The Capay Valley Farm Shop: A Good Bet on the Farm(s)

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By Andy Bamber

Aggregation, distribution, scale—such are the new buzzwords in the world of grocery delivery platforms. In recent years, AmazonFresh, Good Eggs, and Instacart, to name a few, have used the power of big data and the web to launch grocery delivery services in select markets with the hope of achieving a broader rollout. Promising locally grown and organic produce, meat, and dairy products, these corporate and venture-backed platforms are using a “tech” approach to implement a local model of agricultural production at a national scale.

With the way technology and data crunching has come to dominate nearly every last sphere of human activity and, lately, economic endeavor, it would seem that a technology-driven platforms will be triumphant, rendering irrelevant Community Supported Agriculture (CSA) farms, arguably the originators of the organic produce delivery model. After all, if you can get all of a CSA’s offerings from AmazonFresh delivered to right to your door with FedEx precision, why would you do anything else?

While this outcome is not a forgone conclusion, today’s increased capital flow to and technologization of “the local” combines with an e-commerce mentality among consumers to pose legitimate challenges to CSA farms, which are traditionally smaller, family-run, and “slower” in the way they do things. Some CSAs, however, such as the Capay Valley Farm Shop in Esparto, California, are positioned to remain relevant and foodshed-oriented amidst the changing landscape of organic produce delivery.

Becoming a shareholder of local farms

Box sizesAt its simplest, the CSA model involves community members taking an “interest” in a farm, often in the form of pre-payment, in exchange for a “share” of the farm’s bounty. In good years, this means an abundance of fruits and vegetables at regular intervals throughout the year; in lean, slightly less. Farmers, on the other hand, enjoy access to working capital and a guaranteed market, which provides financial security and relieves them of the burden of selling their production on the open market. Based on more than a straight quid pro quo, a traditional CSA engenders a commitment to place and a sustainable agricultural system, one that produces good, nourishing food, supports independent farmers, and reverentially uses the earth’s natural resources.

The Capay Valley Farm Shop differentiates itself from online delivery platforms in all of the unique ways that only a CSA can. While it can be argued that these criteria alone are enough to compete with the fast money and cold algorithms behind online platforms, to survive as an organic farm in the highly competitive organic foods space, a company also needs a strong business model. An on this count, the Capay Valley Farm Shop measures up as well.

The Capay Valley Farm Shop weekly delivers fresh produce, meat, eggs, dairy products, and a variety of valued-added local products to one of twenty-eight locations in Sacramento and the San Francisco Bay Area. As a CSA aggregator, the products that go into its delivery boxes come from other farms. However, unlike CSA farms that aggregate from a much larger geographical area, Capay Valley Farm Shop sources exclusively from forty family farms in the Capay Valley, a small valley of Yolo County to the northwest of Sacramento. This has allowed it to deliver a unique, place-based product offering in the increasingly competitive marketplace of organic produce delivery.

The natural limitations of geography have been a boon to Capay Valley Farm Shop’s differentiation strategy. In only five years, it has been able to grow its subscriber base to over 700 CSA members. In that time, it has also been able to secure additional growth capital from values-based investors. This was the case in the third year of its growth when Capay Valley Farm Shop CEO Thomas Nelson approached the Northern California affiliate of the investment catalyzing platform known as Slow Money, a loosely organized group of entrepreneurs, investors, and activists that seeks to build an economy based on the principles of soil fertility, sense of place, care of the commons, and economic, cultural, and biological diversity.

Individuals betting on food, farms, and fertility

Capay Valley MapWhile Slow Money Northern California does not make investments as a group, it convenes individuals and helps spark investment conversations that can lead to funding relationships for sustainable food and farming businesses. And so, when Thomas Nelson approached the Slow Money with Capay Valley Farm Shop’s values and business plan in hand, it was only natural that his message would resonate with its individual investors, who are more attuned to investing based on “food, farms, and fertility” than profit maximization.

It is this like-mindedness that led Nelson to present the Capay Valley Farm Shop during the entrepreneur “spotlights” portion of one of Slow Money Northern California’s monthly meeting.  Significantly, after this introduction to the Slow Money community, Nelson got to know and form relationships with several of the group’s members. It was these relationships that would, in the end, lead eight Slow Money members to make individual investments in the business over the ensuing months.

Today, the Capay Valley Farm Shop is the only equity transaction facilitated by Slow Money Northern California. As the group’s members typically prefer the ease of documentation and self-liquidation of loans, this is a relatively uncommon form of investment vehicle for the group to have facilitated. However, given the alignment on mission and values between investors and the Capay Valley Farm Shop, it is unlikely that investors will seek a fast exit, or that the company will betray its unique business model in search of higher returns, making equity a safe choice for all.

The capital provided to the Capay Valley Farm Shop by individual investors of Slow Money Northern California is helping the company bring a unique, place-based option to the increasingly venture-back and technologized marketplace of online organic grocery delivery. It competes against the likes of corporate and venture-backed firms that have the ability to command a seemingly endless amount of financial resources and technological prowess to “disrupt” local markets for produce, meat, dairy, and value-added products, markets that are ill-suited for replication at scale.

As the intersection of food and technology threatens to make fast the last vestiges of the slow world of local, organic agriculture, the fact that the Capay Valley Farm shop is succeeding at carving out a market niche around place-based products speaks to the vitality of the community-supported model. It further demonstrates how, in the world of fast finance, an investment approach that “brings money back down to earth” is playing out with the help of Slow Money and its loosely affiliated national chapters.