MARKET RESEARCH AND ANALYSIS

The market for Farmworks patient investments is only limited by the Co-operatives ability to raise investment capital.  The increasing sales opportunity for locally produced foods outstrips current supply.  Any interruption in the existing supply chain will trigger exponential growth in the local market.  Farmworks will be an early leader in financing local growers that can rapidly expand to respond to demand in the market. 

Customers

Approximately 13% (236,000) of the 1,500,000 hectares of Classes 2, 3 and 4 land in NS is under cultivation[3]. Nova Scotia producers currently supply less than 20% of the food purchased.  While local producers will not achieve a 100% supply of local food it is reasonable to expect that over the next ten years farm income will increase as farmers increase output to satisfy the increasing demand.

There is a pent up demand for equity investment in the agricultural sector and the medium and long term prospects for success in the sector are positive: increased public interest and support, success and expansion of farmers markets, government buy local campaigns, food security as a core program for many public health agencies, the growth of agri-tourism and culinary tourism, rising food costs, the impact of rising fuel costs, economic potential of a new breed of farmers, emerging leadership, and new programs such as the PEI Farm Technician program and the Ontario New Entrants program.[4]

Market Size

In 1999 NS had about 4200 farmers, income $389 M, net income $33 M, a return of 9%.[5]

In 2009 NS had about 3000 farmers, income $442 M, net income - $41 M, a negative return of 9%.[6]

The 2008 total income includes floriculture, furs, horses, and exports. Without these, farm gate income for local food was $345 M, which represented 13.2% of the $2.6 billion in total consumer food dollars, compared with 16% in 1998.[7] The supply-managed dairy ($118 M), poultry ($77 M) and egg ($24 M) sectors are achieving substantial local sales but the non-managed sectors have lost ground since 1998.[8] There is significant potential for increase in production of most fruits and vegetables both for local and export markets.

If farm net income returns to overall profitability, and then to the 9% achieved in 1998, average income could increase 20-fold. Investments are needed that will help farmers to regain lost production capacity, and this will help rebuild Provincial food sufficiency.

Trends

Significant numbers of consumers are becoming more aware of the taste and nutritional qualities and the economic, social, health and environmental benefits of local food. This increasing awareness of the importance of supporting the economy through local solutions opens the door for development of agricultural-based economic development. Farmers are innovating, extending the growing season, and processing foods in order to provide consumers with more of the diversity they seek.

John Parker wrote “Because food is so important, agriculture—more than any other form of economic activity—is expected to achieve a series of competing and overlapping goals that change over time and from place to place. The world looks to farmers to do more than just produce food. Agriculture is also central to reducing hunger and provides many people’s main route out of poverty. Food is probably the biggest single influence on people’s health, though in radically different ways in poor countries and in rich ones, where the big problem now is obesity. Food is also one of the few pleasures available to the poorest”.[9]

Competition and Competitive Analysis

Nova Scotia stands to benefit on many levels by gradually shifting our global net-input farm and food economy to one oriented toward local and regional markets. It’s well understood that money spent at local businesses creates a multiplier effect, circulating the same dollars many times within the local economy[10].

Nova Scotians spend about $2.6 billion on food annually but less than 20% overall on local farm products. Strategies that increase the availability of Nova Scotia-grown food will help improve the local economy. With a modest economic multiplier of two to three cycles, even a 10 percent increase in local food production, processing and purchasing could generate $400 to $600 million of new economic activity annually within the Province. Hundreds of new jobs could be created on and off farms and through farm-related businesses such as seeds and stock, equipment, tools, storage, processing, packaging, and distribution.

Ongoing Market Evaluation

 “Nova Scotia’s current debt level, at $13 billion and growing, sends wrong messages, and the cost of servicing it—currently more than 10 per cent of total provincial government spending—crowds out government activities from sectors that it should be more active in, from education to social welfare to economic development.”[11]

“We have moved well beyond the era when Canada’s poorer regions could expect preferential treatment from the federal government as protection against the adverse effects of economic change. A new era has emerged in which provinces are required to take greater control over their own destiny.”[12]

Agriculture comprises less than one percent of the Provincial budget. Of the $8 B budgeted for 2010/2011, $61 M (0.7%) is directed to the Department of Agriculture and $3.7 B (41%) to Health.[13] Diet-related chronic diseases such as cancer, cardiovascular diseases, diabetes, and stroke take up two-thirds of the direct costs of the health system, and it is well established that appropriate nutrition and physical activity could reduce the prevalence of cancer by 24% and lead to dramatic reductions in heart disease.[14] Locally grown food can retain more nutrients than food transported long distances and whole foods that are less highly processed contribute to better health.

The Government is constrained in its fiscal ability to reverse the food and health trends. Nova Scotians can help to bring about positive changes by rethinking what they eat and where they invest their money.

