- Providing loans to small to medium-sized regenerative agriculture businesses
- Financing urban and rural projects
- Funding secondary income streams, such as agritourism, in order provide additional on-farm revenue
- Growing interest in creating stable local food systems that increase the access to food for local community members.
- Funding local, shared processing plants
- Why it’s important to fund and provide access to capital to human-scale food producers
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Full Show Transcript
Macala Wright:
Hi everyone. It’s Macala, and I am back for our latest episode of What We Want to Eat hosted by SIAL America. And today I am talking with Dan Miller of Steward. Steward is an alternative source of funding for agriculture, namely farmers that specialize in regenerative practices. So, I’m going to start by letting Dan tell you a little bit about who he is and what Steward does.
Dan Miller:
Wonderful. Thanks for having me on. I founded Steward five years ago as a platform to bring financing to regenerative agriculture. Most funding in the U.S for farms is focused around large commodity production, and if you fit into that world, there’s tons of capital. But, for the small to midsize producers, really taking care of the land, and really selling and growing wonderful products, they struggle with financing. So, it’s a platform that lets individuals provide funding through Steward to these farms. And we handle all of the administrative and servicing aspects of it. So, really trying to broaden who can engage in regenerative agriculture, and provide more funding to the farmers that are doing things right, and need more resources.
Macala Wright:
Tell us about some of the farmers that you’ve funded, because you’ve done some small scale projects, but you’ve also done some pretty large things like a meat processing facility. So, tell me about the types of farmers you funded and the types of projects.
Dan Miller:
Sure. So, we begin with primary producers, with farmers and producers themselves ranchers, helping them expand their farm, buy more land, fencing, irrigation, the classic farm improvements working capital. But, we’ve also seen a need across the agricultural supply chain, particularly around processing capacity, where a lot of the processing capacity is built for mega agriculture, but smaller scale regionalized processing is generally now unavailable or hard to find.
And so, we’re financing networks of producers to build shared processing that they can all utilize to help get their product to market. A few recent projects we have, we have one live now with Studio Hill Farm they’re in Southwest Vermont, a fourth generation farm that was converted to regenerative by the recent owners. And they have a very successful farm stay business from a restored school house they built with their livestock and sheep operation, and we help them buy more lands, raising funding to buy adjacent land to expand their herd size, and to restore some more buildings for farm stays.
So, it shows the integrated nature, these farms are in education, people staying on the farm, they raise sheep not just for meat, they also have a sheepskin business they’ve been developing. And so, they have multiple enterprises that these farms develop. Another project we funded was a hemp farm in Southern Oregon that does sun grown craft hemp. And they have been one of the leading producers for a handful of years. And there we helped them formalize their UCE organic hemp business and really scale it up. So, as long as it’s somebody who practices align with regenerative agriculture, and we find that they have a viable business that needs funding to take the next step, that’s what we look for.
Macala Wright:
Awesome. And so Dan, what are some of the trends that you’ve been seeing in financing and alternative funding for producers?
Dan Miller:
The main challenge has been that most of the funding in agriculture is driven by government policy, whether direct loans from the government, the USDA, or via bank loan programs where they’re guaranteed by the government. So, that’s led to a really restrictive and rigid system of fair formulaic finance of certain things of large commodities. But, anything that’s different, anything that is unique, often struggles to find financing.
What’s been happening in alternative finance, and I think Steward is leading that is how can we bring new types of funders into the market, and how can we build platforms to broaden who can support these types of funders? Somebody can lend as little as $100 on our platform. So, it’s really about broad accessibility, and taking the people that have driven food systems, changing the people who have been shopping at farmer’s markets and working on regional food systems, having them be the ones to provide their resources to the farmers.
Because, at the end of the day, the issues we have with our food system are often the result of poor government policy or the lack of regulation of large food companies. And it’s going to require grassroots movement on the farmer’s side, and on the funder side, to actually make this regenerative agriculture movement beyond what it is today and really grow it so that it can compete and be the dominant form of agriculture.
Macala Wright:
And with some of the producers that you funded, aside from funding, which you’re now providing access to, what have been some of the challenges for them to adopt more sustainable and regenerative practices into their operations.
Dan Miller:
So, most of the farms we fund are already what we’d be considering regenerative and they’re growing their business. The thing that a lot of these farms are with is they haven’t had access to capital. And so, all of a sudden they now have access to capital, but they’ve never had other staff, they’ve never hired other people. And so, then there’s like, “Now I’m running a business where I actually have access to resources. What would I need to have?” And so, a lot of our underwriting diligence is helping them do the business planning around which business line is most important, should you scale, which piece of equipment necessary, should you do more value added work here, or should you add more infrastructure? And that planning process also leads to them thinking about their business, like do they need to improve their direct to consumer online sales platform?
