Part two in the series The Story of Ayers Brook Goat Dairy. Read part one, “Unfinished Business,” HERE.
While we were scouring the countryside for the ideal farm, our foundation partner, the Castanea Foundation, was busy assembling two collegiate foundation partners of their own to help with the purchase of the farm. The three foundations pooled their funds and formed Evergreen Conservation Partners. By aggregating capital from three sources, Evergreen was spreading the risk and leveraging their resources to take on larger projects that met their respective missions. With this seed funding, we could actually purchase a farm from which we would paint a vision of the dairy and the future of dairy goat farming in Vermont. Acquiring the real estate was just the beginning. We had to purchase the foundation herd, renovate the existing barn and build a new barn and milking parlor. There wasn’t even a hammer, much less an old tire on the property. We were starting from scratch.
Evergreen Conservation Partners, now the proud owner of a farm, agreed to lease the farm to Ayers Brook Goat Dairy, a new L3C comprised of three members: our farm manager, Rene DeLeeuw, Bob Reese, and me. An L3C is a “low profit limited liability company.” This kind of company allows a foundation or nonprofit to invest in a private enterprise provided that the goals and mission of the enterprise are aligned with the goals and mission of the foundation. It is a genius way for capital to flow into the private sector where the return on investment is longer than the tolerance of a conventional investor or lender. Impact investments in social change or, in this case, our food system, take time and most of us don’t have the luxury of taking that level of risk or borrowing the capital required to get there.
Evergreen Partners agreed to finance the sale of the farm to Ayers Brook Goat Dairy L3C for favorable terms of an 8 year period a little above 1% at which time Ayers Brook will refinance the farm through a bank. Evergreen agreed to convey the real estate once we raised 1 million in private capital to make the improvements. And so the daunting task of raising capital for the farm began. We were gratified to learn of the interest among foundations and individuals in the project. It takes a special kind of investor with a keen interest in perpetuating Vermont’s working rural landscape and innovation in agriculture. Supporting farming and entrepreneurship is foremost in their decision making before their ROI.
For the management team at Ayers Brook, however, we wanted the investment to be more than philanthropic. The mission of Ayers Brook is to demonstrate the financial viability of the farm, so we were determined to provide an exit for the investors. Without that model how were we to develop more farms in the future if they could not carry debt or re-pay their investors? Bob crafted an offering for the investors that would pay them a 3% return annually for eight years with a plan to begin to pay distributions once we reached positive cash flow. The interest will increase to 8% after twelve years. Not a bad investment in today’s world, but there are no guarantees, collateral assigned, or option for majority control for the investors. They are taking a flyer on our ability to figure it out in the same way that we did thirty years ago.
Frankly, we are not seasoned at soliciting investors and are accustomed to building a business over 30 years of debt financing. Not being in our comfort zone we had to sell the vision, not the numbers. One can always sell numbers on paper. But we know all too well that the reality of a start-up pro-forma business plan is far from precise. Investor vote of confidence in our intangible passion and pluck validates our renewed sense of purpose. And so, in a matter of weeks, construction of a milking parlor and new barn will begin. The kid goats who arrived last fall have grown up to be teenagers and are being bred to freshen or “kid” in October. The wind rows of manure are being turned into rich compost that will aid in converting part of the existing corn plot to alfalfa hay. The brick farmhouse has been modestly renovated to house Fall students from Vermont Tech to work and learn on the farm. We are feeling resilient and ready to tackle all expected and unknown obstacles.
One of the most pressing issues in agriculture today is the near impossibility for young people with no equity to purchase a farm, much less amass the capital and working capital to start a farm enterprise. If Bob’s financing model goes according to plan, Evergreen Partners will have the option of recycling their capital to help farmers in the same way that they are helping Ayers Brook Goat Dairy. Historically, Foundations and Land Trusts for whom their mission is to conserve land, bought land and the development rights without a plan to work the land. If a foundation can deploy the same dollars that would have purchased land with no intended use to help an enterprise to conserve the land it is a win win. The Foundations have served their mission and the farmers get some low cost capital. It is certainly more risky, but so necessary. If Ayers Brook is successful in realizing a vision of providing good breeding stock and savoir faire to future goat farmers, Vermont will be dotted with ten new farms milking 500 goats each. One acre of farmland will support 4 goats. 5,000 goats will require at least 1,000 acres of working farmland.