In 2008 about 77% of NS farms had a gross income of less than $100,000, and 70% had less than $50,000. Many of those comprised the 59% of farm families supported in part by an average of $36,000 in off-farm income. The average total farm income from the 2150 farms reporting was $62,000 with net farm income adding $26,000.[15]

Off-farm jobs are crucial for those who farm in order to preserve the farm and land. The average  farm size is 262 acres so it to be expected that more than half the arable land in the Province is being preserved by farmers who could increase production if they could support their farms by doing so.

There are farmers and land available to grow healthy local food that could increase farm income, create more jobs on farms and throughout the food system, increase food sufficiency, keep more money in Nova Scotia and provide the economic stimulus that will reinvigorate rural communities. Currently agriculture directly employs over 5,400 Nova Scotians and approximately 22,000 are employed in food services.

Even a 10% increase in total farm gate food sales will add at least $35 M to farms and $70 M to the local economy and generate approximately 500 new on-farm jobs and 800 in food and other services.[16] Tripling farm sales would keep over two billion dollars in the province, create thousands of jobs and contribute millions of dollars to the tax base. 

Agriculture has the potential to be an economic driver for Nova Scotia, but farmers with little remaining equity, competing against low-cost industrially-produced foods that don’t reflect the embedded costs of production or transportation, with little government support available, are unable to take advantage of the rising tide of individual and community interest in rejuvenating food. 

Local food production requires investment in farms and food production and infrastructure.       

Each year several billion dollars flow out of Nova Scotia as investment, and the cumulative effect of the missing multi-billions has decreased the economic viability of every sector of this economy. The food producing sector effects have not been immediately evident to those who rely on chain stores for food, but the downstream economic and health costs are being paid by all Nova Scotians.

MARKETING THE CEDIF TO INVESTORS

Beginning in November of 2011 the Members of FarmWorks will hold community meetings with the goal of raising awareness of the benefits of buying locally and investing in the local economy. It is anticipated that Members will be assisted in this by Acadia Students who will be paid for their assistance as indicated in the budget.

The public presentation will consist of talks and audio-visual presentations about the benefits of secure and healthy food, agricultural sustainability, and economic development. A minimum of 20 presentations will be made whenever there is an opportunity to educate and inform the public about the issues with the food system, and the urgent need for support for local agriculture and food enterprises.  Audience members will be provided with print and web-based resources from organizations that offer consumer guidance for sourcing local food and investing locally. In terms of public awareness, for those who have never considered the question of food security and sufficiency, these presentations will provide a new ‘food lens’ through which to view local farming and eating practices. 

FarmWorks Members will also make connections between organizations already at work within the food system. These meetings will provide a forum for individuals and groups to articulate concerns and strategies that are specific to their experience so that individuals and communities can work together toward sustainable agriculture and economic development.

Advertisements will be placed in local papers to announce meetings and the FarmWorks website will announce upcoming meetings, in addition to providing information about the FarmWorks CEDIF and about agriculture and investing.  

Potential investors will be fully informed about the FarmWorks Board, Members and Advisors, and the range of enterprises that the Investment Committee is recommending. They will be invited to buy shares in the CEDIF and to become active participants in building a sustainable agricultural economy.

Potential investees will be invited to the community meetings with the goal of raising awareness of the CEDIF Shareholder’s interest in putting funds into the local economy. The meetings will enable investees to articulate concerns that are specific to their experience so that FarmWorks Members can work together with them to provide effective solutions for agriculture and economic development.

COMMITTMENTS AND COLLABORATION

     The FarmWorks CEDIF will help insure Healthy Farms and Healthy Food by:

·       Promoting the value of locally produced foods to consumers and the advantages of investing in the agricultural and food economy of NS;

·       Identifying  the needs of the farming community and food producers, governments, business, non-governmental organizations and academia for sustainable, healthy, sufficient, fairly-produced food;

·       Using the CEDIF as the vehicle for the sales of shares to provide funds to assist food producers, processors, distributors and other food-related enterprises to become economically viable and sustainable and to decrease the province’s dependence on imported foods;

·       Collaborating with and mentoring funded enterprises to assist in building their success;

·       Providing public information about the benefits of CEDIFs and co-operatives for socially responsive investing in economically viable enterprises;

·       Collaborating with appropriate partners to create benchmarks and indicators to track changes in local food availability and sales;

·       Helping investees to increase the amount of local food sold in Nova Scotia by 20% by 2020;

·       Providing an equitable return on investment to FarmWorks investors.

      Through its work, FarmWorks will interact with a diverse community:

·       Farming community;

·       Food producers;

·       Businesses;

·       Government Agencies;

·       Non-Governmental Organizations involves in stewardship, heritage, agriculture; and

·       Academia.