Community Investing

Community Investing Promotes Sustainable, Local Agriculture

An integral aspect of socially responsible investing is a process called community investing (sometimes termed “impact investing”). The idea behind this type of investment is to employ the power of capital in local and community settings to bring about social, health or environmental benefits in addition to financial returns. Sustainable, community-based agriculture is one type of community investing that has a proven track record in producing all three of these benefits simultaneously.

How does community investing work?

Community investments direct capital into economically disadvantaged communities through a variety of channels. These channels include specialized loan funds, micro-finance organizations, community development banks and credit unions. Most of these lenders have deep knowledge of the communities they’re supporting and they have personally screened the farm, non-profit or entrepreneur who receives the funding.

What is sustainable agriculture?

Sustainability refers to any system that can persist stably into the future due to its reliance on renewable resources and processes. Not all sustainable farming is certified organic, but all sustainable methods specifically nurture the soil and the environment through the use of natural amendments. The land on which sustainable farming is practiced continues to maintain its fertility. Also, this type of small-scale agriculture benefits from diversity and cost-savings through the use of non-genetically modified seeds. Unlike large commercial farms, which require significant amounts of herbicides, pesticides, fungicides, and specially treated or modified seeds, local small-scale agriculture produces significant quantities of food without exhausting the soil’s future productivity.

How Fair Trade concepts apply

According to Tera Johnson, owner of Wisconsin Specialty Protein, which distributes “Tera’s Whey" nationwide, demand for sustainably produced food often outstrips supply. She points out that one of the main reasons for this imbalance “is the difficulties that sustainable farm and small local processing businesses face in accessing capital.” Fair trade organizations provide working capital directly to farmers, enabling them to earn a reasonable living and find the best markets for their produce.

Sustainable agriculture boosts the local economy

Research at Penn State finds that “Community-focused agriculture has had a measurable effect on economic growth. We found that for every $1 increase in agricultural sales, personal income rose by 22 cents over the course of five years." The Union of Concerned Scientists put out an in-depth publication describing the economic benefits resulting from local sustainable agriculture. These benefits include many types of positive regional impacts, due to the fact that small farmers tend to market their products directly. The UCS study explains that direct sales mean that all farm income is then retained and spent locally, rather than being dispersed through layers of grocery retailers. In Iowa, research found that the presence of 152 farmer's markets resulted in 576 more jobs as well as a $17.8 million increase in personal income across the state.

Investments are strengthened by public and private donations

In Connecticut, for example, the Community Investment Act provides up to $5 million every year to promote and support Connecticut-grown products. Private donors are also deeply invested in local agriculture. The Community Foundations of the Hudson Valley provides up to $25,000 to local non-profit organizations that increase access to local sustainably farmed food. The federal government provides millions of dollars worth of grants to small farms through at least seven USDA programs. One of these is the National Resource Conservation Service, which provides conservation innovation grants of up to $15 million to promote soil health and support beginning farmers.

If you're interested in learning more about your ability to have an impact on local communities through supporting sustainable agriculture, contact a First Affirmative advisor.