Networking Food System Businesses to Build Local Economies

Networking Food System Businesses to Build Local Economies

Megan Shoenfelt & Steve Bosserman

32nd Annual Ohio Ecological Food & Farm Association (OEFFA) Conference Inspiring Farms, Sustaining Communities

9:30 – 11:30 AM, February 19, 2011Granville, Ohio

This Workshop: Practical Steps in How to…

• Strengthen your business within a local economy

• Form business networks that span the sustainable agriculture value chain, starting with the local market and working back to production

• Develop business ecosystems with supportive social, economic, and environmental systems to promote sustainability

• Find within your community the resources and assets needed to launch new businesses and sustain your business ecosystem, while retaining local ownership.

What We’re Doing…In projects supported by the USDA Specialty Crops Research Initiative and the Fund for Our Economic Future of NE Ohio, we are aiding and guiding collaboration on new business opportunities involving specialty crops (fruits, vegetables, tree nuts) innovations and production.

LocalFoodSystems.org

Sustainable Local Economic Development: Key Questions

• What is a local economy?

• How does one participate in a local economy?

• What is a business model?

• What is a business ecosystem?

• How do you plan a business in the context of a business ecosystem?

• How can a local economy operate?

What Is a Local Economy?

“The following study analyzes the impact of the 16-county Northeast Ohio (NEO) region moving a quarter of the way toward fully meeting local demand for food with local production. It suggests that this 25% shift could create 27,664 new jobs, providing work for about one in eight unemployed residents…”

A system of choices and transactions that enable members of a community, neighborhood, or rural area to meet their needs and sustain themselves from local sources.

The Play:•4,000,000 people in NEO•Each local economy serves 10,000 people•Each of the 400 local economies in NEO supports 20 new businesses•Each business creates 3.5 new full-time-equivalent jobs•Total new jobs = 28,000

Hold OfficeHold Office In-StoreIn-Store

How Does One Participate in a Local Economy?

Purchasing

AwarenessAdvocating

Public Service

Search & Lurk

Join & PostJoin & Post

Convene & LeadConvene & Lead

HealthHealth

LifestyleLifestyle

AspirationsAspirations

Vote & LobbyVote & Lobby

ActivismActivism

Farmers MarketFarmers Market

Direct, e.g., CSAsDirect, e.g., CSAs

VolunteerVolunteerContributeContribute

Own & OperateOwn & Operate

StatusQuo

Investing

Level of Participation

1

2

3

What Is a Business Model?

In the context of a local economy, it describes how to:• Market to one’s own community • Identify, integrate, apply, and reinvest local assets and resources to

leverage internal capability and capacity and reduce dependency on external sources

• Generate sufficient revenue and reduce operating costs to sustain the business

• Substitute locally produced goods and services at greater value than externally supplied equivalents

• Conduct business in ways that improve both the social and environmental dimensions of community life in addition to the economic.

• In the case of specialty crops, the business model is applicable to all food system supply and value chain businesses, not just specialty crop production.

What Is a Business Ecosystem?

A business ecosystem, in the context of a local economy, encompasses clusters of interdependent, community-based businesses. These business clusters include businesses that:

•Share a common function, such as specialty crop production, anaerobic digester installation, and deconstruction and material reclamation, etc.

•Link along a common value chain such as food production-to-consumption, waste recovery-to-green energy generation, and repurposing-to-affordable home construction, etc.

•Blend of function and value chain such as agri-tourism-and-dairy-and-organic hay operation or vineyard-and-winery-and-specialty-crop-operation-and-family-friendly-restaurant

Dairy manure Biodigester Greenhouse vegetables School cafeteria (food waste )

What Is an Effective Business Ecosystem?

• Consists of integrated clusters of individual businesses.• Responds to local market demand, strengthens the local economy, and

engages members of community within a supportive framework to launch and sustain myriad local businesses.

• Meets community members’ requirements as measured in calories, kilowatts, gallons, cubic feet, and units;

• Utilizes a wide range of monetary and non-monetary mediums of exchange to maximize participation;

• Minimizes economic leakage from the community, for example through reinvestment, reuse, repurposing, and recycling of local assets;

• Mitigates investment risks by positioning individual businesses within a sustainable, localized system.

