By Tracy Sweely
At Fantastic Farm Enterprises we feel that the Urban CSA is the next logical step in the expansion of the local food movement. We are not only encouraging the elimination of the “middle-man” between growers and consumers but we are encouraging the elimination of the middle! Why not have produce grown within neighborhoods to feed those residing there? Community gardens are an extremely important neighborhood food production model. But many people do not have the time or know-how to participate in a community garden, yet they would love to have access to fresh produce grown in their own neighborhood. The solution that fills this gap is the Urban CSA, where a farmer uses available arable land, be it a vacant lot and/or several backyards to grow produce for a number of paying shareholders.
This component of Fantastic Farm Enterprises provides an overview for starting a CSA based on the experience of those operating the HeartEye Village CSA in Lafayette Colorado (www.hearteyevillagecsa.com). For an excellent and very detailed guide to developing a business plan for sustainable farming we recommend the Michigan based CSAfarms.org, CSA Training Manual Chapter 7. This incredibly helpful guide can be found for free here.
In the late summer of 2008 the owner of a property in Lafayette, Colorado decided to transform a ¼ acre area of the property that had been used intermittently as a garden space into something that would be more beneficial to the neighborhood and surrounding community. HeartEye Village CSA, LLC was subsequently created. HeartEye Village CSA is a non-certified organic, ¼ acre, micro-farm that uses bio-intensive techniques. It is located on an 80-acre piece of land that had originally been a dairy farm in the early to mid-1900’s. Later in the mid-70’s the property was used for a farm-based vocational summer enrichment program for talented and gifted high-school students. More recently the property hosted, and continues to host, a horse boarding operation.
Setting up the Business:
A limited liability corporation (LLC) is a popular choice for farming operations and was considered to be the best business entity from which to operate the HeartEye Village CSA. While a sole proprietorship is the simplest business entity to use, we do not recommend that a CSA be administered in this way because the owner can be held personally liable for any financial obligations incurred by the business. We do recommend consultation with an accountant when choosing which business entity to use and to assist in the administration of payroll if the CSA will have employees.
Many aspects of setting up an LLC can be done without legal assistance. The following documents, used for opening a business bank account, can now be filed very easily on-line in most states through the Secretary of State’s office:
- Articles of Organization,
- State Business Registration,
- Wholesale License Registration,
- and obtaining a Certificate of Good Standing
- An Employer Identification Number (EIN) must be filed with the IRS in order to obtain a tax ID number for the LLC even if you do not have employees. This can be done easily on the IRS website at: http://www.irs.gov/businesses/small/article/0,,id=98350,00.html.
The following are documents that should be vetted by a legal expert:
- Operating Agreement
- Land Lease: this is the lease between the farmer and the landowner of the plots that the farmer is cultivating.
- CSA Shareholder Agreement
- Any type of release forms, such as a release of liability form for volunteers assisting with production.
Finally, appropriate insurance must be obtained. An insurance agent will be able to set up a farm liability policy for a CSA and, if necessary, an additional commercial insurance policy for wholesale sales to the public or to restaurants. In addition, an insurance agent can set up a Workers Compensation Policy (if warranted) if there are any employees or any working shareholders in the CSA, i.e. those who trade labor for their share.
Non-labor expenses incurred in setting up and operating the HeartEye Village CSA in 2009 for its first year totaled approximately $8900. Of this, about $7300 was for hard costs. While we already had on hand shovels, hoes, rakes, a couple of hoses, hand tools, pens and pencils, clipboards, produce scales, greenhouse heaters, a rototiller, 2 refrigerators, 2 wheel barrels, and a canopy and tables for our roadside stand, other hard costs included:
- A broadfork
- 2 long spades
- 88 row stakes
- a compost thermometer
- 2, 6’ x 8’ greenhouses
- 2 greenhouse thermometers
- 3 hoses
- 2 spray nozzles
- 2 watering cans
- 3000’ weed barrier
- a drip irrigation system
- a 5 gallon salad spinner
- 4 extension cords
- lumber to construct seedling trays
- 2 germination pads
- 2 retractable knives
- 4, 20 gallon utility tubs
- water tap splitters
- a third refrigerator
We also had many miscellaneous expenses such as soda pop and sunscreen for our volunteers and working shareholders, mineral oil to finish the seedling boxes, lumber for setting up the greenhouse foundations and replacement handles for older shovels and hoes, etc. We also visited restaurants to obtain free 5 gallon buckets and containers of various other sizes.
