Global Food Swadeshi Business Models

[Lucas]

I started looking at the idea of offering patches of land, for rent, with some services. So that people may grow their own food, maybe starting on a part-time basis.

[Not because I have land myself. But maybe as an idea to offer to someone else.]

I had read it somewhere, but I can't find the link. It portrayed a computer professional, assumed intelligent and able to work hard but not willing to do that if there's an easier way, using a small amount of money to start running a farm, on rented land, as a family business.

Thing is, as soon as I posted my very first draft of what might become a business plan template, one of the (very few) readers of my (Spanish) blog told me about another blog by someone who had actually done it, less than 100 km away from my home.

So what I'd like to do is find more examples, gather some data and ideas, and maybe even write an appropedia page for "business models" around "global food swadeshi".

The idea would be splitting up a 2 acre piece of land (=1 hectare) into 20 partitions. 1 of the partitions would host a place for viewing appropedia-linked youtube videos, plus shared tools (OpenFarmTech, maybe), plus whatever else is needed. The remaining 19 partitions would be offered for rental. Of course many variations would pop up.

Data needed includes: kilograms of food per square meter, water per square meter, and other things. So first it'd be started with estimates, and then, erm, grow from there.

[larahna]

Excellent!

The World Help Training Center is based on 1/10 acre land lots. Individual lots are available from low use (weekend warrior who comes and camps on it) to high use a full-time residential mini-farmer/gardener. The lots are then available for indivuals to garden (or even pay a full time resident to garden).

Some links that I found encouraging are:
http://onestraw.wordpress.com/2007/12/22/110-acre-veggie-garden/
and
http://onestraw.files.wordpress.com/2007/12/18-acre-market-garden.pdf

I will be watching this thread because our goal is to take this concept and pair it with an emergency gardening plan that will allow us to provide a canned 4 season seed mix that provides seeds for each of 4 growing seasons (1 year of planting) that will take individuals to sustainability quickly with the max nutrition.

Live life fully today,
LaRahna

[larahna]

Another link

3 TONS of produce on 1/10 acre. They have taken a 1/5 acre residential lot and use about 1/10 of an acre for production.

[Lucas]

http://www.pathtofreedom.com/about/urbanhomestead.shtml

(isn't chat good)

[larahna]

http://www.pathtofreedom.com/about/urbanhomestead.shtml

[David Braden]

In line with larahna's links, I recently saw a news report about a guy in Boulder (about 20 miles from me) who was market gardening in the yards of his suburban neighbors - I don't remember if he was paying rent or just a share of the produce - and I don't have a link. But I understood that he is making a living selling what he grows at the farmer's market.

I would like to expand your project here beyond just food. To me the definition of sustainability at the community level is:

a community with the capacity to produce all the food, clothing, shelter, education and health care that all of its residents need for the indefinite future.

The plan crystallizing in my mind is to set up a business corporation that would issue shares in exchange for labor. The contribution I intend to offer is the type of urban agriculture you are talking about here (I am 28 years an organic gardener) and I intend to learn all about drip irrigation. (Eastern Colorado is semi-arid - much like places in Spain I understand.)

If you will be so kind as to include this more expansive plan in your "business models around global food swadeshi", I would be pleased to contribute here.

[larahna]

http://blogs.wsj.com/independentstreet/2008/04/22/entrepreneurs-see...

Really cool concept the backyard farming. I saw a special report on 20/20 or one of those kinds of show this weekend about the Village Harvest Foundation: http://www.villageharvest.org who takes scavenger-ing to the backyards!

Lots of good ideas!

[Lucas]

Couldn't agree more, David! Business models is ALL business models, of course. But it's true that I'm focusing more at the community-town level (C-T). Including of course the individual-family level (I-F), because the I-F level can be _served_ by community-town businesses (a business selling seeds and irrigation stuff to families is an example).

"My" example was just one example, but we should think of more, to fill up the "solution space". Ok, the purpose is not filling up the solution space, but coming up with one or two workable solutions.

[David Braden]

Thank you Lucas - please feel free to ask me to take this elsewhere if I become tiresome:

CIE Structure

In a community investment enterprise, residents of a locality agree to cooperate in the acquisition of the land, facilities and tools to produce the food, clothing, shelter, education and health care needed by those resident in that locality. The production cycle for internal transactions is:

- contribution of labor to produce basic goods and services
- distribution of goods and services in exchange for labor

There is also a production cycle for external transactions:

- contribution of labor to produce basic goods and services
- sale of goods and services for money
- acquisition of additional land, facilities and tools
- capacity to accept additional contributions of labor

Growth of the internal cycle depends on expanding the diversity of goods and services offered from one basic service needed by every one on a continuum toward all the food, clothing, shelter, education and health care needed for every resident of our locality to thrive.

Growth of the external cycle depends on increasing the amount of “excess” production available for sale in the market.

Growth also depends on the quality of goods and services as participation in either cycle is entirely voluntary.

Topics to be discussed:

Ownership of the accumulated assets
Valuing contributions of labor in shares
Valuing goods and services for internal distribution in shares
Valuing goods and services for external sale in money
Management structure
Economies of integration
Integrating natural systems

[David Braden]

Ownership of the accumulated assets

The CIE would need a legal structure that could own assets used in its operation and that protects the ownership interest of those contributing to the acquisition of those assets.

One of the reasons to structure the CIE along the lines of a business corporation is that most people are familiar with the concept of stock ownership and the decision making structure in which the shareholders elect a Board of Directors which in turn appoints officers to run the day to day affairs of the organization. Other forms of limited liability organization could also be used – and may be more appropriate – considering the tax and securities laws of the applicable jurisdiction. Generally, a contribution to a business entity, in this case labor, is a non taxable event. When the interest in the business is exchanged for goods and services the value received is taxable. How that distribution is valued must be clarified under local law.

