When It Comes To CSAs, How Big Is Too Big?
Last year, one of the country’s largest Community Supported Agriculture share providers went bankrupt. Grant Family Farms in Northern Colorado launched an organic CSA back in 2007 with 127 members and peaked with more than 5,000 in 2012.
The story behind why Grant Family Farms went bankrupt is complicated. But it also sheds light on whether a CSA can become too big.
Losing It All
CSAs have been popping up across the country, allowing consumers to buy shares of eggs, meat, fruit and veggies at the beginning of the season. Most operations are small, serving dozens of customers. Others serve hundreds.
While Grant Family Farms had thousands of CSA members, the share program was just a small part of the overall operation. Former owner Andy Grant estimates that about 80 percent of the farm’s business was growing vegetables for sale in grocery stores and other commercial outlets.
The business had its ups and downs, Grant says. After struggling through Chapter 11 bankruptcy in 2006 and 2007, Grant needed an infusion of cash at the end of 2011.
“So we were a little short of capital,” Grant said. “We had CSA crops already in the ground, there was no question the CSA was going to work. But would we have enough money to grow the wholesale crops?”
"The sad part is we have lost our family's farm"
Grant, whose father had started the farm in the ‘50s, accepted a $1.5 million loan from a consortium of investors called Localization Partners. But by December 2012, the farm declared Chapter 7 Bankruptcy—which effectively ended operations.
“The sad part is we have lost our family’s farm,” Grant said.
‘Big Is Not Necessarily Better’
There are two different views on why Grant Family Farms declared bankruptcy. Andy Grant says when he had to leave his farm finances to Localization Partners it started accelerating unnecessarily down a road toward bankruptcy.
“By mid-summer  it became very obvious that they had no intentions of reviving Grant Family Farms,” Grant said.
Localization Partners sees it differently. Localization Investor Tom Abood says with almost $10 million in liabilities at Grant Family Farms, there didn’t seem to be many options.
As the Chapter 7 proceedings continue, Localization will re-coop some of its losses. But Grant Family Farms’ CSA is done. Ultimately, Abood wonders whether the CSA growth was sustainable and if the operation grew too complex.
“With some of the other CSA’s—that’s primarily what they do,” Abood said. “They don’t have a wholesale. They’re really looking at a CSA to finance their operation. So I think sometimes big is not necessarily better.”
Grant Family Farms had dozens of distribution points across Colorado’s Front Range, from Colorado Springs in the south to the northern border with Wyoming. Compare that to a smaller operation where members might pick up their share every week from a nearby farm.
“If you’re really going to take seriously the ‘community’ component of it and if one of your goals is to have strong ties with your members and have your members have strong ties with you, maybe there is a point where the CSA can’t really get any bigger,” said John Hendrickson, a professor at the University of Wisconsin-Madison who studies small vegetable farms.
‘That’s Not Going to Feed People’
Arguments focused on restricting the CSA size don’t hold water for Andy Grant, who says his CSA was profitable until the end.
“It’s the litmus test that you can only grow for 100 people,” Grant said. “That’s not going to feed people. There are 4 million people who live in the Front Range of Colorado.”
Starting out, the farm has thousands of hens. Grant lost his previous flock in the bankruptcy proceedings. He says friends helped him finance the purchase of about 15,000—a $65,000 price tag.
“Because after how Grant Family Farms was decimated we didn’t have any money,” Grant explained.
Along with egg shares, Grant Farms will offer mushroom, cheese, fruit and microgreen shares—mostly provided by other venders. While the venture is spearheaded by Andy Grant, Josh Hall is managing the day-to-day affairs. Hall says he and Grant are already applying lessons learned from Grant Family Farms’ bankruptcy.
“Starting from scratch we need to narrow that scope and see what those things are not only that we do good, but what are the things that we do best,” Hall said.
Hall and Grant say they have no grand ambitions for the size of the operation. But in just a matter of months, they’ve brought in about 100 members. Share deliveries started June 17.