Operating costs comprised about $1600 of the overall $8900 initial investment. This included:
- soil amendments
- soil test
- seeds and live plants
- 1000’ row cover
- potting soil
- beneficial insects
- produce bags and rubber bands
We originally projected that we would need 650 hours of labor for our season and so we offered enough working shares to cover ½ of that labor. We then projected our garden manager labor expense to be approximately $6000. Our initial infrastructure set up required more labor than we anticipated but even our regular operation labor projections were more than twice what we anticipated. Overall, 1654 person-hours were spent over the entire season. We believe that our labor projections were so far off because we were basing them on traditional farming models that generally use petroleum inputs for mechanical equipment and synthetic fertilizers, pesticides and herbicides. We did not have any labor figures for bio-intensive models that use very limited, if any, mechanical equipment and no synthetic inputs.
We decided to provide 12.5 shares total and so we sold 7.75 (2-person) CSA Shares for $450 each and traded out labor on 4.75 shares for working shareholders at 64 hours each. We also hoped to sell an additional $300 worth of produce per week at our roadside Farm Stand and to local restaurants. During the season we found it easy to add a Virtual Farm Stand component to our operation. A list of produce was e-mailed weekly to Virtual Farm Stand customers. Customers would then place orders via e-mail and then pick up their orders the next day, leaving payment with the Garden Manager.
When we first started to plan out the produce that we would grow on the 4000 sq ft of planting surface (roughly 1/10th acre) in our ¼ acre plot, we were really excited. But our excitement and anticipation was short lived… After several hours surrounded by reference books and farm start-up manuals we were no further along with the plan than when we started. It was VERY frustrating. We knew which crops we wanted to plant but we did not know how much to plant and when to plant the successions to make sure that we had continuous harvests for our 25 members.
We then spent another couple of hours looking on-line to see if there was any type of programs or software to help us with the plan. We studied the farm start-up manuals to see how others dealt with the complexity of planning so that we wouldn’t have to “re-invent” the wheel. But there were neither adequate programs on-line nor any software that did exactly what we needed it to do for a CSA. And the traditional methods used in the farm start-up manuals were just too cumbersome because none used the power of computers and spreadsheets. So as it turned out we did have to “re-invent the wheel”, but we believe our wheel is a significant improvement over cumbersome manual methods!
I spent countless hours over a couple of months in my spare time to develop the Fantastic Farm and Garden Calculator, based on bio-intensive methods. The prototype of the calculator was then used to plan the HeartEye Village CSA. Once the calculator was functioning all we had to do was input the number of people we were trying to feed, the amount of space we had, our frost date and garden end date, how much of each crop we wanted to provide to each CSA member per week, how much we wanted to sell in retail markets, and the average maturation times for the varieties of each crop we wanted to grow. The calculator kept track of how much space we “used” as we input all of this information so that we didn’t plan for more than we had space for.
The calculator then computed how much of each crop to plant, when and how much to plant for each succession of each crop (in both the early and late part of the season), when our approximate harvest dates would be and how much seed we would need to buy. The calculator also helped us project our weekly and annual retail sales. Once we had all of this information generated by the calculator we could map out each row and use these maps as guides as we planted and harvested throughout the season.
But best of all, by using the calculator we were able to supply consistent quantity and variety to our shareholders during the entire harvest season. Feedback forms submitted by our shareholders indicated immense satisfaction with our quantity to variety ratios. We aren’t saying that it is absolutely necessary to use the calculator but it sure does make it easier and quicker to manage the complexities of production. We also found that it makes it easier to institute and track changes throughout the season and between seasons.
A Measure of Success:
A total of 3713 lbs of produce was harvested from the 4000 sq ft of planting space on our ¼ acre micro-farm. This does not include the number of lbs of produce that we did not harvest because we did not have the markets secured in which to sell it. We guess that we actually grew well over 4000 lbs of produce. The following chart indicates the total number of lbs harvested for each of the 45 crops grown during the 2009 season.
