Issues of Concern to NFA Members:

Table of Contents
Introduction
Community Shared Agriculture vs. the Modern Food System
The Basic Structure and Function of a CSA
The Canadian Framework for Effective Farm Business Management Practices

Marketing
Production
Human Resource
Financial
Summary
Final Words on Community Shared Agriculture

Introduction
Community Shared Agriculture (CSA) brings producers and consumers together to grow and harvest food in a cooperative manner.

The following article highlights the necessary steps, as well as the advantages and disadvantages, of this ‘direct link’ between production and consumption. Like any business venture, those embarking on a CSA arrangement must develop a comprehensive business plan which focuses on production methods, financial arrangements, marketing, and human resources. More importantly however, is the producer’s relationship with the consumer who is involved in the process from the planting to harvest.

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Community Shared Agriculture vs. the Modern Food System
The Community Shared Agriculture (CSA) model is very different from the typical farm that competes in the modern food system. Differences between CSA’s and the food production syndicates projected to dominate the industry during the next millennium, are even more pronounced. The evolution of the food system throughout this century has led to greater distancing of the consumer from the primary producer, with this trend predicted to widen. Conversely in a CSA, there is a "direct link" between the farmer and the consumer.

Traditionally, farmers have been an independent lot with many often viewing the typical food consumer as a problem, not a solution. However, as we near the turn of the century, the independence of the primary food producer is threatened. Efficiency gains of modern technologies require fewer people to produce more food, at a lower cost. Whether or not the consumer actually benefits from the lower cost of producing food depends on the inflating margins extracted by the suppliers, intermediaries and their shareholders. Regardless of whether the consumer will benefit or not, the food system will continue to vertically integrate.

Vertical integrators take market signals from codes marked on products while they are scanned through the cashiers of retailers. These signals are used to advise their distributors, to advise their processors, to advise their plant and animal breeders to advise their farmers - what their consumer’s demand. Combined with this elaborate system, they add the results of market surveys, demographic trend analysis, economic trend analysis plus an assessment of the pending production, processing and distribution technologies. The end result - an efficient modern food system with minimal opportunity for the consumer to know or trust the food producer.

Instead of farmers producing: what they want to produce; what they are best at producing; or what they think they can sell; the vertically integrated system provides the signal to the producer on behalf of the consumer. In the December 29, 1997, Feedstuffs magazine, Harry Cleberg, president and CEO of Farmland Industries Inc., Kansas City, Missouri, eloquently confirms this trend with the following comments "if you’re going to be a serious professional producer (of cattle and hogs), you are going to have to be aligned with a processor, a system, and produce to standards. If you aren’t in a system, if you don’t produce the kind of cattle and hogs your system needs, you won’t have a market".

The attention paid to market signals by the modern vertical integrator, is one of the most important practices that a CSA operator should adopt, if they wish to be successful. CSA operators do have a "market" and they can implement a simple "system" to track these market signals. By approaching their Community Shared Agriculture with a farm business mindset, the growers and consumers, owners and shareholders, can structure a sustainable and rewarding entity for all.

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The Basic Structure and Function of a CSA
CSA’s take on many different structures, however basic to all are two components - the farmer(s) or grower(s) and the consumer(s) or sharer(s). Very simply, each consumer finances a share of the farmer’s operating costs, in exchange for a share of the harvest. The grower enlists consumers prior to the beginning of the growing season and with the currency received for the purchase of the share, proceeds to produce and harvest a variety of foods. This pre-payment of the food is one of the features that makes a CSA so distinct.

The attraction to CSA’s by both producers and consumers goes beyond the single issue economics. Many consumers are drawn to CSA’s for social and environmental reasons. The CSA structure allows the consumer to know and trust the cultural practices of the grower. Often organic food is produced by CSA’s. Likewise, most operators of CSA’s are concerned about the environment and have chosen to live their beliefs. As a result, CSA farmers and CSA shareholders are often resistant to limit the discussion about CSA’s to strictly business management issues. Therefore, as a warning to reader’s with weak stomachs for business related issues, the balance of this paper focuses on farm business management practices in relation to operating a successful CSA.

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The Canadian Framework for Effective Farm Business Management Practices
There is a model of "the successful farm business" described in a document by the Canadian Farm Business Management Council (CFBMC), titled "A Canadian Framework for Effective Farm Business Management Practices". This document summarizes the common traits of successful farm businesses. Although not defined, success appears to be the establishment and operation of an ongoing viable business entity. With respect to an individual CSA, stakeholders may want to include additional criteria to define their own measures of success.

