.org;hbp://farmersmarket1.com/states_arizona.php

TherearefarmorecommunitykitchensinAZthanthereareinNM.Equallynotableisthatthesekitchensarebeingincreasinglystructuredaseitherfor-profitorhybridizedfor/non-profitfacili0es.Arizonahasmorefarmersmarkets,micro-farmsandCSAsthanNMandhighergrowthratesforeach.Theseorganiza0onsandenterprisesarelargelyfundedwithprivatecapital,notbygovernmentgrantsorphilanthropicdona0onsfromAZci0zensorfounda0ons.Moreover,farmers’marketsinAZareprimarilystructuredandoperatedasfor-profitbusinesses.Forexample,theArizonaFarmers,GrowersandProducersAssocia0onandtheArizonaCommunityFarmersMarketGrouparebothfor-profitbusinesses.TheAZDepartmentofAgricultureusesalimitedamountoffundingfromitstenuousArizonaGrownpromo0onini0a0vetoactasoneofthreeonlineclearinghousesforfarmers’marketsloca0ons.Conversely,theNMFarmersMarketAssocia0onwasestablishedasanon-profitclearinghousewitha$50,000grantfromtheNMDepartmentofAgriculture.Whilehavingbureaucra0celementstoitsstructurethatmayconstraincertainentrepreneurialinnova0ons,theAssocia0onhashadconsiderablesuccessinworkingwiththeNMstategovernmentonpolicyini0a0ves.Thedifferencesbetweentheopera0onalsetupsoffarmers’marketswithinthetwostatesrevealpoten0aldifferencesinhowlocalfoodinnova0oncanbestructuredandsubsequentlyfunded.Suchdifferencesarelikelytobeevenmorediverseshouldthetrackingweareabemp0ngherebeexpandedtoabroaderregionalorevenna0onalscale.Withregardtoinnova0onsaimedspecificallyatenhancingfoodsecuritybyprovidingeasy,moreaffordableaccesstolocallygrownandprocessedfoods,NMexceedsAZ’sefforts(seeTable8).Forexample,NMhasmorefarmers’marketswithEBTaccessforSNAPbenefitsthandoesAZ,whichisduelargelytoNM’sFoodPolicyCouncilandFarmtoTabletrainingefforts.Addi0onally,theMoFoGromobilefoodtruckfleetisapar0cularlystrongexampleofaninnova0onthatwiththesupportofablendingofprivateandphilanthropicfundingisabletoprovideincreasedaccesstolocallyandregionallyproducedfoodstosociallydisadvantagedandphysicallydisabledresidentsinthreeNa0veAmericancommuni0eslocatedinNM.PrivateNewMexicanphilanthropistsledthissocialventurewithassistancefromLaMontanitaFoodHub,JohnsHopkinsUniversityandthetribes.NewMexicoalsohasmorefarmers’marketswithEBTaccessforSNAPbenefitsthandoesAZ,whichisduelargelytoNM’sFoodPolicyCouncilandFarmtoTabletrainingefforts.

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IndicatorsofFoodReliefInnovaBon.DataindicatesmorefoodreliefstrategiespercapitahavebeendevelopedinNMthaninAZ(seeTables8and9).Inpar0cular,thereismorepar0cipa0onpercapitainFarm-to-SchoolprogramsinNMthaninAZ.TherearealsomorefoodbankspercapitainNMthaninAZ.However,AZfoodbankshavemorediverseandlonger-termfoodsecurity-orientedprograms,includingseveralini0a0veswithexplicitlyentrepreneurialapproaches.TheCommunityFoodBankofSouthernArizona(CFBSA),forexample,isana0onalleaderinfoodsecurityinnova0on,andisfundedasmuch,ifnotmorebyprivatesupportandentrepreneurialcollabora0onasitisbygovernmentsupport.Moreover,theCFBSAisaleaderinthena0onaldiscourseoninnova0vesolu0onstohunger,whichincludesthosethataremarket-driven.Forinstance,theBankhostedthe2013“ClosingtheHungerGap”conferenceonlonger-termsolu0onstopovertyandhunger,whichbroughttogetherover300par0cipantsfrom170differentorganiza0onsfromaroundtheU.S.todiscussinnova0veapproachestoelimina0nghungerinAmerica(ClosingtheHungerGap,2015).AnotherAZfoodbank,BorderlandsFoodBank(BLB),haspartneredwithbothMarketontheMoveandPOWWOW,bothofwhichsellproducerescuedatthebordertoindividualsandfamilieswithinlow-incomecommuni0es,omenforaslibleas$10for50poundsofvegetables.

