Webinar Unpacks Food Co-op Financing as Strategy for Regional Development


NCBA CLUSA hosted a webinar and live event at its Washington, DC headquarters last week called, “Financing Food Co-ops to Advance Regional Food Systems.” Designed as a platform to bring together retail and development practitioners with leading Community Development Financing Institutions (CDFIs), thought leaders from the Federal Reserve Board (FRB), U.S. Department of Agriculture (USDA), The Reinvestment Fund, Capital Impact Partners and Friendly City Food Co-op, the conversation addressed opportunities and challenges of financing food cooperative retail locations as part of effective community, local and regional development.

The event was an extension of the community outreach FRB and USDA are doing as part of their public awareness for the recent release of their collaborative Harvesting Opportunity: The Power of Regional Food System Investments to Transform Communities. The book explores new data and perspectives around the increased interest consumers have shown in knowing where their food comes from, and according to the Federal Reserve Bank of St. Louis, “how their food dollars can provide greater support for local food related businesses and farmers.”

Close to 300 people from around the U.S. registered for the webinar to hear first-hand from several contributing authors, making this the highest-attended webinar in NCBA CLUSA’s history.

NCBA CLUSA President-elect Doug O’Brien moderated the discussion and noted how food system investment across the U.S. is at the heart of the cooperative model.

“Food retail co-ops were early adopters supporting local and regional food systems,” he said, “and they continue to lead the way on how farmers can access markets. The researchers and authors FRB and USDA put together is a who’s who in the field, and the essays hit every aspect of regional food systems. The conversation they’ve started is incredibly important to both the future of food co-ops and the way Americans think about access to food.”

Andrew Dumont, Senior Community Development Analyst with the Federal Reserve Board, and James Barham, PhD and Agricultural Economist at the USDA, led off the discussion with insights on why their organizations have taken leadership roles in financing regional food systems, pointing out key resources that food co-ops might consider using. For Dumont and the FRB, their involvement is part of a broader mandate to help build infrastructures that support robust local economies and provide avenues for maximum employment. Barham and USDA are mobilizing government resources through education, training and grants, supporting the whole supply chain with over 30 unique programs.

“Food co-ops are anchor institutions,” Barham said, “and have an opportunity to play a role in communities beyond just selling food. They can offer education, procurement, loan access and several other ways to interact with agriculture at large, including acting as a conduit to connect others. One program for food co-ops that we’re specifically excited about is our Business and Industry Loan Guarantee program, which can help lower the risk threshold. Another one is our Community Food Projects grant program. While it’s typically for a non-profit, many non-profits in low-income communities want to start a food co-op and this can help tackle that food insecurity problem head-on.”

Attendees had the opportunity to pose questions to the panelists, and several asked about the B&I Guaranteed Loan Program collateral requirements.  According to the USDA, collateral is indeed required with a documented value sufficient to protect the interest of the lender and the agency. The collateral value is discounted at factors consistent with sound banking practices, with a maximum of 80 percent of fair market value given to real estate, and a maximum of 70 percent given to machinery and equipment. The total collateral value, on a discounted basis, must be at least equal to the B&I loan amount.

The Reinvestment Fund has been a key partner with USDA, and Managing Director of Lending and Investment Andy Rachlin outlined some of the challenges of financing food co-ops, as well as the ways they’ve worked with co-ops to help finance their operations. Capital Impact Partners, another CDFI that works closely with National Co+op Grocers (the trade body for natural and organic food co-op retailers), echoed Rachlin’s comments and emphasized the need for adequate technical assistance to be part of the equation—especially when looking at more traditional models that don’t involve natural foods.

“The combination of TA and strategic capital helps ensure success and protects the lender’s investment,” Director of Loan Programs Olivia Rebanal said, with Rachlin nodding in agreement. “For low-income areas or even non-organic groceries, for example, lenders are just as excited for the increase in communities planning to launch these, but there is concern about the availability of grant funds, and other types of capital that will be needed to support intense technical assistance. CIP, for example, gave a grant to support the Food Co-op Initiative’s program to provide seed grants and TA for food co-ops in low-income urban communities, but this is just a first step. It’s an issue that needs to be addressed by the entire ecosystem: CDFIs, credit unions, TA and development organizations, city and state government, local non-profits and allies in the food access space. The values still align with the natural food co-ops, but it’s also a different motivation and product mix, so new innovations need to be made.”

The perspective that brought all this info together was provided courtesy of Steve Cooke of Friendly City Food Co-op. As a co-op that came together during the Great Recession but is now on the cusp of an expansion to better serve the Shenandoah Valley’s burgeoning population, they’ve seen it all. And their commitment to local is at the heart of it.

“We know that competing on price is not a strategy that works for us in the long term,” Cooke said, “but we can emphasize the quality of our products, the benefits to our local economies from community ownership, our focus on service, and meeting the needs of our communities. We expect our margins to gradually decrease as natural/organic products become more and more available nationwide. Streamlining admin and operational expenses through greater collaboration and networking will keep us sustainable long into the future.”

To view this webinar in its entirety, visit NCBA CLUSA’s webinar archive, where you can also download the presentation. For further questions on the topic or to get in touch with the presenters, email Bryan Munson at

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