Do they need help with financial management bookkeeping? They pretty much all need help with financial management bookkeeping. And then we’ve also been connecting them now with freelancers and other experts who can fill in those gaps for a farm, because the challenges with farms and ranches is they have the production side, and then they have the running of, of a small business that makes and sells the product, they tend to focus on the production and not focus on the operational business side of it.
But, that is just as important, particularly in this day and age where you want to bring your product directly to market, you want to have all the margin you don’t want to sell through distributors and wholesalers. So, you have to adapt and be a much more integrated organization to be successful in agriculture today. It’s challenging, but that’s also the exciting opportunity that the consumers and general awareness is out there that if you can present a product and tell a great story, people really want to buy it.
Macala Wright:
And like you said, producers focus on the production side of the business, not so much the marketing, and the sales, and the systems and operations. So, when did you find that you needed to help guide them in that process in order to be successful?
Dan Miller:
It was really learning by doing… In 2017 is when we made the first loans to the first group of farmers. That was a learning experience for me as well as what type of funding do these farms need? What can they afford to pay? What challenges do they have as businesses? And that quickly became a realization that if you’re going to be funding them and you want to make sure that they can actually repay the financing, you can’t take a passive approach. It’s not like you’re just lending against a piece of real estate, like a normal bank doesn’t have to pay very much attention, they have the collateral, and if worst comes to worst, they’ll sell it. These are very dynamic businesses that you need to be engaged with to help them resolve challenges. So, one of the examples that, I think, lays it out best was an urban farm in Detroit that we had funded, they were operating on a 16th of an acre, actually the side lot next to their uncle’s dry cleaner.
Dan Miller:
So, just grabbing whatever land they could have at a farm. We helped them buy two acres of land from the Detroit land bank, add fencing irrigation, wash and pack stations, to become an anchor to their local community. They were generally selling through restaurants. COVID hit restaurant market shut down, and they had to pivot overnight to direct to consumers on farm sales. We helped them build a website that could do eCommerce and helped them with that system.
And they launched it and they sold $20,000 worth of product in the first week, all for local residents who came to pick it up with the farm. Which then led to them becoming a community anchor during that time to provide food. So, that type of shift in their sales channel required a technology change to deal directly with consumers. They didn’t have the capacity to do that themselves, even though it wasn’t a complicated eCommerce solution, it just shows the complexity of all the different elements that these types of businesses require these days.
Macala Wright:
And, I think, that’s an interesting touch point, is that the producers that you’re funding, whether rural or urban, are becoming anchor points in their local communities. So, do you have a few more examples of where other producers have really helped… How has your funding helped expand their ability to feed people locally?
Dan Miller:
That’s one of the big themes. So, we’re providing financing, and we’re trying to price the terms of that funding that makes sense for the funders and for the farmers, but they need to be doing more than just agriculture. And most of these regenerative farmers, they wouldn’t be doing this if they didn’t care, it’s not easy and it’s not the easy path. So, they come at it from a certain angle. This farmer in Detroit really cared about food access. He really cared about educating young children about healthy food. And so, having an urban farm in Detroit gave them that outlet for those community conversations. Another operation we’re working with in Montana is a livestock processing facility. And this has been a huge challenge for smaller livestock operations.
Macala Wright:
Yeah.
Dan Miller:
Is that they can’t get processing capacity. And if you can’t get processing, you can’t get your product to market.And so, by building a shared processing hub and a coordinated regional brand, it gives the smaller producers the chance to be viable, which can expand the production and access to high quality protein and livestock. And most of the ranches that were selling 95% of their product wholesale, which shows they’re leaving all the value on the table, the product goes into the local customer who can buy it. So, all of the projects we support are about expanding access, it’s about expanding their production while maintaining their principles. And they all have a different purpose that they’re focused on, but certainly land restoration, and ecological, and ecosystem health is fundamental.
Macala Wright:
And you recently started also funding producers that have agritourism businesses within their main ranch. That was the first for me to hear about. Why are you doing that?
Dan Miller:
So, that part of being a successful farm business today first is, as I somewhat mentioned about having more direct sales channels, not selling through intermediaries, having all the margin, it’s also about doing value added products so that you get a better margin on end product, instead of growing peppers and selling peppers to who want to make hot sauce. But, we’ve also found that these farms have beautiful pieces of land that people want to be engaged with. And they do that via farm visits, they do that via farm stands at weekend farmers’ markets, but people also want to stay on these farms. They want to experience a natural environment and enjoy that time. And so, we work with a farm called Studio Hill Farm, they’re in Southwest Vermont, fourth generation livestock farm. When the farm was taken over by the new generation, they stopped all sprays, the ecology collapsed, they brought in livestock to start to restore the soil.
