Thursday, October 29, 2015

The economics of the CSA share

At one time in the history of the CSA movement, the conception of what a CSA share meant was that the farmer makes a budget at the beginning of the year, divides it by the number of shareholders the land can support, and that is the price of the share.  The farm itself may be owned by a group of consumers who hire the farmer to manage the farm for them, or the consumers might contract with an existing farm to grow their vegetales for them. The customers have a "share" of whatever the farm produces; it's a nice and simple idea and the vision of a cooperative and mutually beneficial economic arrangement between eaters and growers.  This problem with this vision of how community-supported agriculture should work is that there have been few if any farms that actually structure their shares this way.

I worked on my first CSA farm in 1995.  By that time, what many farms were offering and calling a "CSA share" was really more like a subscription service than a real "share" of the farm's total harvest.  Customers pay at the beginning of the season for the promise of vegetables every week.  The inflow of cash early in the season is beneficial to the farmer, and the customers share some of the risk.  Many already-existing farms got into the CSA market as a way of diversifying their marketing. There were also a great deal of idealistic young farmers who saw a CSA as a great way to start a farm, and then found that it was harder than they thought to provide a steady stream of vegetables every week (some of those young farmers are in their forties now and are still going strong). This type of arrangement is great for both the farmer and the eater; there is a real connection between the two, and the risk-sharing and early payment are a real boon to the farmer.  But it does differ from the older conception of a consumer-driven Community-Supported-Agriculture.

At this time, there is a wide variety of share types ranging from the urban box share where the farm drops off a box of produce somewhere in the city to an online ordering system where you customize that box. Some farms maket purely through a CSA-type outlet, others mix CSA with farmer's market, restauant sales, or wholesale sales by the truckload. What all of these share types have in common is that they are a way for farmers to sell produce and not so much the cooperative relationship between farmers and their eaters that was at the heart of the original CSA vision.  What the farmer grows and puts in the share is a decision of the farmer based on what they can grow well and what they think their members want to eat.  And the price is based on supply and demand; what other farms in the area charge is more important than the actual cost of production.

Our own farm is a hybrid, as many small farms are.  When we came to North Amherst in 2006, we thought we would transition over time to do all of our marketing through CSA shares.  The share format made sense for a farm that had been successfully preserved by community effort.  Our original business plan called for us to grow to 400 or 500 shares and stop going to farmers market by the third year.  We tried for a couple of years to advertise our shares widely and wean ourselves from farmer's market, but were unable to attract more than our current level of 250 to 300 shares.  We found that with all of the great CSA farms in our area, people shop very judiciously, and our base of people who like what we do and who are in our neighborhood is somewhat fixed.   Our share price is constrained by the price other farms charge; and while we might be able to achieve some economies of scale and reduce our costs by selling to a larger base of CSA members, we haven't been able to increase that base.  We also have found that some of our loyal customers who shop at our stand at market try a share for a year or so, and then go back to shopping at market because that fits how they want to do things better.  So we have kept going to market, but our goal has always been to sell most of our produce at the farm.  It has always seemed silly to us, with 10,000 people who live within a mile of our farm, to pack everything up, drive 3 miles to the center of town, unload everything, sell for a little while, and then pack it all back up again to go home.

Our current project to build a farmstand on the site springs from our hope that we can bring together all of our marketing into a single unified effort.  We hope that if we pour all of our energy into that one effort that is accessible to more people, we can increase the total output of the farm, and achieve more of those economies of scale.  By increasing our marketing volume, we can also grow more of those crops which are more profitable for us and let other farmers specialize in things they do well. This doesn't mean we will be turning the farm into a monoculture, by the way.  We just might leave potatoes, for instance, to a larger farm who can afford the specialized equipment to really crank out potatoes more efficiently than we can.  We have started this year buying potatoes from Atlas Farm, who sells them more cheaply than we can grow them.  We are contributing in this way to increasing the efficiency of our local food system.  And even a larger farm like Atlas has many different crops and is rotating their land through a diverse cropping system.

We are excited about the potential for this new farm stand to increase how much of our community we reach, while also providing a more sustainable income for Dave, myself, and our crew.  And we haven't even started talking about phase 2, which would be starting a kitchen to cook some of our great food for you all to take home to eat!

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