Saturday, March 17, 2012

What is Community Supported Agriculture (CSA)?

Community Supported Agriculture or CSA is an alternative model to the traditional wholesale-retail approach to bringing produce from farm fields to consumers' tables It basically entails a partnership between the farmer and the consumers. Instead of consumers waiting at the market or grocery for the fruits of the harvest to arrive and be purchased, here they enter into the process prior to the season starting. Consumers become investors in the farmer's venture, facilitating his purchase of seeds. fertilizer, and other gear and in return are promised a component of the harvest .

This works for the farmer as it allows for him or her to have the funds needed to make the season happen. The term “seed money” originates with farming and literally entails the moneys needed to purchase seed. Without those funds, there would be no season. In many cases today, farmers turn to either banks or the US Government or some mix of the two for the funds needed for spring planting. In this model, farmers will then sell their harvest, the produce grown that season to consumers, either through a wholesaler or directly to consumers via farmer's markets, farm stands and the like. The challenge here is that at the end of the season, regardless of outcome, the banks and government expect to be paid in full, regardless of the actual harvest and return.

With that a farmer will often be in debt to initiate a spring planting. He will only pay off that debt if he has a good harvest and likewise brings it to market and sells it. In short there are various challenges or risks in this model. The first and most obvious of course being that farmer needs to have solid or ideally a bumper crop. There are others though. Did he grow the right crop? Does the market need his tomatoes or would he have done better to grow peppers? And then there is the question of which pepper? Does he go with Bell peppers or hot peppers? Bumper crop or not, is the market interested in his produce?

Once these decisions regarding what to grow are made then he has to decide who or where he is marketing the produce. Ideally this question is entwined with the above. Who wants and desires his hot peppers was ideally considered in the spring time when he bought and planted the seeds. Lastly there is the challenge of delivering his produce. Perhaps, a wholesaler who comes to the farm to collect the harvest is the best, or perhaps he is bringing the produce into various farmer markets-right to the consumer, or perhaps he is maintaining a farm stand right there. Most, likely it is some mix of these options and regardless this is another cost – getting produce to market, one way or another, is a cost.

More important than cost, however is the risks involved. Costs are always there. Risk, however is the big challenge-the potential for additional costs. A farmer, like anyone entering the marketplace, needs to limit risk and with that limit cost. So a model that leaves him entirely responsible for selecting the crops he is planting in the spring, and then requires him to go into debt to implement that plan is suspect.

So after a critique of the standard model of farming today, I return to the idea of CSA (Community Supported Agriculture). In this model, consumers-individuals, families, restauranteurs partner with farmers. An agreement is made between them regarding what crops will be planted, how much is desired at harvest of these, and the cost for the farmer and consumer to achieve these results. The partnership is begun in the springtime, before seeds are purchased. In this model risk is distributed. The risk of funding or seed money, the issue of what to plant and what consumers will want, and the question of how produce is delivered are all largely dealt with. All of this is done in conjunction with his customer – the consumer.

Regarding seed money, loans are avoided. The challenge here is that the farmer must find a large enough community of investors/ consumers interested in his harvest and produce. That said, these people are probably interested in his produce already. It is merely a question of do they purchase it at a farmers market at harvest, or do they have a deal in place where they get a certain amount of the farm fresh harvest largely guaranteed to them. In short they join the farmer in taking the risk of that initial investment. If the harvest is good everyone eats good. If the harvest is not bountiful then all share in that. Obviously, this model does not prevent droughts and other harvest disasters. What it does prevent is such things as a farm going into foreclosure as a bet on corn, soy beans and tomatoes did not work out. With the CSA model, a farmer may lose investors for next season but he is not in debt because of a poor harvest.

The CSA model, however, has another feature. It allows the farmer to have consumer support in making bets on which crops to grow. Consumers will no doubt want to have some say on what crops, what fruits and produce they will receive at harvest time. Good luck to a farmer who insist that he only wants to grow soy beans and then appeals only to those at the local farmers market in town, who desire fresh fruits and vegetables. Likewise, a farmer will have to know what he and his land are capable of growing, but assuming that there is a good number of options there, he has the ability to respond to what his customers want. Not only that but he will know they are sincere in their requests as they will be putting up cash to having produce from his or her field, served on their tables. Not only does this minimize his risk but also should maximize return on investment as he is intimate with his customers who are now also his investors.

Please forgive the heavy focus on economics here. The obvious benefit of Community Supported Agriculture (CSA) that I have largely ignored is that the consumer has a much better idea of who and how this produce has been grown and harvested. Likewise this model leads to two very over-used but still desirable terms or results-farm fresh produce and sustainable farming.