- Arugula 16.53
- Beets w/ greens 163.38
- Bok Choi 47.95
- Broccoli 0.79
- Brussel Sprouts 0
- Cabbage 0
- Carrots 134.37
- Cauliflower 0
- Chard 94.2
- Cilantro 1.25
- Collards 25.91
- Corn 0
- Garlic 0
- Kale 24.18
- Leeks 0
- Lettuce, Leaf and Head 93.88
- Mustard 0
- Onions, Red 118.94
- Onions, Yellow 140.5
- Parsley 8.3
- Parsnip 0
- Peas 0
- Peas, Snow 38.69
- Radishes 48.87
- Shallots 0
- Spinach 16.87
- Turnips w/ greens 101.32
- Basil, Ppl 4.1
- Basil, Italian 15.91
- Beans, Yellow 110.01
- Beans, Green 119.79
- Cauliflower 0
- Cucumber 372.94
- Eggplant, Japanese 3.21
- Eqqplant, Rose 2.73
- Eggplant, Black 11.29
- Melons 6.5
- Okra 0
- Peppers, Bell 76.57
- Peppers, Aneheim 24.4
- Peppers, Serrano 5.53
- Peppers, Habenero 0.49
- Peppers, Jalepeno 7.52
- Peppers, Poblano 8.92
- Peppers, Pepperocini 1.62
- Pepper, Asian 1.41
- Peppers, Passilla 3.07
- Potatoes, Red 23.5
- Summer Sq, Patty Pan 160.3
- Summer Sq. Crookneck 79.19
- Summer Sq Zucchini 89.74
- Tomatillas 52.44
- Tomatoes, Cherry 21.41
- Tomatoes 1176.5
- Winter Sq. Blue Hubb 119
- Winter Sq. Delicata 97.5
- Winter Sq. Sweet Dumpling 41.5
Total start-up expenses for 2009 were $25,002. This breaks down as follows:
Start-up, hard costs 7302
Garden Manager wages+ tx 16141
Annual operation costs 1559
Total expenses 25002
Total income for 2009 was $5625. This breaks down as follows:
Income from cost of shares 3300
Retail Sales (farm stand) 1685
Wholesale Sales (restaurants) 640
Total income 5625
Total Labor for the 2009 season was 1654 person-hours. This breaks down as follows:
790 hours performed by Garden Manager,
304 hours performed by working-share members,
30 additional hours volunteered by working-share members,
398 hours performed by Garden Co-managers underwritten by the landowner,
132 additional hours volunteered by Garden Co-managers.
If no changes were made in the expense, income and labor picture for the 2009 season, the CSA would, literally, never be able to pay for itself. This is because monetary labor costs and operation costs are both annual expenses and thus would add an additional $17,700 each year to the original start-up expenses of $25,002. Another reason the first year operations are unsustainable is because the portion of labor underwritten by the landowner and volunteer labor cannot be relied upon on an annual basis.
Where income is concerned, we were aware from the start that retail and wholesale markets may not be a sizeable income stream during our first year. Typically, these types of markets must be developed and expanded over time. Given the small size of our operation we don’t project our access to these markets will grow significantly enough, quickly enough, to make our operation sustainable in a satisfactory amount of time.
These shortfalls were ascertained earlier in the season and significant changes are planned for 2010 and beyond. These changes will make the CSA a sustainable entity and allow start-up costs to be recouped in a reasonable amount of time, which we anticipate to be 3.5 years.
In order to recoup start-up costs and allow the CSA to pay for itself annually, changes in labor allocation, working share commitment, and marketing are planned.
Since infrastructure set up consisted of 140 hours, it is projected that only 1514 will be needed annually in future years. Labor is the single largest factor underlying the true cost of food production. Subsequently, changes in labor can have the most significant effect on expenses. The garden manager position is a skilled position and thus it is important to pay a sufficient wage so that the position is filled by someone with the skills and dedication that will ensure the greatest level of productivity of crops given the risks beyond human control, such as adverse weather conditions.
