Find other case studies that share these features:
Enhanced distribution channels    |   Golden Horseshoe   |
Creating viable farm income   |   For-profit

Alvaro Venturelli, Co-owner/operator

Melanie Golba, Co-owner/operator

Phone Interview August 5^th, 2011 (Lisa Ohberg), Site Visit August 16, 2011 (Lisa Ohberg, Sarah Wakefield), Email Correspondence (with Melanie Golba)

*  CSA operating successfully and financially self-sustaining for 13 years

*  Short supply chain emphasizing regional trade with small local producers and direct sales to consumers

*  Physical distribution and redistribution hub supplying produce from their farm, other small producers, and another producer/re-distributor directly to consumers

*  Market only through alternative retail models such as the CSA and farmers markets

 

Organization Overview

History

Plan B Organic farm was started 13 years ago by Venturelli and his family. The farm is organized around principles of agro-ecology, and grows certified organic produce. The farm started out small, selling only the produce they grew through a small CSA (community shared agriculture). The operation has expanded in the last decade, and Plan B now acts as a food distribution hub and redistributor as well as a primary producer and direct seller in the system (see the schematic at the end of the document for a relational sketch of the Plan B supply chain). Their organic CSA delivers 700 to 1000 boxes a week, and includes produce from their farm as well as a number of other small producers in Southern Ontario, and in the off-season, organic produce imported (through Pfennings, see below) from warmer climates.

 

The Supply Chain

Plan B is involved in every stage of the agri-food supply chain for fresh produce: their “grower supply chain is a chain but a short one”, explains Venturelli. The farm grows its own produce, and purchases produce from Pfennings Organic Farm (a farm, importer and redistributor of organic produce in Southern Ontario) as well as from small producers directly. Purchased produce and the majority of produce grown on Plan B is used to supply the CSA boxes distributed weekly to Plan B’s 700 – 1000 customers. A small portion of the produce grown at Plan B is sold fresh at three farmer’s markets in the area, and any leftovers are sold back to Pfennings, which does not sell direct to customers but to the retail market, supplying grocers such as Fiesta Foods.

The CSA has “37 [pick up depot locations] in the Golden Horseshoe”, explains Venturelli, as well as a home delivery option for an additional fee. The delivery fee in the past was the same regardless of the customer’s location, but is now differentiated based on proximity zones, to reflect the rising cost of fuel. The routes taken by Plan B’s driver are carefully planned to be as efficient as possible, delivering boxes to depots and hitting home deliveries on the way back, for example “in a very tight route”, says Venturelli. Since the driver is not going out of his way to make home deliveries, the transportation fees actually make home delivery a very economical choice for Plan B, providing the income to cover transportation costs for all deliveries.

 

Human Resources

Plan B operates as a business partnership with Venturelli, his wife and his brother running the farm. His parents were important resources in providing a lot of the start up capital to build the farm 13 years ago. These family-business relationships have been fundamental in operating the farm successfully. In addition to the stable dedication of the Venturelli family, Plan B relies on the labor of 1.5 to 2 full time staff positions, as well as 5-6 seasonal laborers made up of waged workers, volunteers and interns. Interns sometimes receive different compensation depending on the program within which they intern at the farm. Some are unpaid interns, sometimes second year interns receive a salary, and student interns from the local high school program require minimum wage.

Venturelli admits that the interns can at times be considered “underpaid to an extent” but at the same time the interns gain valuable education through their placement at the farm and are sometimes interning to fulfill the requirements of a certification program. The interns are also provided room and board on the farm during the working season. These relationships highlight the complexity of labor questions on a farm: while interns are not the highest paid workers in the economy and often work long hours, labor costs (such as minimum wage) continue to rise but vegetable farmers are unable to charge more for their produce to recoup these costs. Venturelli’s strategy to address this question has been to try to “build [full time] positions as the business grows and make those stable conditions…to have a stable workforce” made up of fewer interns and more full time workers.

