Micro-loans

Brian Clements of Northcroft Farms in Ashland purchased a seeder with a micro-loan from Chequamegon Food Co-op. The seeder will help him to increase his productivity and production, leading to an increase in his bottom line and make more locally produced food available for the region.

The traditional proverb states that through small steps are great strides taken.

That is a notion that the Chequamegon Food Cooperative’s Micro-Loan Program is based on. Since 2007, the program has made very small loans to area food producers, to aid those agriculturalists to become more efficient, expand their operations and provide more locally produced food for a hungry market seeking healthy, locally produced food.

According to the Co-op’s General Manager Harold Vanselow, the idea of making small, low-interest loans available to small producers came from University of Wisconsin Extension Ashland and Bayfield County Agricultural Agent Jason Fischbach.

“He brought it to our board as a suggestion; a revolving loan fund that would basically pay for itself after two years of getting loans out,” he said. “We started out real small, with maybe $10,000 from loans and had a fall and spring cycle both years. Last year, I believe we awarded close to $25,000, and $60,000 over the past two years.”

Vanselow said the program has been a great success at getting small farmers the bridge capital they need to expand their operations and also great success in seeing the loans paid back, opening more capital for further loans.

“We have had multiple individuals and families who have done more than one loan with us,” he said. “At the Co-op, we have received a lot of products that have been able to be delivered to us, bought by us and sold at the store as a result of expanded and more efficient operations from some of the smaller farms, and even some of the larger farms who were able to buy a piece of equipment that enabled them to do a lot more.”

For the Co-op, the loans are not merely a small bit of altruism; they are clear examples of enlightened self-interest. The need for locally produced food far outstrips the supply. It makes the hardest kind of business sense to encourage the development of efficient and reliable agricultural producers.

According to Stacy Stark of the University of Minnesota Duluth in his 2010 study “Defining the Agricultural Landscape of the Western Lake Superior Region,” the northeastern Minnesota and northwestern Wisconsin region spends $1.27 billion a year for food. Of that total, some $13.54 million is grown locally. Given that, there would be a need for well over 7,000 new farms to produce 100 percent of that food locally.

Clearly that isn’t something that is going to happen any time soon, but it is an indicator for the great growth potential for locally grown food.

According to the Chequamegon Co-op, total local food purchases for organizations like Northland College, the Chequamegon Co-op, area schools, the Bayfield Regional Food Producers Co-op, area restaurants, farmers markets, the Community Supported Agriculture group and small merchants like the Sixth Street Market and Tetzner’s Dairy topped $1,900,000. On top of that, other markets including Wisconsin Indianhead Technical College, Memorial Medical Center, the University of Wisconsin, Superior and Saint Luke’s Hospital of Duluth have all expressed a desire for more local food products.

It is clear that the market exists.

However, one of the problems any small entrepreneur faces is the cost of capital, and indeed, access to any capital in the first place to invest in equipment and other necessary items to produce products to meet the demand.

Vanselow pointed out that items as small as a hand-operated seeder could make a huge difference for a small operator. That need is what the microloan program is designed to address, he said.

And while it is in the Co-op’s best interest as a buyer to make such loans available, the loan doesn’t tie the producer to the Co-op in any way.

“There is no stipulation in the micro-loan that if you take a loan from us that you have to sell your products to us,” he said.

The growth of locally produced agricultural product has become an important part of the local economy, and there doesn’t seem to be a ceiling on that growth anywhere in sight. Vanselow said the micro-loan program has had a part in that growth, helping in a trend that was naturally evolving.

“I don’t think it would have been much different if we weren’t making the loans, it is a trend that is naturally evolving,” he said.

Nevertheless, by aiding the smallest of the small producers, they are playing a crucial role for those producers, enabling them to take advantage of a rapidly growing market for local food.

“That is a bit of a gamble,” Vanselow said. “I am not sure of what other kinds of financing sources that they have, at their disposal, but none of them are going to be as inexpensive as ours, or with less of their assets held as liens or collateral for the loan.”

In addition to the original Co-op investment in the micro-loan program, and repayments made into the revolving loan fund, there have been some additional investments into the fund. One is a $600 matching grant from the Agriculture and Energy Resource Center. The other is a Co-op patron-funded voluntary contribution program called “Chipping Change,” where patrons at the cash register are given the option to round their bill up to the next dollar and chip in their change to the micro-loan program. In 2015, those donations totaled $20,934.60.

“There are some very committed members who shop at the store, and they see that their 23 cents today or 47 cents tomorrow when coupled with everyone else’s really does allow the store to leverage it into some pretty decent loan amounts,” Vanselow said.

Vanselow said that it is a lot of fun to see the purchases that have been made using the loans.

“It’s everything from a seeder that plants the smallest seeds to a big washer that washes carrots,” he said. “It’s just really neat projects that have been purchased with the money. These are things that will be used for years.”

The Cooperative has just announced their spring micro-loan cycle.

Local farmers and value-added food producers are invited to apply for a loan in one of two loan categories. The total amount of available funds will be determined by the overall quality of applications. The loans are to be made in two categories:

• Category #1: Loans greater than $2,500 and up to a maximum of $5,000; three-year payback.

• Category #2: Loans at or below $2,500; two-year payback.

Loan applications are due March 1, at 9:00 a.m. Decisions will be made by the Co-op by March 15.

Micro-loan applications are available at the Co-op or online at

chequamegonfoodcoop.com/co-op/community. To learn more about the Chequamegon Food Co-op micro-loan program, contact Harold Vanselow, general manager, at (715) 682-8251 or haroldv@cheqfood.coop.

(Copyright © 2021 APG Media)

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