Putting Intent Into Practice

by Michael Sands, Ph.D. – Environmental Team Leader at Prairie Crossing and Senior Associate at the Liberty Prairie Foundation

“Just hire a farmer.” I wish it were that easy to create a viable farm within a new or existing community. What are some of the practical considerations in turning the desire for a farm in a new community to reality? I will draw from our experience at Prairie Crossing over the past years. If there is any market for new development in the future, evidence indicates communities that distinguish themselves with integrated farms are gaining momentum in the marketplace. As a pioneer in the creation of this development model, Prairie Crossing learned through trial and error and succeeded largely through the continual commitment of the developer and community to the farming operation.

Benefits & Challenges

What are the potential benefits and challenges in the incorporation of food production into a community? It is important to evaluate these issues from the perspectives of the different stakeholders, as they  may well have different interests. To succeed, a project will often need to satisfy these disparate interests. Below are examples of potential benefits and challenges for stakeholders.

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Clear Goals & Objectives

A number of objectives must be considered when incorporating food production into a new community. Understanding these options and making a clear decision about which objectives are a priority for each project will make the subsequent design and planning more efficient. there are several common reasons why project teams become interested in incorporating food production components:

Marketing the project. For the developer, the opportunity to distinguish the project and enhance the marketing efforts is often critical. This requires that the food production component be developed early in the project. Additionally, the farm should be reasonably prominent and visually appealing. the farm staff should be able to community with potential home buyers, as the developer will want to hold events at the farm to attract potential buyers and the press. the developer may be willing to invest resources from the marketing budget to support the early success of the farm. The corollary is that the developer may not have a long-term commitment to the farm after home sales are complete.

Opportunity for residents to grow food. Providing residents an enhanced opportunity to grow a portion of their own food provides a valuable amenity to a new community, particularly one trying to develop along New Urbanism standards of small lots and higher densities. A series of distributed community gardens near the residences will probably accomplish this objective best. To be effective, the gardens will need some infrastructure; at a minimum, water, a composting system, trash collection, and occasional access for trucks and tractors. Each location should contain enough plots (20-25) to create a sense of the “garden community.”

Opportunity for residents to buy local food. Traditional neighborhood developments appropriately mix uses to provide walking access to the necessities of daily life. Integrating business and office space provides jobs and local shopping. Providing fresh, local, high-quality produce would strengthen this model by locating sources of food near the community.

Production for local restaurants. Some chefs such as Dan Barber of Blue Hill Restaurant in Pocantico Hills, New York, are going beyond a general commitment to local sourcing and establishing either a shred or exclusive ownership in a farm. This may range from a larger farm able to provide meat products to smaller diverse vegetable production plots. The opportunity to locate a restaurant next to a farm gives a direct visual connection to its source of food, and can be a very powerful marketing opportunity. Imagine each dinner reservation starting in the garden with diners picking fresh product for their meals. Such a restaurant is a distinctive amenity with the ability to attract potential homebuyers.

Additional independent community businesses. Mixed-use planning enhances local economies, provides amenities to residents, and promotes business development in new communities. A local farm may ad businesses associated with distribution, value-added products, catering and commercial rental kitchens. These cost the developer little more than the potential opportunity cost of the land for houses and may provide rental income.

Views for the community. Farmland can provide aesthetically pleasing pastoral views for community members. If this is the primary objective, the developer might want to consider the visual impacts of the following different farming systems. Commodity crops (corn, soybeans, wheat, rice) provide large vistas of soothing monoculture, but often require seasonal herbicide and pesticide spraying from industrial-sized equipment or nighttime harvesting from lighted combines. Vegetable systems are more diverse and labor-intensive, with much more activity. They have greater requirements for buildings and field storage of equipment. Orchards provide attractive, symmetrical three-dimensional vistas, but usually require straying significant amounts of pesticides. Grazing animals in well-maintained pastures can provide extremely attractive views. Prairie Crossing’s residents paid lot premiums for views of the horse pastures.

Farm-based educational programs. Educational programs for the public and community members are another amenity that will enhance marketing efforts. However, an attractive experience requires attention to high-quality programming and staffing. The long-term business plan and appropriate institutional arrangements need to be addressed early, as educational programs will probably not be supported wholly from homeowners association dues. A percentage of the sale price from each home can be directed to a non-profit that helps support educational programs.

Connection to regional food initiatives. If the farm plays a role in a larger local food movement, it will provide a broader brand for the community beyond the typical real estate development. These efforts will also require an institutional home that outlasts developer buildout.

Design & Capital Implications

The design and development team will want to address a number of design and capital implications when setting specific objectives for their project’s farm or food production efforts.

Scale. How big can the effort be? How much land is available for the initiative and what buyers do you hope to attract? Developing the 100-acre certified organic Prairie Crossing Farm says something very different than a 100-acre equestrian operation. Likewise, 4 acres of greenhouse or hoophouse production is a different initiative than 4 acres of community gardens. These have significantly different association project costs and income streams.