 

Physical Resources

Plan B has a warehouse on premises as well as two houses, in addition to a van and a truck for deliveries. A quarter of the warehouse space is used for packing CSA boxes, and the rest is used for storage, both of Plan B’s produce and some of the produce purchased from small producers. Warehouse space is a critical resource in this supply chain. It allows Plan B to purchase crops from small producers who lack warehouse space, and store them until they can be used in the CSA boxes. This benefits the small producers as Plan B can often offer them a better price than major wholesalers (who might be able to purchase a comparable quantity). Pfennings’s extensive warehouse space is a resource that benefits both small producers and Plan B, who purchases from Pfennings and sells surplus from their farm back to Pfennings when they have it. As the Venturellis and many of the seasonal workers live on the premises, two houses is also an important physical resource.

 

Natural Resources

Plan B had an analysis done of their farm’s natural resources to evaluate which crops they could grow most efficiently given their climate, soil and water resources. Their strengths include having “some labor, good water, decent soil” says Venturelli . In addition, they practice an agro-ecological farming method that builds natural fertility cycles in their soil. They have used the results of this assessment to focus on growing what thrives given the resources they have available (including annual vegetables, garlic, onions, cooking greens and carrots), which is better for the soil, and more efficient. Their partnerships with other small farmers in the area and Pfennings allow them to fill in the gaps of what they do not grow themselves for the CSA. In this system, producers grow what is most efficient for them to grow, and through regional trade achieve the sufficient variety to attract and hold enough CSA customers to be profitable.

 

Financial Resources

In 1997 when Alvaro & Melanie decided they wanted to start an organic farm but had no way to start that, they created a summer youth project called “Plan B Organic Farms” they received a 150,000 HRDC grant from the Canadian government through a Youth Entrepreneurship program for that project that paid themselves and 6 other “youth” for the season to learn how to run a small csa farm. They hired a mentor farmer, each received a $200 stipend/week, and paid for a business training course with these funds. Venturelli’s parents also contributed funding for the farm. The first season, Plan B sold 75 shares and used those funds to purchase a walking rototiller, seeds, row covers, and the hand tools needed

Aside from the initial funding for start up costs, Plan B has not received any additional funding. The operation is completely financially self-sustaining. The operation, “became financially viable at around 500 to 600 shares”, explains Venturelli, and they have been able to expand to 700 to 1000 shares at present through positive press and word of mouth. Customers purchase shares at the beginning of the season, and they guarantee the farm a market and a set price for their product. In addition, the share system allows Plan B to know in advance exactly how much produce they will need, allowing them to “grow only what we need” and reduce losses, explains Venturelli. The success of the CSA has been the key to Plan B’s sustainability.

 

Community Resources

Plan B “partner[s] with loosely about probably twenty-two growers, [and] also Pfennings…to be that culturally appropriate box”, says Venturelli. When the CSA first started, Plan B actually lost customers because as Venturelli explains, “people have habits which are everybody goes to the store…[and we] couldn’t provide people with culturally appropriate [variety]” that they had come to expect from the experience of shopping at supermarkets. In order to achieve variety in their product that would allow them to maintain enough customers to be profitable, Plan B “started to work with other farmers in southern Ontario to create our own food system”, Venturelli explains.

To supplement their own produce in the CSA boxes, Plan B buys directly from small producers specializing in products that Plan B can’t grow as efficiently, as well as purchasing from Pfennings, which sells their own produce, more of the produce of small farmers in Southern Ontario (as they have a greater capacity to store it) as well as some imported organic produce. These community business partnerships are mutually beneficial relationships: Plan B can often provide small farmers with a better price than what a wholesaler is willing to offer, and the box variety achieved by so many suppliers keeps Plan B in business.

Good press from the CSA customers and word of mouth in the community have helped Plan B expand its customer base and exceed the number of shares needed to break even. Plan B used to rely heavily on CSA customers outside of Hamilton (in Toronto for example) for income, but positive press from customers within the Hamilton community has recently allowed them to secure the support of more customers in their own community.