Dan Miller:
But, that takes time to develop the carrying capacity of the soil and develop the growth of that livestock business. So, in the meantime, they had restored an old schoolhouse on the property for their own living. And then with the construction cost of restorations needed to figure out how to get some money back. So, they put it on Airbnb, and now it’s booked out every night for the next 18 months.
Macala Wright:
Wow.
Dan Miller:
It’s in one of the most successful Airbnbs out there. So, by having a farm stay business, they’re able to generate more revenue on the land, which lets them reinvest in the agricultural system, as opposed to having an off-farm job. And that flexibility helps them grow. So, it’s about diversifying income streams. We’re not funding projects that are just about hospitality, but it’s about integrating hospitality and farm stays into a farm experience.
Macala Wright:
[crosstalk] educational classes and everything else like that too?
Dan Miller:
Absolutely Tours, educational classes, retail shops. And you’d rather have… When you think about people spending money in a hotel, why doesn’t that money go to a local business? Whether that’s a local hotel or in this case, a farm who’s hosting the farm stay.
Macala Wright:
If producers wanted to be involved with Steward, what are some of the initial criteria that you look for when vetting projects to fund?
Dan Miller:
So, we do welcome any producer to submit an application through our platform. We have an open conversation with all producers, no matter what stage they’re in. Generally, we’re looking for a farmer, rancher, who has at least three years experience. Ideally one of those with their own operation. So, they could have worked on another farm for a few years and got their farm started. And in that period, we want to see them have identified some markets and some products that they’re producing a few items, they know what they can produce well, they have some demand whether through a farmer’s market or local sales.
And then generally they’re trying to take the next step, which is they need to scale up production, they need some drip irrigation, they need fencing. They need access to equipment, labor, and infrastructure to get to a volume that can sustain them with income and can drive growth to meet the demand. And so, that’s where we are. How can the funding grow the business? How can we enable them to produce more? How can they meet the market demand they’re seeing? And we’ve generally found that there is enormous demand for sustainably produced traceable, agricultural products. And so, if you can help them produce more while keeping their regenerative practices, they generally can meet the market demand.
Macala Wright:
In 2022. What are you guys looking for beyond the producers that you fund? Are you looking for new collaborators, new ways to maybe expand Steward what you’re doing to the broader industry?
Dan Miller:
We’re finding that by providing financing and resources to these farms, it’s opening up a market for a lot of other people who are realizing, “I’d like to do this. I’d like you to do it myself, or participate with Steward.” We’re partnering with a lot of local nonprofit organizations who provide technical assistance to farms. They often have long relationships with these farms and they help them run their business, but they need financing. And so, that’s a good partnership where they can do some of the on the ground work. We work with one, for example called Sprout NOLA in Louisiana, they brought us one of their farms they were working with and we provided the financing for them to buy land. And now they’re actually doing a site visit on another farm in Louisiana. We were already funded to help them figure out an issue they’re having with markets. So, those types of local partnerships are really helping us expand our breadth, but also have the geographical local coverage that is important to agriculture.
Macala Wright:
Okay. And has there been any interest from larger food brands and manufacturers in what you do, or from local associations that support producers in their county or their state?
Dan Miller:
We’re finding a lot of interest from local government, state and county level around trying to rebuild food systems. We’re doing a lot of food systems infrastructure projects now. So, shared processing, and those food hubs are very much of interest. They’re very hard to execute, so we’re one of the only groups, I think, specializing in funding those. And in general, the policy has shifted too. The USDA is trying to put a lot of money towards regenerative ag. There’s a lot of talk about it, in reality on the ground it’s still very hard for producers, but the interest has shifted. And so, our goal at Steward is just broadening the message of bringing more people on to fund, bringing more service providers who can support the farmers, and then working with more farmers to expand the market of regenerative ag.
Macala Wright:
Awesome. Dan, thank you so much for taking the time to speak with me today about alternative methods of funding local food systems and small farmers. If people want to get in contact with you after this, what’s the best way to find you.
Dan Miller:
Absolutely. They can go to our website, GoSteward.com, or they can email me directly at Dan at GoSteward.com and I’d be happy to chat.
Macala Wright:
Awesome. Thank you so much for taking the time.
Dan Miller:
Thank you.
