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Rob R

Is community funding competing against small businesses?

Prompted by the Making Local Food Work conference coverage today got me thinking - is 'community' supported agriculture (or other sectors) actively competing against small businesses for a limited market? Given that most are not-for-profit and funded by things such as the National Lottery, are we not in danger of pushing out small businesses in the process, what do you think?
bulworthy project

I do think that it is important for organisations to ensure that they don't undermine the market for local produce. Being in the charcoal game we come across charcoal that is made by various organisations for conservation reasons and is sold at a price which does not allow for a living wage. However, the main problem is still that we cannot compete with wages of $1 a day or less and a seemingly "unlimited" supply of rainforest to carbonise. We figure that if these organisations educate people into making informed ethical decisions, overall it is a good thing.
Rob R

That raises an interesting question as to which is more ethical - under-priced British Charcoal or imported stuff that pays someone a living wage?
Jamanda

No dilemma here. We use Bulworthy's stuff, local and reasonably priced - in fact we had a barbie on Sunday and used it!
Rob R

Do you make an active choice against community funded projects, or is it just a happy coincidence?
Jamanda

I'm racking my brain to think of any examples of it round here.
sean

There was a CF charcoal business but it seems to have disappeared.
Hairyloon

Re: Is community funding competing against small businesses?

Prompted by the Making Local Food Work conference coverage today got me thinking - is 'community' supported agriculture (or other sectors) actively competing against small businesses for a limited market? Given that most are not-for-profit and funded by things such as the National Lottery, are we not in danger of pushing out small businesses in the process, what do you think?


Don't you keep telling us how little you are able to pay yourself?
That suggests to me that you are not for profit as well, so why not declare yourself as such, then the playing field is level.
Rob R

My aim is not to remain this way, though, and it would be immoral to invest public/charitable funds into my infrastructure in order to pay myself more.

ETA - if you could manage it at all;

Quote:
A partnership is not generally considered to be a Social Enterprise, though social aims can be spelled out in the Partnership Agreement. A Partnership Agreement is between two or more people and defines how the business will be run. But there is likely to be a problem if the business wants to apply for funding as it will be difficult to
demonstrate any wider social involvement
. Partners can be selfemployed
or employees of the partnership and they are personally liable for debts.


http://www.resourcecentre.org.uk/information/setting_up/info_pdf/not4prof.pdf
Rob R

However, that isn't really the question I was asking, unless you are suggesting that all small businesses become not-for-profit in order to survive?
wildfoodie

Rob R wrote:
Given that most are not-for-profit and funded by things such as the National Lottery, are we not in danger of pushing out small businesses in the process, what do you think


No. Below is a quotation taken from the csa page of the Making Local Food Work website
"Community Supported Agriculture (CSA) is a mutually-beneficial partnership between a community and farmer."

where did you get that most schemes are lottery funded? CSA is about making viable and sustainably produced local food available to a local market. Some schemes may have had start up funding, but from what I understand, the long term aim is to sell the produce, either for straight cash or for help with growing the crops, or a combination of the two.
Hairyloon

However, that isn't really the question I was asking, unless you are suggesting that all small businesses become not-for-profit in order to survive?


I missed the conference, so I don't really understand the question, but why not? What do you actually need profit for?
crofter

What do you actually need profit for?

More profit = more tax
Hairyloon

What do you actually need profit for?

More profit = more tax

Yes, I am sure that is what motivates most people...
Ty Gwyn

[quote="Hairyloon:1230920"

What do you actually need profit for?

To re invest in another Rose.
Hairyloon



What do you actually need profit for?

To re invest in another Rose.
Non-profit companies are allowed to re-invest: it doesn't count as profit.
Shan

However, that isn't really the question I was asking, unless you are suggesting that all small businesses become not-for-profit in order to survive?

I missed the conference, so I don't really understand the question, but why not? What do you actually need profit for?

Just a clue here but self employed people work bloody hard and sacrifice an awful lot in the hope that one day there will be pay back in terms of a bloody good salary and quality of life.
Hairyloon

Salaries are costed before calculation of profit, so I am stumped to where you are going with that clue. Shan

The more profit you make, the more money coming in, the more money coming in, the more you can afford to pay yourself one day and when you come to sell the business, the valuation does take profit into account... ding ding ding Rob R

Rob R wrote:
Given that most are not-for-profit and funded by things such as the National Lottery, are we not in danger of pushing out small businesses in the process, what do you think


No. Below is a quotation taken from the csa page of the Making Local Food Work website
"Community Supported Agriculture (CSA) is a mutually-beneficial partnership between a community and farmer."

where did you get that most schemes are lottery funded? CSA is about making viable and sustainably produced local food available to a local market. Some schemes may have had start up funding, but from what I understand, the long term aim is to sell the produce, either for straight cash or for help with growing the crops, or a combination of the two.