As the CIE accumulates assets, we would want to have the entity incur the tax liability on the income used for the purchase, rather than pass that liability through to the owners. That is the way a “C” corporation works under US tax law – but it is also possible under a Limited Liability Company structure. Issuance of shares in exchange for labor is exempt from securities regulations in the US because of the direct involvement of the person receiving the shares. Sale of shares for cash, by either the company or the shareholder may be subject to securities regulations. The limitations that apply would also have to be clarified under local law. It may be possible to make changes to the tax and securities laws to encourage community investment enterprises.

In a typical transaction we contemplate that a share would be issued for an amount of time spent working for the CIE producing goods and services. The worker would then redeem some or all of the shares earned in exchange for other goods and services. Any shares not redeemed would represent an ownership interest in the assets owned by the CIE. That would include a book value of the total value of the assets divided by the number of shares outstanding and a liquidation value of a percentage of proceeds on sale of the assets. The shares would also entitle the holder to vote for the Board of Directors. Typically there would be one vote per share held so that those who have put the most into the CIE, and taken the least out, have the most say in its operation.

All of this is subject to modification based on the experience of actually running such an organization. In a typical business corporation, the shareholders have little involvement in the business and are not expected to interfere with management except on rare occasions such as takeover bids, etc. In this case, the shareholders will be intimately involved in the day to day operations. It may be feasible to include modifications such as having each occupation type select representatives to the Board and each Board member having a vote based on the number of people they represent.

Operation of the CIE will depend on maintaining the value of the shares. Someone who understands the relationship between shares issued and value produced must be in charge and have the authority to make decisions that produce the desired results.

[David Braden]

Valuing contributions of labor in shares

In my example, I have used 1 share is equal to 1 hour of semi-skilled labor but I would think that would float over time based on a bidding/negotiation process. For any given task, there will be 0 to many people willing to perform the task. If there are 0 the corporation will need to increase the share value until it attracts at least one – (who will clean the toilets for example). If there are many people willing to do a particular task management might institute a bidding process and/or select people based on qualifications (who will play with the babies?).

The number of shares people will need to justify spending their time with the CIE will depend on the value of the goods and services for which the shares can be redeemed.

Valuing goods and services for internal distribution in shares

If the CIE has an abundance of any given product – a bumper crop of tomatoes say – then the cost to the corporation is the shares issued to the people who planted, watered and harvested the tomatoes. We take the share cost divided by the pounds of tomatoes produced to arrive at the share price per pound. If it took 10 shares to grow 1000 pounds of tomatoes the share price per pound would be 1/100 of a share. If we considered that a shareholder is worth $15.00 an hour and spent one hour earning the share we might consider that pound of tomatoes cost the shareholder $0.15.

So what if it took 100 shares to grow 1000 pounds of tomatoes? In that case, the relative share price per pound calculates to $1.50 a pound – when, in season, tomatoes here go for about $2.00 a pound. To the shareholder, who spent 5 hours on a Saturday last May planting the tomatoes, there is really no cost because they wouldn't have been earning money then anyway. The five hours at 1/10 share per pound nets 50 pounds of tomatoes or a $100 value (although we would not expect the shareholder to spend all 5 shares on tomatoes).

Valuing goods and services for external sale in money

Again, just making up numbers, say that tomatoes are selling in the market for $2.00 per pound. The CIE first makes its tomatoes available to its shareholders. If any are left the CIE would then preserve as many tomatoes as it expected its shareholders to want over the winter. Some of the tomatoes would be used in the CIE's pizza joint. Any fresh tomatoes left over could be sold for cash in the market. The CIE would want to get the best price available, but, since it has no cash cost in the product, it could easily offer them at any price in order to sell them.

There are two reasons to not undercut the market price. The first is to maximize cash available for reinvestment. The second is to maintain the cash value of the shares.

Valuing shares in money

The differential in the value that one can obtain with shares compared to the value that can be obtained in cash creates a market value for the shares. A potential buyer of tomatoes can get a pound for say $1.90 in cash or somewhere between $0.15 and $1.50 in shares. The same will be true for all goods and services offered by the CIE because labor is not a cash cost of production. A shareholder who needed goods and services not offered by the CIE could sell some of their shares for cash valued at the additional value the buyer of the shares will receive spending shares at the CIE.

All of this valuation will take an extensive record keeping system, people making decisions that understand the numbers, and the development of procedures that produce quality goods and services efficiently.

[Lucas]

At first sight, to me, it looks like there's a lot of bureaucracy. But I guess crossing the street in NYC looks difficult until your body automatises it.

Ok, ok, will read it more slowly.

Thanks!

[David Braden]

Just keep in mind that we are looking to extend bridges to the most vulnerable in the community - those with limited marketable skills. We want to make it easy for any one to participate - just show up and see what tasks are available and how many shares the task pays. That will take a core group of people who understand how all the parts fit together.

On the other hand, note the incentives for the people in charge - to deliver as much value for your time as possible in order to attract as much labor as possible - as opposed to a business competing in the market where the incentive is to pay labor as little as possible in order to maximize profit and attract capital.

There are many in the social justice and environmental movement who are suspicious of structure and authority. I think those sentiments are misguided. In this organization in particular we want to use the best information and knowledge available - not the lowest common denominator of consensus. If you don't like the way your CIE is running go contribute to a different one - or save up your shares and vote for a change in the Board of Directors - or just go get a job and don't contribute.