MONEY

Slow money movement links farmers, investors

Jere Downs
LCJ

W hen Ivor Chodkowski needed about $7,000 for equipment to expand his Louisville farm's production, he knew better than to go to a bank.

"Small scale farmers aren't able to get a second or even a first look from a bank," said Chodkowski, founder of Harvest, a NuLu restaurant that serves farm-to-table fare, and the defunct Grasshoppers, a warehouse network that distributed locally grown food to subscribers.

Money instead came in loans from Louisville investors affiliated with the newly created Slow Money Kentucky. A branch of the local food movement, Slow Money chapters link local investors willing to loan small amounts, perhaps several thousand dollars, with farmers and small food producers.

Slow Money's guiding principles include interest rates below 5 percent. Loans can range between $1,000 and $10,000, with no collateral required.

The goal is a sustainable local food economy, where more food grown in the region makes it to area consumers. The movement aims for consumers to know where their food comes from and that their food is produced in a way that sustains the environment.

"If you have this little sneaky feeling that things are a little too fast and crazy on Wall Street, meaning that money is zooming around the planet and all kinds of crazy stuff, that is fast money," Slow Money founder and author Woody Tasch said in an interview last week. "Slow Money is the opposite of that. Instead of just being a customer of a slow food establishment, it is being an investor."

The creation of Slow Money Kentucky comes as Louisville prepares to host the sixth annual international gathering of the Slow Money movement in November. That event will draw farmer and author Joel Salatin, environmentalist Vandana Shiva and Mary Berry, daughter of Kentucky author and farmer Wendell Berry and executive director of The Berry Center.

Slow Money Kentucky is the latest of 10 investment clubs and 19 Slow Money chapters in the U.S. In all, 300 small food producers have attracted more than $35 million from investors since 2010, said Tasch, a venture capitalist based in Boulder, Colo.

Some call the Slow Money trend "patient capital," or "nurture capital." For security, investors rely on the social capital of borrowers, knowing they will see them regularly at a farmer's market or around town.

"It's the way people used to do it. It is old-time community," said Larry Snyder, a co-founder of Slow Money Kentucky. "We are not doing any due diligence. There are no financials, no PowerPoints."

Chodkowski received two loans, for a combined $7,250, to build two winter greenhouses and hire extra hands to expand capacity of his Field Day Family Farm through winter. Both loans are for two years, at 3 percent interest.

He said he could have cobbled together the capital on his own, adding that his winter safety net is about that much.

"I worry about investing that kind of money, because that's the money I have to get me through the winter," he said. "Winter time production is risky. With a loan, I'll be able to hire extra help to pay more attention to those crops, make sure greenhouse doors are closed and frost blankets are in place."

Such cash flow problems increasingly confront area food producers trying to meet demand for their products, said Sarah Fritschner, coordinator of the Louisville Metro Farm to Table program, a city initiative that promotes the local food economy.

"If a farmer doesn't have cash flow, he could go broke trying to meet the market," Fritschner said. "That is what Slow Money could do. We need those people" to help farmers.

Demand for locally grown food outstrips supply, according to a recent study Louisville Farm to Table commissioned.

In the region's $3 billion food economy, Louisville-area residents spend an estimated $100 million annually on local foods and express interest in purchasing as much as $158 million more, according to the 2012 "Louisville Local Food Demand Analysis."

Commercial buyers such as Kroger, Rainbow Blossom and ValuMarket already spend $214 million on locally grown foods, with that market's potential estimated to be as high as $353 million, according to the report, which also was prepared for Seed Capital Kentucky, a nonprofit that supports local, sustainable agriculture.

Chodkowski's farm adjacent to the Oxmoor Country Club already sells weekly "shares" of produce to subscribers from May through late November. He also sells year-round at the Bardstown Road Farmers' Market.

One of the challenges of growing a local food system, he said, is the lack of fresh greens during long winter months.

"There will be no challenge with moving the product," Chodkowski said of the hardy lettuces and greens he will cultivate under cover in the two new "hoop houses" this fall and winter. He's aiming to attract 25 winter produce customers, who will pay $25 to $30 for weekly boxes loaded with fresh kale, collards and salad greens in combination with root crops and stored winter squashes. "Peer-to-peer lending is filling a hole in the financing world."

Investors and entrepreneurs are welcome to attend the second meeting of Slow Money Kentucky at 3:30 p.m. June 29 at Harvest, 624 E. Market St., Snyder said. The meeting structure is informal, he added, noting that, while anyone can attend, only approved borrowers can present.

"It is pretty unsophisticated. Everybody goes around and introduces themselves. We talk about what we are trying to accomplish. We are trying to build community," Snyder said. "Then we break, and people can talk to each other."

Jere Downs can be reached at (502) 582-4669, Jere Downs on Facebook and Jeredowns on Twitter.

Slow Money Principles

1. We must bring money back down to earth.

2. There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down — not all of it, of course, but enough to matter.

3. The 20th century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later — what one venture capitalist called "the largest legal accumulation of wealth in history." The 21st century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place and nonviolence.

4. We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises.

5. Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from Making A Killing to Making a Living.

6. Paul Newman said, "I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out." Recognizing the wisdom of these words, let us begin rebuilding our economy from the ground up, asking:

• What would the world be like if we invested 50 perecent of our assets within 50 miles of where we live?

• What if there were a new generation of companies that gave away 50 percent of their profits?

• What if there were 50 percent more organic matter in our soil 50 years from now?

Source: www.SlowMoney.org

Slow MoneyKY. meeting

When: 3:30 to 6 p.m. June 29

Where: Harvest, 624 E. Market St.

Information:

facebook.com/

SlowMoneyKy or www.SlowMoney.org.

Contact: (502) 727-5344 or mrlarrysnyder@

gmail.com.

Online

See videos from founders of the "Slow Money" movement to help small businesses at www.courier-journal.com/news.