• In the case of specialty crops, food and related businesses are but one dimension of a holistic business ecosystem.

How Do You Plan a Business in the Context of a Business Ecosystem—Part I?

Business Case TemplateTitle: In 70 words or less, what is the name of your business case?

• Reference: Re-enter the name of your business case, then enter names of principal developers, describe how the idea came about, and describe the state of things as they are today.

• Context: Building on the information you provided in the previous section, what opportunities and challenges do you see? What business objectives do you have? How do your objectives align with or build on other opportunities and business objectives?

• Value Proposition: What will your business provide to customers and why will they pay for it. Map your route to those outcomes. State business benefits by outcomes, considering economic, social and environmental impacts of the value you plan to provide. Consider various financial scenarios and associated risks and costs of proceeding and not proceeding.

• Focus: What specific problem are you solving or specific need are you addressing? Assess issues of size, scale, and complexity. What is the scope of your endeavor? What considerations have you made to help you maintain focus on the problem and manage scope? Identify and evaluate various options that enable you to stay in-bounds of your original guidelines.

• Deliverables: What will you deliver as a result of your business and how will customers benefit? What critical factors influence your capacity to deliver your promised goods and or services? Who are the key stakeholders? What organizational areas, both internal and external, will be impacted during delivery?

• Workload: How much work is there to be done and what is your plan for doing it? Who will do what by when? How will you organize operations to get things done? What specific activities are required?

• Required Resources: Who will be on your project leadership team and/or governance team? What resources, including funding, are at their disposal? What additional resources need to be found?

• Commitments: What are the expectations of your customers, colleagues, suppliers, employees, etc.? What budgetary and quality controls, internal and external communications, and schedule documentation will you need to assure those expectations are satisfied?

http://localfoodsystems.org/building-business-cases-0

• Points are business cases or ideas proposed during agbioscience stakeholder meetings• Symbols for points indicate potential business ecosystem clusters• Line color spectrum indicates strength of potential supply chain relationships (purple=weakest, red=strongest)

Potential Local Economies andAgbioscience Business Ecosystems in NEO

How Do You Plan a Business in the Context of a Business Ecosystem—Part II?Business Ecosystem DevelopmentConsiderations that connect your business with others in ways that build wealth in the region and enhance the sustainability of each of the interacting businesses through waste or supply chains, shared resources or mutual development of markets, as examples.

1.Mapping: What information have you assembled on: a) Asset inventory - geographically where do or could your supplies come from, particularly within Northeast Ohio?b) Process flows – what happens at each step in producing value?c) Value chains – how much value is added to your product at each step?d) Supply chains – what materials, information, etc. is needed in each step of the process?

a)Modeling: What information do you have on testing "what if" scenarios to identify choices, select strategies, and ultimately identify how your business fits into a logically organized network of businesses (business ecosystems) that deliver interrelated products and services into local markets and are mutually supportive towards sustainability of the entire network. b)Information Flows: What data, communications, and other information technology resources have been identified and/or acquired to support the functioning of the businesses that network together into a business ecosystem?c)Know-How: What is the combination of information, experience, skills and abilities, and application to the business that is essential in the business and the business ecosystem to ensure an ability to adapt continuously to changes in the business climate, and what is the current status of this knowledge among those engaged in the business?d)Community Investment: What mechanisms and resources are in place within Northeast Ohio or need to be created to provide access to local investment in the business so that the ownership of the business and the wealth generated have every opportunity to remain within the region.e)Governance: What are the existing legal authority structures that will govern the operation of your business and related businesses, and what changes in policy or statute are needed to improve the function of the business ecosystem.

Process Flow Maps for Fresh Produce

http://localfoodsystems.org/process-flow-maps-fresh-vegetable-and-grape-production

How Can a Local Economy Operate?

