The LocalHarvest Blog

Dear CSA Farmer,

By now you are probably aware of the recent conversation in the media about Venture Capital (VC) funded "Farm Box" businesses taking the wind out real CSAs' sails. I wanted to share with you what I think is going on and how we can take a stand to preserve the integrity of the CSA movement.

As the Good Food movement started to go mainstream, starting in 2006 VC investors began flocking to "local food" startups. For a few years, we at LocalHarvest received dozens of calls from hungry investors wanting to fund us. Our response was always the same: Pretty much by definition, "maximization of profits" as the investors' top goal will never be compatible with the Good Food movement, which is driven by the health of farmers' livelihoods, communities, and the environment.

Since then, VC-funded companies have attempted a takeover of the CSA market painstakingly developed by small farms and the local businesses who collaborate with them. 10 years later, and with most of the capital spent, we're now seeing these ventures fail. Good Eggs, Farmigo, AgLocal, and other heavily-funded businesses have failed to take over the CSA space. They all learned the hard way that you cannot squeeze 20% to 30% profit margins from CSAs. We believe this trend will continue, and that the space will finally resettle into the steady grass-roots-driven growth it had during its first 20 years, before the VC money flooded in.

The most recent case of a heavily-funded venture failing is Farmigo. They launched a CSA Software product in 2009 in direct competition with our CSAware. I projected at the time that their plan was to learn how CSAs are run and later use the knowledge to compete against their own CSA clients. This proved true when in 2011 they re-launched as an "Online Farmers Market". With most of $26 million dollars now spent, Farmigo proved unable to transform the CSA model while skimming 20% or more from CSA profits. While doing this, they squeezed many established CSAs and (in worse cases) helped drive CSAs out of business in the markets where they operated.

Farmigo has announced that they will refocus on CSA software while they still have investment funds to stay in operation. LocalHarvest pioneered the CSA Software space with our CSAware and CSA Manager products. While Farmigo has proven their willingness to commoditize the local farmer to gain profit share, we distinguish ourselves from this practice. LocalHarvest has always and will continue to focus on helping local farms grow their business.

We at LocalHarvest.org have been dedicated to helping CSAs thrive since 1999, and we are here for the long run. Our goal is not to sell out to the highest bidder, but to provide a livelihood for our small and dedicated crew, while providing tools and services needed by CSAs and family farms.

Just imagine what could have been achieved if those billions had been invested in promoting family farms and locally-grown agriculture. We encourage you to choose your business partners wisely and to collaborate with those that share your vision of the future of food.

If you would like to speak with us about growing your CSA using our CSAware or CSA Manager services, please contact us directly. We have successfully transitioned Farmigo clients to CSAware. If you are currently working with them, we can help make the transition painless.

Sincerely,

Guillermo Payet
President
LocalHarvest.org

PS: Watch for the upcoming July edition of the LocalHarvest Newsletter for more on this subject.

Guillermo

02:53 PM CDT