 

Policy and Program Resources

Venturelli has found that there is not a lot of funding for interns. As mentioned earlier, Plan B also received some of its initial funding through the Youth Entrepreneurship program, which they used to train under an organic farmer and grow their first season of shares. Golba expressed a need for policy and program resources that specifically addressed the needs of small-scale fresh fruit and vegetable producers:

I think there is a need for organization and funding of fresh vegetable/fruit producers, especially small scale. What we need is access to funds precisely for capital purchases to develop the very costly infrastructure needed on farms that handle fresh produce. Small vegetable farms need proper cold storage facility, refrigerated delivery vehicles, and also develop proper kitchen space on farm for value added production. These 3 key things, if small farms could have help with access to funding to develop these [they] would be doing much better and we would see more of them survive in this market.

 

Desired Assets

Venturelli expressed a desire to have a multi-level policy environment more supportive of small farmers and biological organic production methods, which, he says, “are they only way you ever built soil”. At present the market concentration by large corporate farming operations is preventing small producers from accessing consumer markets. One of the barriers to instituting a local food system he says, “is that we don’t have access to markets as local farmers”.

Venturelli explains how broad trends in global agriculture are affecting local producers and regionalization efforts: “the biggest issues are seeds, water, and land and whether or not small holders and people are allowed to just live. Three quarters of the world still feed themselves and small scale agriculture is feeding most of the world”, but “alternative land use pressures” and corporate “market concentration” threaten the livelihoods of small farmers everywhere.

 

Constraints/overcoming them

Venturelli emphasized the constraints facing small producers like himself in Ontario because of the dominance of large corporate farms monopolizing access to markets and government programs. Plan B overcame this constraint in part by obtaining start up capital for the farm through social equity, his parents putting their life’s savings into the farm.

When they first started out, Plan B’s CSA consisted only of produce they grew themselves. They lost customers after a season because they could not meet the demand for variety and diversity in this way. The regional trade partnership supply chain model they devised to overcome this barrier has been incredibly successful for several reasons. Firstly, the partnership allows each participant to be most efficient, growing what is suitable to the resources they have without being dwarfed by large corporate operations or global competition. Secondly, the partnership benefits the small producers Plan B (and Pfennings) purchase from because the storage space of the latter two allows them to purchase large quantities and provide a fairer price than competing wholesalers. Thirdly, the variety and diversity that Plan B can now offer its customers retains their customer’s business and allows them to serve enough customers to be self-sustaining.

 

Successes

When asked to share some of the successes Plan B has had Venturelli responded that they’ve “managed to build a farm at a time where farms are going out of business, managed to do it organically, [and] managed to give people better prices [although they can’t always guarantee that] both for the farmers and for the consumers”.

 

Relevance

When Venturelli was asked why the Plan B has managed to be successful despite the constraints faced and the hostile socio-economic environment for small producers, he identified four main transferable business strategies: i. diversity afforded by regional trade partnerships, ii. non-speculative production, iii. access to social equity and iv. knowing and exceeding the break-even point in sales.

“We had [customers] abandon us when it was us alone as a CSA”, says Venturelli, because Plan B alone could not provide customers with the variety and diversity of produce that they expect. Purchasing from small local producers and Pfennings Organic Farm allows Plan B to secure a greater variety of produce for CSA customers and in turn retain those customers. It also allows each producer to grow the mix of crops that is most efficient for them to produce based on their available resources and microclimate.

The CSA model allows Plan B to practice non-speculative production, since customers sign up for shares ahead of time, explains Venturelli, “we know what we’re growing and for who”. By not growing any more than they need, they reduce waste. Access to social equity when starting the operation was critical in allowing the farm to obtain the start up capital they needed, says Venturelli, “if my father and mother hadn’t put their life’s earnings into this farm it wouldn’t be here,” adding that, “banks laughed at us”. Banks and agricultural programs will not accept mortgages for farmers below a certain sales threshold, making access to capital a very difficult hurdle for small producers to overcome. Accessing social equity was the only way for Plan B to overcome this barrier in their formative years.

The farm is now financially self-sustaining, “we have been earning our money from growing vegetables and selling vegetables”, says Venturelli. The key was to identify what the break even point was to recoup the costs of operating, explains Venturelli, “we became financially viable at around 500 to 600 shares, and are now at 700 to 1000” with more shares in the summer season than winter. Being able to offer customers variety in their box, as well as a good price are two points that have allowed Plan B to retain enough customers to be self-sustaining. Another is good press in the local media and advertising through word of mouth.

Return to Case Studies