Table8:PercentageofFarmtoSchoolProgramsbyStateTotalsState

Farm to school districts

Farm to schools

Farm to students

AZ 23%(53)

28%(552)

38%(384,925)

NM 29%(26)

41%(400)

57%(194,114)

Sources:hbp://www.ped.state.nm.us/it/schoolfactsheets.html;hbp://www.azed.gov/about-ade/overview/

Table9:FoodReliefProgramsPer1,000,000Residents

State Food banks SNAP-eligible stores & mini-marts

SNAP-eligible farmers’ markets

AZ 1.6 631.4 2.8

NM 2.4 733.3 18.09

Source:www.fns.usda.gov/snap/retailerlocator;www.feedamerica.org

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Anotherexampleofthediversesupportoflocalfoodinnova0oninAZaimedatreachingthosewhoarefoodinsecureisEdibleBajaArizona.Thismagazine,whichispublishedsix0mesayearandreaches90,000in-statereaders,istheonlyEdiblemagazinethatcoversfoodjus0ceissuesinbothSpanishandEnglish.Itscoverageoffoodjus0ceissuesandvolumeofadsbysmallbusinessesaregreaterthanthecombinedeffortsbythetwootherEdiblemagazinesinthesestates,EdibleSantaFe.Overall,AZfoodjournalistsaremoreengagedinpromo0ngcommunity-basedandar0sanal-scaleentrepreneurialac0vity,aswellasfundingstrategiesaimedatfoodinsecuritythanaretheircounterpartsinNM.Intermsofregionalleadership,NewMexico’sFarmtoTable(FtoT)isanon-profitwhichprovidesNMcommuni0eswith“accesstonutri0ous,affordable,locallygrown,culturallysignificantfoodsbylinkinglocalfoodproduc0ontolocalneed”(FtoT,2015).TheFtoTisanexampleofalocalfoodinnova0onthathasbeenfundedthroughstate-ledpolicyini0a0vesandcollabora0velymaintainedbytheNMFarmersMarketAssocia0on(NMFBA)andtheNMFoodPolicyCouncil.In2007,FtoTandNMFBAsuccessfullylobbiedthelegislaturetopilotastate-fundedSeniorFarmers'MarketNutri0on"Enhancement"Program(SFMNP)insixcoun0es.Thisprogramprovideslow-incomeseniorswithincreasedaccesstolocally-grownandproducedfoods.In2009,theNMFMAalsostartedpilotprogramsforaccep0ngEBT(foodstamps)atfourfarmers’marketsusingwirelesstechnology,whichwaslongbeforeAZdidthesame.By2010,theNMFMAencouragedtheNMDepartmentofHealth(NMDOH)toapplyforthefederallyfundedSFMNP.Duetothesuccessofthestate-fundedpilot,theNMDOHreceivedfundstoprovidevoucherstoover16,000seniors.NMFMAalsobeganhelpingmarketsincreasethepublicvisibilityoftheirSNAPprogramswiththeDoubleValueCouponProgram(DVCP),whichAZhasadoptedrela0velyrecentlyatjusttwosites.Addi0onally,theNMFMAreceived$50,000infederals0mulusfundstofurthersupporttheDVCP,whichresultedintheincreaseofannualSNAPsalesby400%across16markets.In2012,theNMFMAalsopartneredwiththeWholesomeWaveFounda0ontobeginaFruitandVegetablePrescrip0oninRioArribaCounty,asoneoftheini0altwelvesitesselectedfromacrossthena0on.TheFounda0onaddedonesuchprograminAZtoitspordolioin2015.ThepublicfundingdirectedbyNMstateagenciestowardslocalfoodinnova0onshouldnotbeviewedsimplyassubsidies.Instead,suchstatefundingshouldalsobeunderstoodasstrategicinvestments.Thepoten0alreturnsonsuchinvestmentsinlocalfoodsectorsincludes0mula0onoflocaleconomies,increasedfoodsecurity,andreduc0onsinpublichealthcarecoststhroughincreasedhealthyea0ng.Accordingly,weconsidersuchfundingalloca0onstobeentrepreneurialinvestmentsofthepublickindratherthanconven0onalsubsidies.