In the "Canadian Framework for Effective Farm Business Management Practices" you will find a drawing of a structure that represents a solid farm business built upon four pillars. No disrespect for the model provided by the CFBMC, but personally I find it easier to remember this structure as a four legged "milk stool". (As a five year old, I began my apprenticeship of milking cows by hand at my grandfather’s farm. He had a four-legged milk stool and a three legged milk-stool. I preferred the stool with four legs.) The model described by the CFBMC has the following four strong pillars (legs).

Marketing Management
Production Management
Human Resource Management
Financial Management
These four legs support the seat which represents the operations management level of the business. At the operations level, day to day decisions are made which involve the functions of the four legs. The day to day duties are the short-term actions required to implement the longer term annual plan, which in turn is a part of a long range plan (i.e. five year plan). With the brains of the business supported by four solid legs, strategic planning becomes an easier task. In reality, most growing businesses, including CSA’s, seldom enjoy the stability of four strong legs. As the number of weak legs increase, more energy is required to manage day to day issues, with less energy available to manage with an eye to the future.

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1. Marketing
Knowing what the market demands is key to the success of any business, no different for a CSA. As the link between the producer and consumer is direct in a CSA, CSA farmers have no excuse for not providing the products their consumers demand. Simple surveys circulated to CSA consumers will provide this feedback, without the bar codes and computer programs. However, CSA farmers may find themselves guilty of producing what they want to produce, what they are best at producing or what they believe their consumers should be consuming.

From a production and financial management point of view, there is nothing wrong with producing what a farmer is best at. However, if the crops or products do not mesh with consumer’s demands, the CSA becomes vulnerable to high rates of consumer turnover. Likewise the risk of high consumer turnover exists when CSA growers grow too many of the foods that they believe their consumers should be consuming. This is a fundamental marketing mistake - "it does not matter what the grower thinks their consumers should consume, what matters is what the consumer wants to consume". In defense of the CSA trying to educate their consumers about healthy food options, the CSA is a great structure to accomplish this. However, the CSA producer must ensure they have satisfied the core demands of their consumers first.

It is a marketing advantage for a CSA grower who can not grow certain crops at their farm, to link up with other CSA growers within reasonable distance who can grow the products. Some CSA’s have networked with non-CSA growers in their area who adhere to similar production principles, in order to provide their consumers with the demanded produce. Some examples of this include different berries, tree fruits and sweet corn. The CSA sharers should be informed of the benefits to them for establishing such connections, prior to registering for a share.

Establishing close links with other CSA’s or growers in the area can be a valuable marketing advantage during a crop failure. In a CSA, the shareholder shares with the farmer the growing risks encountered during the growing season. CSA farmers have reported that when a crop loss actually happens, not all sharer’s are comfortable with sharing this production risk. The relationship between the shareholders and the CSA farmer is tested during crop shortages. This is a basic "public relations" issue the CSA farmer must deal prior to registering consumers for the crop year. Quoting Robyn Van En, co-founder of Indian Line CSA, Great Barrington, MA, "CSA’s are built on trust and the grower must do the very best to commit to their sharers".

The direct relationship between growers and sharers in a CSA provides an excellent opportunity to listen to consumer’s concerns and compliments. Modern business companies spend lots of time and money on market research. With little effort, the CSA can implement an efficient process to record and monitor this direct feedback. Similar to the modern business, this information can be used to address areas of concern or build upon areas of strength. In addition, annual and seasonal meetings between owners and shareholders is an essential conduit for exchanging knowledge and experiences. This grass-roots market research is key to enhancing a sustainable CSA.

Customer service is an important area of marketing for the CSA and should be demonstrated by all farmers, owners and volunteer workers of the CSA. In CSA’s were sharers are encouraged to share in production and marketing tasks, the sharers need to practice good customer service habits when communicating with other CSA consumers. Good customer service may be difficult for the grower, sharer or volunteer who is exhausted from long hours of strenuous work in the field. The CSA should recognize this potential problem up front and design a distribution process that minimizes the opportunity for conflict.