Invest Time, Usage, and Money into Portfolio

Receive Recognition…and Return on Investment

Meet Needs

Satisfy Wants

Personal

Personal

Community

Community

Community Investment Portfolio

Point of Consumption

Services

Basic Business Ecosystems Flow:Community Investment Portfolio Framework

Production

Products

Processing Preparation

Virtual(Green)

Physical(Orange)

In Out In Out In Out


Services

Community Investment Portfolio (CIP)Businesses that Assure Ecosystem Sustainability

Production

Products

Processing Preparation

Virtual(Green)

Physical(Orange)

Governance


Services

In Out

CIP Governance: Operational Guidelines for the Business Ecosystem

Production

Products

In Out

Processing

In Out

Preparation

Virtual(Green)

Physical(Orange)

Governance


Services

In Out

Essential CIP Support Services: Providers Inside or Outside the Business Ecosystem

Production

Products

In Out

Processing

In Out

Preparation

Virtual(Green)

Physical(Orange)

Education

TeachingResearch Outreach

Transactions

CapitalExchange Access

Legal

ContractualCriminal Compliance

Governance


Services

In Out

Formation / Expansion of Core Businesses in CIP

Production

Products

In Out

Processing

In Out

Preparation

Virtual(Green)

Physical(Orange)


Education


Transactions


Legal


Governance

Services

Distribution

Distribution

In Out

In Out

Aggregation, Queues, and Distribution

Production

Products

Distribution

Distribution

In Out

In Out

Processing

Distribution

Distribution

In Out

In Out

Preparation

Virtual(Green)

Physical(Orange)

Education


Transactions


Legal


Governance


Services

Distribution

Distribution

In Out

In Out

Zero Waste Return Loop

Production

Products

Distribution

Distribution

In Out

In Out

Processing

Distribution

Distribution

In Out

In Out

Preparation

Recycle

Reuse

Repurpose

Reclaim

Virtual(Green)

Physical(Orange)

Governance

Education


Transactions


Legal



Services

Distribution

Distribution

In Out

In Out

Physical Essentials for Business Ecosystems:Providers Inside the Business Ecosystem

Production

Products

Distribution

Distribution

In Out

In Out

Processing

Distribution

Distribution

In Out

In Out

Preparation

Recycle

Reuse

Repurpose

Reclaim

Virtual(Green)

Physical(Orange)

Education


Transactions


Legal


Governance


Services

Distribution

Distribution

In Out

In Out

Complete Community Investment Portfolio

Production

Products

Distribution

Distribution

In Out

In Out

Processing

Distribution

Distribution

In Out

In Out

Preparation

Recycle

Reuse

Repurpose

Reclaim

Virtual(Green)

Physical(Orange)

Education


Transactions


Legal


Governance


Services

Distribution

Distribution

In Out

In Out

Populated Community Investment Portfolio

Production

Products

Distribution

Distribution

In Out

In Out

Processing

Distribution

Distribution

In Out

In Out

Preparation

Recycle

Reuse

Repurpose

Reclaim

Virtual(Green)

Physical(Orange)

Apple Creek Dairy

Apple Creek Bio-Energy

Apple Creek Meat

Apple Creek School Lunches

Apple Creek Decision Support

Apple Creek Information Systems

Apple Creek Asset Utilization

Apple Creek Agri-Tourism

Apple Creek Produce

Apple Creek CIP Management

Apple Creek Equipment Systems

Apple Creek Asset Inventory

AppleCreekZero

Waste

Apple Creek CIP Website

Apple Creek Operations

Apple Creek Distribution

Apple Creek Facilities Management

Apple Creek Creamery

https://sites.google.com/site/applecreekcip/cip/apple-creek-zero-waste



Potential Approaches to CIP Governance

• TimeBanks– Time Bank Mahoning Watershed

• BetterMeans– Open Source Venture: Picture This

• Local Roots

• Zingerman’s

• Evergreen Cooperatives– Ohio Employee Ownership Center

• South Central Manufacturing Network, Inc.– Ohio Cooperative Development Center

• Shagbark Seed & Mill– Appalachian Center for Economic Networks

(ACEnet)

• Cooperative Local Food System– NEO Food Web

Next Steps…

• Check out LocalFoodSystems.org• Form an online group• Develop a business case• Post it to your group and have others do the

same with theirs• Associate the business cases by clusters• Establish a governance structure• Form a business ecosystem