CONCLUSIONSAccesstocapitalforearlystagefarmersandfoodentrepreneurshasalwaysbeenlimited,butthisproblemhasbeenaggravatedsincetheonsetoftheGreatRecession(Schwartz2013).Non-conven0onaloralterna0vefundingforbeginningfarmandfoodenterpriseshas,however,mademeaningfulcontribu0onstotheeconomicrecoveryofcommuni0essincetheGreatRecessionbeganin2008(Hewleb2010).Indeed,localfoodventureshavebeenamongthequickestandmostcost-effec0vemeansofgenera0ngmul0pliereffectsands0mula0ngthepost-GreatRecessionrecoveryoflocaleconomies(Schwartz2009).OurpreliminaryanalysesofdataandtrendsfrombeforeandamertheGreatRecessionrevealthatthelocalfoodsectorsinAZandNMareincreasinglyengagedinandtosomeextentinfluencedbyapeculiarbroadeningandblendingofmonetarysupportandothersourcesofsupport.However,itremainsdifficulttousegovernmentalsta0s0csandon-linesourcestoobtainaccurateannuales0matesofstate-levelsupportforlocalfoodinnova0onthroughphilanthropicandgovernmentalfunding,aswellasconven0onalprivateandalterna0vefinancing.Thedataandtrend-trackingmetricswehavecompiledandpresentedherebegintoaddressthischallenge.Whilewecannowconfirmthatalterna0vefinancingisindeedaidingearlystatefarmersandfoodentrepreneursinAZandNM,andbroadeningthefinancialpordoliosofotherfoodbusinesses,wemustawaitmorelongitudinaldataanalysestodetermineboththemagnitudeandefficacyoftheseinnova0vefinancialstrategiesinaidingearlystagefarmers.

16

Buildingonouranalysisofdescrip0vedatafromAZandNM,weproposedthatthedegreeofblendingofalterna0ve,conven0onal,governmentalandphilanthropicfundinglikelyinfluencesthenature,trajectoryandpaceofthelocalfoodinnova0on.Innova0onsbysinglebusinessesorby“hybrid”non-profitsandfor-profitshaveindeedbeguntocontributetoposi0velocalandregionalfoodsystemschange(greaterequity,foodsecurity,profitability,etc.).Althoughwecannotclaimorconfirmcausa0on,entrepreneurialac0vityappearstobemoreevidentintheAZlocalfoodsectorsthaninthoseofNM.Therearenotabledifferencesinthelevelsofsuchentrepreneurialac0vi0esbetweenthetwostates.SomeofthesedifferencesmaybeabributabletoAZfoodentrepreneursbeingsupportedlessbystatepoliciesandprogramsaswellashavinglimitedaccesstophilanthropicfundingandconven0onallendingop0ons.Thereisnodoubtthatotherstatescurrentlyfacesimilarimbalancesintheiraccesstothefourgroupingsoffoodandfarmsupport.Theirpolicymakers,communityleaders,andentrepreneursshouldconsiderthestrengthsandweaknessesofthestrategiesprevailinginAZvs.NMwhennaviga0ngtheirownpeculiarmixofavailablefinancialsupport.Ourprovisionalsetoflocalfoodinnova0onindicatorshashelpedusdocumentdifferencesbetweenthetwostates’foodsystems.Localfoodentrepreneursinbothstatesareincreasinglyturningtonovelblendsoffinancialsupporttoini0ateorrestructuretheirlocalfoodenterprisesandorganiza0ons..Atminimum,wecanconfidentlyreportthatcommuni0esinbothAZandNMhaveembracedanumberofinnova0vestrategiesforposi0velychangingtheirLFSsoverthelast15yearsinamannerthatmakesbeberuseofin-statefoodproduc0ontofeedtheirlocalpopula0ons.Withthisinmind,therela0velyrecentdevelopmentofsuchblendingstrategiesandtheseeminglygrowingnumberofalterna0vefinancingopportuni0esdeservemorediscussion,analysis,anddebateovertheassociatedrisksandpoten0albenefits.Ourpreliminaryfindingsalsoprovokeaben0ontothenascentbroadeningandblendingoffinancingstrategiesandresourceacquisi0onapproachesthathavehelpedlocalfoodentrepreneursinbothAZandNMini0ateandimplementlocalfoodinnova0ons.Althoughweencourageotherscholarsandprac00onerstoexpandandrefinethesetofindicatorswehavedevelopedhereforfuturecomparisons,itappearsthattheuseofsuchasetofmetricshasheuris0cvalueinunderstandingpabernsofchangeinlocal,state-levelandregionalfoodsectorsandsystems.WerevealthatthekindsandpaceofchangemeasuredbyoursetofindicatorsdocumentthatAZandNMareevolvinginverydifferentways.Ononehand,NMhasmostlybenefitedfromleadingedgeini0a0vessupportedbythepublicsector,whichincludestheblendingofgovernmental(stateandfederal)andphilanthropicsupport.Ontheotherhand,AZ’slocalfoodsectorhasalreadyemployedasuiteofinnova0onsdirectlyreflec0veofitsstrongentrepreneurialclimate.Suchinnova0onsinclude,butarenotlimitedtotherela0velyintensepursuitofalterna0ve“SlowMoney”foodandfarmfinancingstrategies.Inthisregard,AZfoodinnovatorshavecometorelymoreonprivateentrepreneurialsupportandalterna0vefinancingstrategiestomaintainandpromotetheirinnova0ons.Byincludingcomparabledatafromthesetwoneighboringstates,wehadhopedtorevealhowpabernsofstategovernmentpolicybasedonsocio-poli0calandeconomicfactorsdifferen0allyinfluencethetrajectoryofLFSsinAZversusNM.Inallprobability,suchrelianceislikelylinkedtothechroniclackofotherpublicsupportop0onsinAZthatpushtheoverallentrepreneurialculturetoflourish.TheentrepreneurialapproachesofthoseleadingthechangesacrossLFSsinAZarealsolikelydriventowardprivateandalterna0vefundingsourcesbyaconserva0vepoli0calenvironmentthatfavorsfreemarketini0a0vesoverpublicinterven0ons.Whilethebalanceofsourcesoffundingsupportisdifferentineverystate,foodscholarsandcommunitydevelopmentprac00onersingeneralarelikelytofind“takehomemessages”per0nenttoopportuni0esorconstraintsintheirownLFSsbyno0ngtheresultsofthedifferenttrajectoriestakenbyAZandNM.Weexpectthisini0alprobewillencourageothersustainablefoodsystemsscholarsandcommunityleaderstodevisebebermetricsthatcansupportLFSdevelopment,aswellastheac0vi0esoflocalfoodentrepreneursandprac00onersacrossmanystates,notjustAZandNM.