The last issue under marketing management relates to price. A core principle that distinguishes CSA’s from the modern agriculture businesses is based on a fair return to the labour and management provided by the grower. Seasonal swings in supply and demand resulting from crop losses or bumper crops are not intended to reward or punish the grower under the CSA model. Instead during bumper crops, the sharers have the opportunity to share in the extra harvest or donate their excess share to others in need. During crop shortages, consumers share the pain of the crop loss with the grower. Unlike most forms of agricultural where price is determined by the market, in a CSA, price is determined by the costs of production and a fair return to the farmer.

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2. Production
The production plan must be designed around the marketing plan. As mentioned above, the marketing plan will depend on the crops demanded by the CSA’s customers. However, the CSA grower must address and respect their limitations to production. Although a core principle of a CSA is built upon the grower earning a fair return for their labour and management, the CSA grower cannot expect their customers to pay an outrageous price for a product which should not be grown on their farm property. There are a number of factors that will influence this decision on the part of the CSA grower.

Production may be limited by soil type, climatic conditions, or lack of equipment and experience. Some of these limitations can be overcome by sharing produce with other CSA’s or growers in the area. Another advantage of establishing this relationship may be to expand the market window of a given crop. Cooperating CSA’s may choose to grow more of a given crop targeted to market at different times. This cooperation allows CSA’s to offer their consumers a popular product for a longer period of time. With a strong concern for the environment common among CSA’s, all trucking must be efficient and reflect the core values of the CSA

Each grower’s approach to cultivating crops will have the most impact on the difference between production plans of CSA’s. There are numerous approaches to growing crops available to CSA farmers - organic, bio-dynamic, ecological, no-till, no-till/chemical, chemical, etc. In the end, consumer demand will determine the market share of the different production systems. Historically, the majority of CSA’s have followed organic production principles. However, with the relaxed standards proposed under the U.S.A. Organic Regulations (draft at this date), combined with the push of vertically integrated food retailers to increase their share of the expanding organic food market, CSA consumers and producers need to re-examine their core concerns. The revised "organic" label may no longer meet the standards desired by the CSA’s growers and consumers. The CSA structure allows producers and consumers to address common concerns and establish individual CSA production standards.

In addition to the production philosophy followed by the grower, each producer has apprenticed under a different grower in a different environment. Both the grower and the apprentice have their own experiences with different tools, equipment, machines, vehicles, and crops. These differences are magnified in a CSA where experienced growers and experienced sharers combine their production skills to nourish and protect the crops. However, it must be clear from the start of the grower-consumer relationship, that the grower has the final say about day to day decisions involved with the production of the food. This is not to say the grower should not listen to the input of the sharers nor to alter production practices based on suggestions of the sharers, but in the end, the sharer must respect the grower’s decision.

The more experienced that a sharer is with growing crops, the more patient they will be with "low-risk" crop plans. However, if the majority of CSA sharers have little experience with growing crops, they will exert pressure on the growers to grow a wide variety of crops, or crops that reflect what is available at the local supermarket. It is important that the CSA grower does not let this pressure influence them to design high-risk crop plans. The grower may need to educate their sharers on the risks involved with a given crop (perhaps with limited test plots) in order to maintain a satisfied sharer base.

When sharers are involved in the physical production of the food, they appreciate the production variables and risks. Further participation in the exchange of produce with other sharers, on pick-up days, or at drop-off sites, involves them in the full circle of emotions which growers experience. The modern food system has disconnected this natural circle of energy between the grower and consumer.

The production plan of the CSA will include many varieties of crops that the commodity oriented farmer would never consider. The commodity oriented farmer must focus on producing a good looking product that can withstand the rigors of everything from mechanical harvesting to sorting and packing to shipping and handling to storage and more handling. A luxury afforded to the CSA farmer is the ability to select varieties with maximum taste and nutrition. Harvesting is usually completed the morning of the same day the produce is delivered to the consumer. The focus on taste and nutrition may result in lower seed costs as the CSA farmer is not trapped into using exclusively expensive hybrid seeds. Conversely the CSA farmer must know how to select and save their own seeds, or source them from reliable seed producers. The direct link between farmer and consumer in a CSA shifts the focus of production from "looks good" to "tastes good".

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3. Human Resource
Many CSA’s start out as a husband and wife team. For like-minded couples who believe in the underlying principles of a CSA, their individual talents can often provide the leadership required to be successful in all four of the business legs. However, the stress of working and living together can often be too much for the business, marriage, or both. Similar to other beginning farm businesses, there are definite advantages to having off-farm income to support family living expenses.