Front & center versus back-forty. Typically the farm is on the edge or the “back-forty” of a new community. At Prairie Crossing, the farm is along the western border, and serves as a buffer for a potential new road and an existing landfill. However, because of this location, its connection to the daily pedestrian traffic of Prairie Crossing is limited. Alternatively, South Village’s farm is right at the entrance to the community. Another consideration is that not all of the farm activities lend themselves to daily public exposure. Where does the compost production pad or the pig paddock go?

Connectivity to retail (restaurant and food store) and civic spaces. In most projects, the farm and retail are developed as separate areas. However, there may be opportunities to integrate these operations and gain a synergy that enhances the viability of both. Imagine the farm having a physical and visual connection to a restaurant at one end of a community’s retail street.

Land and soil suitability. In the same way that certain portions of a site are more appropriate for certain types of development, not all soil and land cinditions are conducive to a successful farm oeration. What is the quality of the land for farming? What are the soil types, topography, and pH? What is the drainage like? Different crops or production systems can utilize different land conditions. Some non-ideal conditions can be addressed with restoration technologies, others cannot.

Access. How is the farm or garden site accessed? Most farms will need to enable large trucks to get in and out of the farm. Some deliveries may be very frequent during specified periods of time, like fall deliveries of municipal leaves for composting. Accessibility within the farm is also an important issue, particularly during inclement weather.

Land ownership and control. Perhaps one of the most important questions to be addressed is the long-term ownership and control of the farmland. Options might include the development company or a local proxy, the homeowner association, a non-profit organization, or a farmer. Whatever the ownership, it is important to ensure sufficient protection against inappropriate future development through a conservation easement. A long-term lease for the farmer will help stimulate investments in soil quality and farm infrastructure. The conditions of the lease should provide sufficient independence for the farmer to make 0n-the-ground management decisions, and adapt to changing market conditions and emerging technologies.

Financial Capital Development

Most farm projects will require initial capital investments. Depending o the existing facilities, there may well be $250,000 to $300,000 in initial investments required. These may include wells and irrigation, buildings, greenhouses, wash stations, coolers, tractors and other equipment. Much of this investment may be needed in the first year or two.

While this is a significant investment for a beginning farmer, it should be feasible fore the developer with the creative allocation of a project’s marketing funds. At Prairie Crossing, we realized the potential of the farm early; feature articles about the new local food farm helped to drive sales more effectively than ads in the real estate section of the Chicago Tribune. We were eventually able to recoup a portion of this investment by selling the equipment to the farm operation as the business reached a level of profitability.

Long-term Financial Viability

What does the long-term business model for a farm I a new community look like? There are two major paths to choose from: to maintain close control by hiring a farmer as an employee, or to reduce control and facilitate the success of an independent farm entrepreneur.

Hire a farmer. By hiring a farmer (farm manager) as an employee, the developer ensures access to the farm facility for visits, developer-generated events and other initiatives aimed at marketing the community or project. As mot of these activities will compete with traditional farm production, marketing and management and will not generate much revenue for the farm, there should be limited expectations on the profitability of the farm enterprise as a stand-alone business during the initial home sales phase.

The challenge to this approach comes later in the project life, when the homes are sold out, no marketing dollars remain, and there is little justification for the developer to manage an ongoing business unit with limited or no profits.

Facilitate an entrepreneurial farmer. By identifying and facilitating the initial start-up of a bright, committed farmer-entrepreneur, the developer creates a potentially self-sustaining business. Now an individual (or a couple) has “ownership” of the project and all the incentive in making the farm successful. This model requires developers to sacrifice control over the daily operations of the farm in exchange for a better prospect for a finally viable long-term business. The challenge is finding the right entrepreneur, and developing a business plan that builds on the synergies available.

Successful farmer-entrepreneurs must possess or have access to a number of important skill sets. Obviously they have to be good at raising crops or livestock, but a number of other skills go beyond what you might have been looking for in a good farm manager. They must be able to sell whatever they product at the best possible prices. They need to be skilled at marketing. They have to be good financial managers. That means managing not only the short-term cash flow, but also the issues of growth, debt, and long-term planning. They also need to be good at labor management. As they grow, they will have to hire and motivate a great productive team. Finally they must be able to communicate well and directly with their customers. No single person is likely good at all these unique skills. Often a farm couple will have complementary skills to contribute. Agri-entrepreneurs must be able to identify how they will access the capabilities they do not have.

At Prairie Crossing, we started the project by hiring a couple as farm managers. They did a great job developing a successful working farm and hosting a large number of events that were critical in marketing the Prairie Crossing community and house sales. As the development neared buildout, we made a transition to an independent family farm operation. Sandhill Family Farms has a long-term market rate lease for a significant portion of the farmland and operates as a very successful independent business. They sell fresh organic produce to the general public as well as community members, primarily through a Community Supported Agriculture (CSA) model. The education activities at the farm are now the purview of the Liberty Prairie Foundation, and independent non-profit that supports itself with a .5% transfer fee from Prairie Crossing home sales, grants, and fee-for-service contracts.