17

ArecentreportbyTaschandDickie(2014)indicatesthatmostSlowMoneyinvestors,investmentclubsandsmallinnova0vefundsarefocusedonofferingsmall-scaleloansof$100korlesstolocalfarmersandfoodentrepreneurs.Whilelow(1-5%)tono-interestloansaccountforabout70%ofalterna0vefinancingtransac0ons,20%comeintheformofequityinvestments.Grants,royal0esandconver0bledebtaccountfortheremaining10%ofsuchtransac0ons.Farm-andranch-basedprojectsandvalue-addedfoodprojects(e.g.,organicenterprises)eachcapturedathirdoftraceablealterna0vefinancing.OnethirdofSlowMoney-styleinvestorsarehelpingthesestart-upsbasedonthepoten0alsocialandenvironmentalimpactsasmuchormorethantheirexpressedinterestingainingimmediateeconomicreturns.Such“socialventure”investorsareseekingtofosterlocalfoodproduc0onandconsump0on,jobcrea0onwithlivablewages,ruraleconomicvitalityandincreasedaccesstohealthyfoodacrossincomebrackets,culturesandraces.Halfofques0onnairerespondentsreportedhavingtrackedavailablemetricstoassessthepoten0alsocialandenvironmentalimpactsoftheirinvestments(TaschandDickie2014).Nevertheless,itiss0lltooearlytotellwhetherthisnewarenaoffoodandfarmfinancingismakingasignificantnumberoflocalfoodstart-upsandenterprisesmoreeconomicallyviable.Weseetheemerginginterestoflocalfoodentrepreneursinexperimen0ngwithadiversifiedsetoffinancialsupportmechanismsasanindicatorthattheconven0onalfinancingoflocalfoodinnova0onisnotworkingaswellasithadpriortothe2008GreatRecession.Whilewealsoseeamodestincreaseinthenumberofstart-upbusinessesexperimen0ngwithhybridfor-profit/non-profitstructures,thesamplesizeisfartoosmalltoknowwhethertheseini0a0vesareanymoreeconomicallyviablethanotherssupportedsolelybyeitherfor-profitornon-profitstructures.Indeed,thelong-termstabilityoffinanceinnova0onssuchasBarnraiserandKickstarterremainuncertain,asdothepoten0alunintendedconsequenceslinkedtoundefinedborrowerdefaultandcollateralcollec0onpolicies.Nevertheless,novelfinancingstructuresandstrategieswarrantongoingaben0onaslocalfoodinnova0onscon0nuetoemergeanddevelop.WethereforeurgeLFSscholarsandprac00onerstomorerigorouslymonitoremergingandevolvingalterna0vefinancetrendsandassociatedimplica0onsinordertobeberguidelocalfoodentrepreneursduringstart-upac0vi0es.WeintendtheindicatorswehaveaggregatedfromAZandNMtoserveasatemplateforthedevelopmentofbroaderandmoreexpansivestandardizedmetricscapableofguidingthedecisionsandstrategiesofpolicymakersandlocalentrepreneursalikeonthestate,regionalandna0onallevels.Itisourhopethatthebaselineindicatorswhichevolveoutofthisprocesscanalsobeusedasaresourcefornascentlocalfoodentrepreneurswhoareabemp0ngtotraversetheincreasinglycomplexanddiverselocalfoodsectorlandscape.

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