The production and harvesting of most crops places seasonal peaks on labour which the farmer must supply in order to keep pace with the sun’s energy. The ability to meet these peak labour demands can mean the difference between happy sharers who return for another season, or sharers who leave at the end of the season. In order to meet these labour demand peaks and to keep costs of production down, many CSA’s rely on volunteer labour. Recruitment and motivation of volunteers is an essential skill to master if the CSA adopts this approach .

As the CSA grows, it may be necessary to hire growers on a salary or salary/food share arrangement. Again, human resource skills are a must. Many veteran CSA growers, sponsor young growers on apprenticeship programs. Tutoring brings it own challenges to the mix of human resource issues. As the jobs of planting, nourishing and weeding have such a big impact on both the date and quantity of produce harvested, the production plan must be tempered by the reliability of the human resource team

All human resource plans must address safety issues. The person in charge of labour deployment must ensure the skills of the person is matched with the requirements of the task. Safety equipment must be incorporated into the costs of production whenever safety equipment is required. Given the unusual and varied "work-for-food" arrangements made in various CSA’s, coverage under the Worker’s Compensation Board for an injury is not practical. CSA members need to assess the risks involved on their individual operation and search for an insurance package that will cover potential injuries and liability for everyone involved.

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4. Financial
One of the features of the CSA model is the prepayment of shares which provides operating capital for the farm. Despite this advantage, the beginning CSA owner with minimal capital faces the same dilemma facing all start-up businesses. There is a minimum level of functional equipment needed to complete the various tasks and ensure the production plan does not fall behind the sun’s energy, nor the marketing plan. The financial plan should include contingency funding to look after any major equipment break-down or unexpected expenses.

Capital assets such as equipment or property have been handled differently by each CSA. Some CSA’s have been able to secure capital financing from their sharers. Others have followed the typical beginning farmer route by working off the farm prior to purchasing land or equipment. In many CSA’s the farmers have been able to rent the farm land involved. All rental situations require a written contract that clearly sets out the obligations of both parties. Investments on the property should be made by the landlord. However, the CSA farmer may consider such investments if they are secured with a long term lease.

For the starting CSA farm, there is a strong need for off-season and/or off-farm income to support family living expenses. The number of sharers required to provide a young couple with a family income demands a sizable CSA. In order to provide the bare income to survive in the current economy, the CSA needs upwards of 100 sharers. For example purposes, if there are 100 sharers @ $300 per season, there would be a gross income of only $30,000. In a well managed farm businesses, there should be a gross margin of 40% in order to provide for repairs and replacement of equipment and tools (depreciation), leases, insurance, taxes and family living. Using the figures in this CSA example, the CSA farmer would not likely earn more than $10,000 per year. If the farm couple does a good job of preserving their own foods, they may squeak through for a few years, but if they hope to raise a family or purchase property someday, the CSA must grow in size.

In the area of financial management, many CSA farmers can benefit from the experiences of their sharers. Within the group of sharers, there are often people with experience in both financial and legal matters. Similar to the shares for labour commonly issued in a CSA, shares may be issued for accounting or legal services provided to the CSA. Shares of this nature do not increase the revenues of the CSA, but may reduce the expenses. However, as shares are issued for barter of services, the financial plan must be adjusted to reflect the minimum level of revenue (shares issued) required to earn the farmer a decent yet minimal family living.

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Summary
Approaching Community Shared Agriculture from a business mindset ensures that everyone involved is focused on developing a sustainable relationship. Failure to pay attention to the load that each of the four legs must bear, could prove to be very short-sighted. In order for CSA’s to survive into the next millennium, they must recognize the practices and weaknesses of their competition. In the years to come, there will be many opportunities to develop CSA’s that can provide a decent living for the farmers involved, if the individual CSA is approached from a business mindset.

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Final Words on Community Shared Agriculture
These last words are not mine, but what other authors have written about CSA’s:

it is a way of feeding people that allows both growers and consumers to share in the responsibilities of growing and harvesting food.
it fosters a closer relationship between the consumer and producer.
it helps to promote local, environmentally-sustainable agriculture, while making affordable produce available to consumers.
its not about cheap food, not about expensive food, but a sustainable food production system.
it is a model that values food as food, not as a commodity.

 

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