I was directed to the lottery funding by someone who started following me on Twitter & when I followed them back I got a DM about it. If you go down the page on the MLFW website, bottom right hand corner is a lottery funded symbol.

I haven't been able to find the mutually beneficial link between a community and a farmer without a specific structure, when it seems it would be a lot more simple to just buy from your local farm & save all the funding element.

There's more to the world than farming though, and I wondered how it extended to other small businesses that are effectively competing against not-for-profits. If they are actually encouraging people away from supermarkets and not taking any business away from small businesses then that's good, but I just wondered whether that was the case.
Rob R

[quote="Hairyloon:1230920"

What do you actually need profit for?

To re invest in another Rose.

Yes, that is rather high on my agenda at the moment. Laughing
Rob R



What do you actually need profit for?

To re invest in another Rose.
Non-profit companies are allowed to re-invest: it doesn't count as profit.

I think before you go any further with this you need to define 'profit', as growth is an important aspect & I'm not sure whether you are just redefining profit? Profit, to me, is revenue minus costs which is then used to pay the owners back for their money and also pay any unwaged owners. If we are just to define pay and growth as costs then you haven't eliminated profit, you've just changed what it is you are talking about.

Of the privately owned non-profit companies I have looked at they may give any 'accidental' profit to charity, however, what happens when they make an accidental loss? You can't ask the charities for your money back, so you have to be pretty sure that you'll always make a profit (whether you called it that or not).
Nicky Colour it green

sometimes these initiatives dont help.

eg the visit Britain campaign - a government funded thing to help the tourism industry. they offer a free booking service to holiday cottage owners - but there are already companies doing this service, and they find it hard to compete with one that is free, with all that advertising etc. so the initiative is actually hurting the holiday industry.

Soooo they take it to court.. and each side lose a lot of money fighting the case.

how was it helping again?
OtleyLad

Going back to your original point, there are lots of charity shops in Otley and they pay reduced business rates I believe (as well as being staffed by volunteers).
A number of them have been selling new stuff - mostly but not always fair trade products.
There are local businesses selling exactly the same products in many cases but they have to pay full rates and their staff too.

Its hard to see how that is fair competition.
Shan

It's not fair competition and it ends up strangling high streets. Try visiting Clevedon and counting the Charity shops - the last time I was there, I counted at least 12 and I probably missed a few.

I would think they should consider amalgamating their shops or selling on ebay.
bagpuss

It's not fair competition and it ends up strangling high streets. Try visiting Clevedon and counting the Charity shops - the last time I was there, I counted at least 12 and I probably missed a few.

I would think they should consider amalgamating their shops or selling on ebay.

The trouble is the change in the law that means the owner has to pay rates on an empty shop but charity shops pay very little rates so there is a large incentive to give charity shops short term lets on the properties
Shan

There is also the problem that because charities pay less in rates they can afford to pay more in rent - so again, small businesses are affected and we end up with a homogenised high street of charity shops. Hairyloon



What do you actually need profit for?

To re invest in another Rose.
Non-profit companies are allowed to re-invest: it doesn't count as profit.

I think before you go any further with this you need to define 'profit'...
I believe the issue on the table is that non-profit companies have an unfair advantage because they have access to various funding sources.
It is not me that needs to define profit, except insofar as that which non-profit companies do not have.
Rob R

I believe the issue on the table is that non-profit companies have an unfair advantage because they have access to various funding sources.

Yes, but as my link above demonstrates, becoming a not-for-profit company doesn't necessarily make you eligible for the funding.

It is not me that needs to define profit, except insofar as that which non-profit companies do not have.

Erm, yes it is, if you can pay wages, growth & return on capital out of a not-for-profit organisation then there really is nothing left that isn't covered in conventional for-profit companies. I am doubting your assertation that it is possible (else everyone would be doing it to avoid paying tax).
wildfoodie

Rob R wrote:
If you go down the page on the MLFW website, bottom right hand corner is a lottery funded symbol.

But MLFW isn't a CSA. Their role is to offer support and advice to people who want to set up CSA's or other projects and businesses that fit their brief - making local food accessible to local markets.
Our embryonic csa (Transition Cambridge Cropshare ) is working closely with a local organic veg box farmer, he is very much part of the plan. his land, seed, water and expertise, Transition Cambridge supply the manpower on 6 or so working saturdays throughout the season. Onions last year, this year we are doing onions and carrots and possibly another crop.
bagpuss


Erm, yes it is, if you can pay wages, growth & return on capital out of a not-for-profit organisation then there really is nothing left that isn't covered in conventional for-profit companies. I am doubting your assertation that it is possible (else everyone would be doing it to avoid paying tax).

