Funds designed to support the local food and farm sector in Ontario have been put together through a partnership of grassroots organizations from Sault Ste. Marie, a region not known for agriculture.
Why it matters: Agriculture could find ways to capitalize on a global trend of investors who factor in ecological and social benefits along with financial gains when considering investments.
A series of information sessions set to begin Oct. 3 at the Desbarats Arena will propose how this model might help kickstart local food enterprises across Ontario.
The sessions are scheduled to be held in Puslinch on Oct. 18, Thunder Bay on Oct. 23, and Madoc on Oct. 30, and will be hosted by Local Food and Farm Co-ops (LFFC) and the Rural Agri-Innovation Network (RAIN).
Both organizations are based in Sault Ste. Marie, and have scraped together seed capital that will be drawn upon during the first two years to match funds invested by outside individuals, businesses or organizations, says LFFC project coordinator Sally Miller.
The LFFC says the Fair Finance Fund will support social enterprises with values that relate to “local food system, local economies and the planet”.
The aim is to create “an ongoing investment opportunity for community-minded investors to support food that is grown, raised and processed in their own backyards.”
The organization lists small flock chickens, an incubator farm, community cannery, local pizza and brewery outlet or a co-operative abattoir as options.
According to a 2016 survey by the Responsible Investment Association, about $9.2 billion had been invested in Canada with not just profit, but also environmental and social benefits in mind.
However, Miller said the growing popularity of food production as an investment hasn’t yet turned into capital for Ontario’s local food entrepreneurs. The Fair Finance Fund aims to change that.
Miller said a recent survey conducted by the partnering organizations showed a significant gap in mid-range funding for local food and farm social enterprises.”
She said 30 per cent of more than 450 survey respondents had either been rejected for loans or offered terms they saw as unacceptable.
“Twenty-seven per cent (of respondents) rely on credit cards to run their business, and 28 per cent rely on loans from friends and family,” Miller continued.
During a followup of about 60 one-on-one interviews, she said, it became clear “that the Fair Finance Fund is very much needed, despite the existence of various agriculture financing and small business support programs in Canada.”
Bringing impact investment into Canada’s farm sector isn’t a new idea. An inspiration for LFFC and RAIN was the Nova Scotia-based FarmWorks network, which Miller says has raised $2.23 million through seven investment offerings, “and has supported 85 businesses in the local food and farm sector across the supply chain and across the province.”
In Ontario meanwhile, successful mid-scale impact investment models include SolarShare (“they have issued community bonds with several term options and raised $35 million to support the solar sector”) and the Centre for Social Innovation, which she said raised $6.3 million through community bonds to buy a building in Toronto in less than a year, and provided three to 4.5 per cent returns).
The investment vehicle used by Nova Scotia’s FarmWorks, the shifting of RRSP tax credits into a community project, is not open to Ontario’s taxpayers. So, the Fair Finance Fund plans to pursue the community bonds model.
“Social finance funds in the local food and farm sector have shown high payback rates, and returns on investment that are comparable to many market investments,” she said, citing a review of three dozen social finance funds across North America.
She added the rewards go deeper than the financial returns and include stronger communities, increased access to healthy food, job creation, and local procurement for food supply.
For information about the proposal and the upcoming information sessions, visit the Local Food and Farm Co-ops website.