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Two former international businessmen are now working to rebuild the local food economy of Maine. Could their efforts serve as a model for foundations wishing to support localism and sustainable farming?

In recent years, men and women across the United States have joined a growing movement of farmers and producers looking to become part of a local, small-scale food economy.

One such example is Jessie Dowling, owner of Fuzzy Udder Creamery in Maine. Dowling is a cheese producer, currently in her 6th season of production. Her farm has over 40 sheep and goats, and she sells her cheeses all around the state in local farmers’ markets.

When asked about her motivation to become a small-scale food producer, Dowling responded that she “got into it for political reasons.” She saw it as the best thing she could do to make a positive impact on the planet and to live according to social justice.

Dowling describes the event at which she first “became radicalized.” As an Anthropology major, she had visited a Native American reservation in Black Mesa and saw first-hand how the locals’ water was being drained to supply the generating station of a coal mine. She came to realize that the way we live has an impact not only on the environment but on people.

Dowling is not alone. All around the United States, young men and women are joining the “new food economy” of small farmers and food producers. Since 2006, local food marketing channels have seen substantial growth: Farmers’ markets have grown by 180%, reaching 8,200 nationwide. 7.8% of farms in the U.S. are marketing locally, and local food sales have reached $6.1 billion.

Maine in particular has seen a rise in local agriculture, with approximately 8,174 farms in the state—more than any other state in New England. Since 2006, the number of small farms in Maine has increased by 13%, with agricultural sales up by 24% since 2007. Of these farmers, nearly 40% are under 34, meaning that many young people have felt a call, like Dowling, to do something different.

Unfortunately, many of the small- to mid-level farmers and food producers who have sought to scale their operations have faced difficulties acquiring capital loans from banks. Banks often have very little knowledge of the risks and opportunities involved in food production, and shy away from providing loans to farmers.

Programs such as the USDA Farm Service Agency provide low interest loans, but they have specific (and often frustrating) guidelines and regulations. Dowling faced obstacles in growing her business after receiving her Farm Service Agency loan: the agency doesn’t consider cheese-making as farming; therefore, to qualify as a “farmer,” she had to produce 50% of her milk on-site. Dowling’s original hope was to buy milk from other local farmers to produce her cheese and build up her own herd of sheep and goats slowly over time. Instead, to qualify for the loan, she was required to raise her own herd of animals first, slowing down her cash flow during the initial growth of her business.

But thanks to the Maine Harvest Credit Project (MHCP), Maine’s local farmers may soon have an easier means of acquiring loans to grow their businesses. MHCP is the vision of Sam May and Scott Budde. Their goal is to create a local credit union that will give loans specifically to Maine’s farmers and food producers. With a better knowledge of the risks involved with agriculture, they will be able to supply the capital loans that banks generally won’t provide, due to their lack of expertise in the sector.

Two businessmen with experience in international business, Silicon Valley, consulting, commercial banking, and investment management, Sam and Scott are interested in helping Maine rebuild a local food infrastructure: By giving farmers loans to build grain mills, slaughter houses, distribution plants, and more.

Scott, who some years ago formed a social investing strategies division at TIAA-CREF’s investment department, says that infrastructure is key. “100 years ago, you would’ve had local financial institutions that understood how local farming worked,” and who could help build up local processors and distributors. Today, however, everything has gravitated up to the level of big ads and “big food.” Rather than a local food economy, what we see today is production by a “very limited number of institutions” on a national level, with “the goal of corporate profit and cheap food.” Sam notes that “people understand the danger of our standard American diet,“ the “sad diet” of our food system. “Food is the basis of health, nutrition,” it is the “vector of disease.” By helping those who are trying to revive local food economies, we can return to “nutrient dense” foods and begin seeing improvements to our health, not to mention the environment.

Based on their international experience, Scott and Sam have concluded that the best thing they can do for agriculture worldwide is to go local. Scott describes his desire to transition “from a very top down high level job to a very bottom up job” as being partially motivated by seeing the work of Rockefeller impact investing in Africa. While observing their work on a sustainable agriculture program in Africa, Scott realized “the best thing anyone could do for agriculture all over the world, from poor peasant farmers in Bangladesh to anywhere else, is to fix American agriculture.” He sees a lot of investment in African agriculture as futile when we see how “cheap grain exports and subsidized machine exports” from the United States, Canada, and Australia distort the economy in places like Africa. The best thing we can do to help African farmers, he says is to “stop trying to dump all our crap on them and fix the American model. That for me was a real lightbulb moment that redirected me back to a more domestic focus.”

But though they both agree that returning to small-scale, local farming in the United States will have a positive impact abroad, they are under no illusion of saving the world through MHCP. “We’re meaningless, negligible… but we’re two people who get up every day and start to do something,” Sam says. He adds that they are “not saving the world here,” but just “working hard to re-localize our food system.” Moreover, they are not doing something revolutionary, but simply using the old, straightforward model of a credit union to meet a need in Maine’s local food economy. Nevertheless, they do hope that other states will see the success of their model and follow suit: as Sam affirms, “We hope this thing is replicated everywhere in the country.”

When asked how they would balance the mission-driven nature of MHCP with the realities of assessing risk and responsibly managing a credit union, Scott noted that “our goal is to drive the mission of the credit union as far as we can within that credit union structure.” It is important to remember that “we are creating a regulated financial institution” with “government auditors looking over our shoulders.” They will therefore not be able to provide loans to just any operation, but mostly to farmers with some middling level of experience and a reasonable chance of success. There is “still a role for nonprofit loan funds that would lend to relatively riskier borrowers.” Nevertheless, there is a great need for loans among farmers who have tried their hand and are now looking to set out on their own or scale their work, and MHCP is being created to make their hopes possible.

Part of what makes Maine such an attractive state for budding farmers is that land is affordable and there is a generation of older farmers willing to pass on the tricks of the trade. Sam and Scott see people coming from all over: from London, from Yale, from North Carolina; they all “wanna do something meaningful, something fun, something rewarding.”

So far, MHCP has built up $1.4 million in 18 months out of a needed $2.4 million in start-up capital. Local foundations, including the Merck Foundation, Sewall Foundation, and Ram Island Conservation have taken an interest in the project and contributed. Sam and Scott have begun the “complex and iterative” application process to start a credit union, and are now aiming to raise the remainder of the money and open their doors in 2018.

Currently, demand for small farm mortgages in Maine reaches an estimated $90 million, in addition to a $95 million need for lines of credit, equipment loans, and start-up costs. The success of MHCP will mean a boost for those seeking to contribute to the growing, thriving local food economy in Maine.

Understanding the impact that a local credit union focused on a specific sector can have also allows us to expand our sense of how philanthropy can benefit civil society. As Scott notes, “all of the foundations” that have funded MHCP so far “really have a strong commitment to Maine.” Though the credit union itself is a 501c14 and grants to it go through the 501c3 Maine Organic Farmers and Gardeners Association, the foundations’ support for the project means that they are building up the elements of a thriving economy, healthy population, and vibrant community of local farmers committed to the well-being of the state. By focusing on some of our most basic needs—good, quality food and meaningful work—the hope is that MHCP can play an integral role in strengthening Maine’s civil society for years to come.

This is a video announcing the MHCP:

2 thoughts on “Strengthening the local food economy: a new role for philanthropies?”

  1. Aj sue says:

    Love this endeavor! I am a member of the Willy street food co-op in Madison WI and WSGC is also helping local food producers with a loan program. Not the same thing, but definitely the same vital cause! Go dog go!

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