Weighing these factors we made the decision to divest the skilled, Garden Manager position of the more time-consuming garden tasks, making it an almost exclusively “managerial” position. We instead will create a full-time garden intern position to carry out a majority of the regular and time-consuming tasks. The garden managers will oversee the intern and the working shareholders on a part-time basis, greatly reducing monetary labor expenses. The intern will be compensated with a private residence (in an existing farm worker building), a weekly stipend and a half-share in the CSA. Thus the bulk of the 2010 labor allocation will be as follows:
- 100 hours performed by Garden Manager
- 72 hours performed by working shareholder/garden co-manager
- 1108 hours performed by Garden Intern
Based on the limited amount we are able to pay for labor there is a slight shortfall in the number of person-hours needed for the season. To mitigate this shortfall we will need to make an adjustment to the working share time committment.
Other CSA’s that we polled offer their working shareholders a slightly discounted share in addition to a labor commitment. That is, working shareholders generally pay a discounted rate for their share, typically $100-200 off the regular full-share price, and also commit to an average of 35 hours of labor. We would like to avoid having our working shareholders pay anything on top of their work commitment. Instead, we will ask our full-share working shareholders to contribute 72 hours during the growing season and our half-share working shareholders to contribute 36 hours during the growing season.
Given these changes the total labor commitment from 4.25 working shares will be 306 hours. Adding this with the paid hours performed by the Garden Manager and the Intern the total of 1514 hours needed for the 2010 season will be met.
Because of the limited size of the arable land available to us and because stable markets take time to acquire, we are not currently in a position to increase our revenues by increasing production volume. We foresee that as our bio-intensive skills grow we will be able to produce more from the same amount of land, but this will take time and in the meantime, we must look to other avenues for income generation. We plan to expand our retail sales component but we also will add an educational component to our operations. We are also planning to participate in the increasingly popular “Farm Dinner” market and we are planning to do fundraising as well.
Instead of the once-weekly manned farm stand, we will be increasing retail sales by creating a small, honor system based, un-manned farm stand that will be operated daily. Such farm stands are typically successful and, of the farmers we spoke with who use them, tend to not have problems of theft. The benefit of course, is that the farm stand can have longer hours of operation with minimal expense from labor.
We will also be expanding our Virtual Farm Stand sales by increasing the e-mail recipient list. We found that the Virtual Farm Stand has significant potential because it provides another level of convenient access for consumers looking for locally produced food, while again saving the labor expense of a traditional manned farm stand.
Along with the current market trend towards local food, there is also increasing interest by consumers to begin growing their own produce. While many consumers have the desire to do so, they often lack the skill and experience to make their efforts viable. In addition, there is significant interest by many to start farms of their own. To participate in these arenas of market demand, HeartEye Village CSA will offer workshops in not only production, processing and preservation techniques, but also in commercial aspects of farming such as starting up a farming business as well as developing markets in which to sell products.
One new market within the local food movement that has been growing exponentially is the “Farm Dinner.” This is a dinner hosted by a farm for paying attendees, where currently available produce, grown on site, is prepared and served paired with wine, usually along with other locally produced foods such as meats and cheeses. The demand is so great for the experience that farm dinners generally tend to be sold out months in advance and have long waiting lists. Since one of our working shareholders is a gourmet chef, we are planning to organize at least two such farm dinners.
A Silent Auction is also planned to coincide with each of the farm dinners in order to raise additional funds. We are also planning to apply for agricultural grants to specifically defray some of our original start–up costs.
Despite shortfalls, the first year of operation for HeartEye Village CSA has been tremendously successful. Any new business expects start-up costs to be mitigated over future years. From our standpoint, we were not only able to provide an abundance of quantity and variety of produce to our members and other consumers, but we also clearly see where our operation must change to ensure its viability. Most farms have the asset of access to larger cultivatable areas. While we have limited potential for expansion, our management team is uniquely positioned in the local food movement and possesses a broad range of knowledge. This knowledge and improvements in our skills with using bio-intensive methods will enable us to both get the most out of the space we have and to creatively draw upon traditional and unique market opportunities to ensure HeartEye Village CSA’s future viability.
To track the changes HeartEye Village CSA Farm has undergone since its inception please read the Annual Reports that we've produced for each subsequent year of operation: Click here and scroll down to the bottom of the page for the latest reports.