I think not for profit enterprises can not be publicly traded not pay dividends to share holders which tends to limit growth
Rob R


Erm, yes it is, if you can pay wages, growth & return on capital out of a not-for-profit organisation then there really is nothing left that isn't covered in conventional for-profit companies. I am doubting your assertation that it is possible (else everyone would be doing it to avoid paying tax).

I think not for profit enterprises can not be publicly traded not pay dividends to share holders which tends to limit growth

That's what I thought too, but HL has some kind of master plan up his sleeve...
Rob R

Rob R wrote:
If you go down the page on the MLFW website, bottom right hand corner is a lottery funded symbol.

But MLFW isn't a CSA. Their role is to offer support and advice to people who want to set up CSA's or other projects and businesses that fit their brief - making local food accessible to local markets.
Our embryonic csa (Transition Cambridge Cropshare ) is working closely with a local organic veg box farmer, he is very much part of the plan. his land, seed, water and expertise, Transition Cambridge supply the manpower on 6 or so working saturdays throughout the season. Onions last year, this year we are doing onions and carrots and possibly another crop.

I didn't say that MLFW was a CSA, but the funding is there to help set up CSA's & other such schemes that comes from the Lottery (whereas most core business funding has to come from borrowing). It doesn't really matter who physically receives the money, it is who benefits from it that makes the difference.

Regarding the onion share scheme, how does that work out financially? The farmer must be receiving more than the cost of onions in work for it to be worthwhile for him, which means that cheap labour is subsidising cheap food, isn't it? I'm all up for people packing their own beef so that I don't have to do it, but it's only an advantage to me if they do it for less than it is worth in real terms. Or perhaps I am missing something? Confused
Rob R

I'm also trying to get my head round crowdfunding too, and how that works? - it was suggested to me when I was appealing for votes for Fund101, rather optimistically, as a better way to raise the 500. Without vastly improved profits I can't see how you would ever be able to give any tangible returns on the money invested that didn't end up being more expensive than just taking out a loan... Confused wildfoodie

Quote:
I didn't say that MLFW was a CSA, but the funding is there to help set up CSA's & other such schemes that comes from the Lottery (whereas most core business funding has to come from borrowing). It doesn't really matter who physically receives the money, it is who benefits from it that makes the difference.

Regarding the onion share scheme, how does that work out financially? The farmer must be receiving more than the cost of onions in work for it to be worthwhile for him, which means that cheap labour is subsidising cheap food, isn't it? I'm all up for people packing their own beef so that I don't have to do it, but it's only an advantage to me if they do it for less than it is worth in real terms. Or perhaps I am missing something?


I'm pretty sure that the MLFW lottery money is not handed out to csa schemes, its used to finance mentoring, learning and other support schemes for them..

The onion scheme was a pilot to learn more about growing food and collaborating with a commercial grower, to see how a CSA might work. TC folk are largely urban peope some with experience of allotment or home growing, but no one with commercial growing experience. The deal was TC working parties would help with the planting, cultivation and harvest of the whole of Paul's (the farmer) onion crop in return for a 100 square metre patch for our own onions. at this stage it was more of a learning exercise, and less about making money.

Paul does not have the resources to put all of his land under cultivation ( his business is growing veg, and running a veg box scheme including packing and delivery - he and his wife and 2 daughters do all the work, with occasional visits from Woofers) He was definitely very happy to have extra help, I think it was also a learning exercise for him managing groups of amateur workers, and some things need tweaking for this year for sure.
Longer term we all hope that a full blown CSA scheme can develop from this, but that is down the line.

I really don't think I'm being unrealistic, but the spirit of open minded enquiry, collaboration and the goal of sustainably produced local food really underpin what this scheme is all about and for that reason this particular CSA experiment is emphatically not about putting local producers out of business.
Rob R

I'm not doubting that the money doesn't go to csa schemes, but they do get financial benefit, in the form of training, mentoring or whatever that puts them at a competitive advantage, even if they've never seen the money. However that isn't really important, I'm just trying to understand how it works on a financial level (for both parties). From what you have said it sounds like they are benefitting through the experience gained, and in financial terms the farmer is getting a good deal (although I do recognise that he'd have to supply extra tools & management time, so it's not all profit for him).

The thing I am trying to understand, however, are the multipliers involved. For the money spent on the support schemes, is it really worth it, financially, verses borrowing the money (or getting it as a grant funding) & employing more people to do the work? And can it be applied to other small businesses, or is it just a veg growing model?
Nick

What do you actually need profit for?

