Food, farms, fish and finance: a report on the issues of social impact and investment
On the 15th of June, the J.W. McConnell Family Foundation* released a new report entitled “Food, Farms, Fish and Finance: Practical impact investment strategies to seed and sustain local food systems”. The report, written by Ashoka Fellow Christie Young, aims to examine the issues within impact investment in local Canadian agriculture, highlighting the realities and challenges facing entrepreneurs in the sustainable and local food systems.
The profiles of most of the individuals interviewed are small business owners and are often families that are looking for viable and significant sources of funding. These enterprises aim to balance profitability and return on investment in order to cultivate a local and sustainable food system. However, they face significant risks. Agriculture, at large, is an economic activity that is highly dependent on weather conditions and as such is considerably affected by climate change. Furthermore, the perishable nature of their yields increases the difficulty of crop forecasting.
Entrepreneurs in this sector face fierce competition from large corporations. However, what sets them apart from the corporations that dominate the field of food and agriculture is their expertise and knowledge of natural products. More often than not, these enterprises do not utilize pesticide, GMO’s or other techniques that do not respect the natural cycle of the environment. On the other hand, it is difficult for these companies to grow and sustain their businesses when the market competition requires competitive prices that corporations are able to attain due to their non-natural farming methods.
The self-financing capacities of such enterprises are difficult in the short-term and they are constantly on the lookout for investors who would support their investments. Investors, however, often show little interest due to the low profit margins in this field. As a result, local agricultural entrepreneurs have had to come up with new and innovate ways to reduce production costs. They have managed to accomplish this through a reduction of waste, management of risk through diversification, and reduction and control of their supply chain.
The report emphasizes the opportunities and needs for more philanthropic risk-taking, as well as a need for equitable investment in local and sustainable agriculture. Indeed, impact investors in this space must seek to share the risk and returns equitably.
Farming is one of the oldest professions. Farmers have always had the noble task of feeding the world, now more than ever. In the past several years, agribusiness has been shown to have material ecological and economic limits. Reinvestment in local sustainable agriculture, on the other hand, helps to fight against rural poverty and global warming, while promoting healthy food and ecosystems. These farmers have in their hands, the key to the economy of tomorrow.
For now, there are very few investment products in this sector that are available to individuals. In the link provided you will find examples of these funds: http://www.ethiquette.ca/strategies/linvestissement-a-impact-social.
If you have any comments, suggestions or ideas please let us know in the comment section below.
* The J.W. McConnell Family Foundation aims to engage Canadians in building a more inclusive, viable, resilient and innovative society. The purpose of the foundation is to strengthen Canada’s ability to address complex social, economic and environmental issues.