More profit = more tax


Profit is a cost. This is a business basic, 101.
wildfoodie

Quote:
I'm not doubting that the money doesn't go to csa schemes, but they do get financial benefit, in the form of training, mentoring or whatever that puts them at a competitive advantage, even if they've never seen the money.

training and mentoring etc are available through many different sources,often for free, for all kinds of start-up businesses. it may be ompetitive advantage but it's also a sensible strategy to get a new business up and running successfully. what's not to like?

Transition Cambridge got a smalll grant - (from the council I think ) to buy a few tools - hoes Smile and some of us brought our own along. but yes there was considerable investment from Paul, and it hasn't been a straight conversion from extra inputs to more income.

Quote:
For the money spent on the support schemes, is it really worth it, financially, verses borrowing the money (or getting it as a grant funding) & employing more people to do the work?


worth it financially to whom? csa schemes? undoubtably! Its staggering how separated our society has grown from land and food. CSA'S help to put more people into a deeper relationship with the land and their food.
Or do you mean the farmer? from what our farmer has said, he has been completely stretched to the max just running his business even at less than 50% capacity production.. I doubt he would've had the time or inclination to do the neceessary work to get funding. and employing someone to do the work brings its own considerable challenges and costs..
Yes there are csa schemes that cover other aspects of food production - including meat production:
http://www.tinyfarmer.co.uk/about-the-tiny-farmer.html - not officially a csa but operating a bit like one
http://www.chestnutfarms.org/ - fully fledged meat csa.

one of the real strengths of csa seems to be that it focusses on building and strengthening the links and loyalty between the grower and customer, and provides a measure of financcial security to the farmer. You've heard that saying, people buy from people? large scale food systems have lost sight of that - or rather they use branding to replace human to human relationships.
Rob R

Quote:
I'm not doubting that the money doesn't go to csa schemes, but they do get financial benefit, in the form of training, mentoring or whatever that puts them at a competitive advantage, even if they've never seen the money.

training and mentoring etc are available through many different sources,often for free, for all kinds of start-up businesses. it may be ompetitive advantage but it's also a sensible strategy to get a new business up and running successfully. what's not to like?

Well we've had a few debates on DS recently about Tesco & other larger companies taking on jobseekers for free & it was mooted that they were replacing paid jobs & making the problem worse. It seems like the same situation to me, so if those people who suggested it are right, then it is damaging the economy in the same way. I'm not necessarily saying they are right, just trying to work out whether it is a good thing or not.

Transition Cambridge got a smalll grant - (from the council I think ) to buy a few tools - hoes Smile and some of us brought our own along. but yes there was considerable investment from Paul, and it hasn't been a straight conversion from extra inputs to more income.

Quote:
For the money spent on the support schemes, is it really worth it, financially, verses borrowing the money (or getting it as a grant funding) & employing more people to do the work?


worth it financially to whom? csa schemes? undoubtably! Its staggering how separated our society has grown from land and food. CSA'S help to put more people into a deeper relationship with the land and their food.
Or do you mean the farmer? from what our farmer has said, he has been completely stretched to the max just running his business even at less than 50% capacity production.. I doubt he would've had the time or inclination to do the neceessary work to get funding. and employing someone to do the work brings its own considerable challenges and costs..
Yes there are csa schemes that cover other aspects of food production - including meat production:
http://www.tinyfarmer.co.uk/about-the-tiny-farmer.html - not officially a csa but operating a bit like one
http://www.chestnutfarms.org/ - fully fledged meat csa.

one of the real strengths of csa seems to be that it focusses on building and strengthening the links and loyalty between the grower and customer, and provides a measure of financcial security to the farmer. You've heard that saying, people buy from people? large scale food systems have lost sight of that - or rather they use branding to replace human to human relationships.

Yes, I'm very familiar with that saying, and it's outcomes - people definitely prefer to buy from their mates, rather than business. Which is weird, because at the other extreme an awful lot of people would much rather buy from a big business than a small one - I guess both are the result of familiarity.

The thing I am trying to establish is how sustainable, long term it is. ie is it relying on a voluntary workforce giving cheap labour or are there rewards for the people other than the experience it brings? because if people really had wanted to stay connected with their food, they wouldn't have left the countryside in their droves to get away from this kind of menial work.

tinyfarmer.co.uk doesn't appear that different from any direct sales website, only with less actual information than your average farm website. Plenty of talk about knowing where the meat comes from and who Tiny Farmer is, but no indication of where the meat comes from nor who Tiiny Farmer actually is, or what part the meat-share holders play in the scheme other than handing over money. The registrant on the domain is a dissolved company. It's not what I envisage when I think of a CSA, really, just a bit of clever marketing.

The Chestnut Farms one, again, seems to be a fairly simple transaction of handing over cash for meat. It did teach me one thing though - Most meat sold commercially is frozen and thawed several times. - here in the UK we are not allowed to do that, it's considered unsafe in terms of food hygiene. Shocked
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