By Elizabeth Schuster and Michelle Klieger
The COVID-19 pandemic was a tremendous disruption for many small farms. Unfortunately, these were the same farms that often struggled with profitability even before the pandemic. This disruption came with a silver lining as consumers developed a greater appreciation for their local food systems, which ultimately added to the food system's resilience.
Small farms play a distinct role in disasters because they can be simultaneously impacted by disruption and also feed others who have been impacted. How can we help ensure that small farms are part of the solution during our next emergency? By documenting the lessons learned from the pandemic, we can ensure that agriculture – with an emphasis on small farms – is included in future disaster relief programs.
The $49 million Vermont Everyone Eats (VEE) program leveraged small farms to increase economic resilience while feeding the hungry with locally produced foods. Launched in August 2020, in the heart of the pandemic, VEE was the only food security program in the state that also had economic development as a primary goal. This new program was a paradigm shift in collaboratively tackling food aid, economic development, and farm viability.
The VEE program had a $78 million multiplier effect: the re-circulation of money by farms and restaurants in their local supply chains and labor pools. The $49 million government spending combined with $78 million private re-spending added nearly $130 million in local spending in Vermont during a time of otherwise lower economic activity.
Further, many small farms and food businesses in Vermont initially participated in VEE to support the community and feed those in need. In many ways, it was a bonus that these businesses also reported large economic benefits in addition to the goodwill they were expecting. Through their participation in VEE, many small farms experienced improved economic resilience, enhanced cash flow, increased visibility, and new partnerships with customers.
Even more interesting is that farms focusing on organic production and regenerative agricultural practices had a prominent role in the program. Data suggests that the producers who care about the environmental sustainability of their operations also tend to make business decisions that reflect their care for the community in which they live.
Let’s dig into the five secrets to the VEE’s program's success.
Overview of the VEE program
When the COVID-19 pandemic led to shutdowns across the United States in March 2020, the disruption cut into the already-thin margins for small-scale farms and restaurants. Despite the extensive experience that partners in Vermont had around the local food economy and hunger relief, never before had there been an ambitious state-wide program to simultaneously support farmers, restaurants, and residents in need of food. Could they design a program that would work – or was it too ambitious?
Partners across the state came together quickly and initially secured enough funds from the Federal Emergency Management Agency (FEMA) for the program to last for five months. The program was extended numerous times, lasting from August 1, 2020, to March 31, 2023. Total funding was $49 million, with the majority from FEMA and a $1.3 million allocation from the Vermont State Legislature.
The VEE program was structured around 14 community hubs across the state, managed by a diverse mix of groups – from downtown businesses to farm-to-table to hunger relief organizations. These hubs interacted with the restaurants, who were paid $10 a meal and required to source at least 10% of their ingredients from local food producers. In turn, these nutritious meals were provided free of charge to the recipients.
Mobilizing rapidly during times of disruption: 5 secrets to success for the VEE program
VEE’s success is due to the ability of partners to rapidly design an effective program in such a short time. Initial program partners included the Agency of Commerce and Community Development (ACCD), the Agency of Human Services (AHS), Vermont Emergency Management (VEM), VT Department of Public Safety, Southeastern Vermont Community Action (SEVCA), Capstone Community Action, and Vermont Sustainable Jobs Fund (VSJF).
Why was their design so effective?
Lesson 1: Being prepared is a key factor in being able to launch a program during an emergency because it is too difficult to build relationships quickly or do quality research as an emergency is happening.
Even before March 2020, stakeholders in Vermont already understood the top challenges and opportunities around hunger relief programs. Vermont was known for many programs that supported the local food economy. In the early months of the pandemic, various nonprofits, businesses, and government entities quickly piloted two programs to test the concept of paying restaurants to make meals for those in need at no charge to the meal recipient. That does not mean that the VEE program was designed before the pandemic hit. Partners were able to innovate when structuring the VEE program, but it was likely due to early tests, investments, research and partnerships that they could hit the ground running.
Lesson 2: Programming that leverages existing talent and capacity is a must.
The VEE partnered with existing organizations and businesses to serve as the community hubs to run the program. As an example, prior to the pandemic, the Vermont-based nonprofit Center for an Agricultural Economy (CAE) already had a mission focused on “thriving landscapes, healthy local food, and vital, equitable communities.“ This alignment made it a natural fit for CAE to become a hub for VEE in Albany, Craftsbury, Hardwick, and surrounding towns where they had familiarity with the communities. Similar to the CAE, all the VEE hubs had bookkeepers and systems that would enable them to process payments. Further, the participating restaurants could leverage the chefs they already employed rather than hire and train new cooks to make meals.
Lesson 3: Allowing for flexibility, rather than having overly burdensome participation requirements, keeps things nimble.
The meal recipients could choose meals freely from a variety of participating restaurants. Subsequently, the restaurants could choose how many meals to make each week, what foods to purchase, and which recipes to make. The restaurants had complete freedom to purchase local foods from any farmer or local food processor that was both based in and located in Vermont.
Lesson 4: Even when scaled to be a statewide program, there is a need to maintain local connections.
The thought leaders behind VEE knew it was important to include community empowerment through ownership of the various components up and down the food supply chain. Yet scaling to the state level leverages economies of scale and allows for greater impact and shared learning. VEE was able to capture both statewide impact and local connections.
Lesson 5: Targeting the root cause of poverty by keeping people employed is crucial.
Unemployment is the largest predictor of poverty. For many, bouts of poverty are short-term and the loss of a job is the main trigger; therefore, many people who lose their jobs during an emergency are likely to experience at least a short bout of poverty. It’s this same population that will need social services during this time. By keeping people employed – which is something that successfully resulted from the VEE program - we can help folks avoid the poverty that comes with unemployment.
Figure 2. Top food products for farmers and food producers participating in VEE.
Economic resilience of the local food economy
When we started our research on the VEE program, we aimed to understand better what farmers and food producers saw as positive impacts. Specifically, we wanted to tease out which benefits came because of the VEE program - and which would not have happened otherwise. We conducted 40 interviews with farmers and food businesses in February and March 2023 to gather information.
Because VEE is an emergency relief program, the main benefit of VEE was that it improved the economic resilience of farms during a time of disruption. However, it is important to note the benefits to farms came from restaurant purchases stimulated by the VEE program. At the core, this means we are talking about the resilience of the local food economy and not just the economic resilience of the farms.
ABILITY TO MAINTAIN A POSITIVE CASH FLOW
During our research, we heard one restaurant owner note that because of the cash flow generated from VEE, he was finally able to get enough funds together to replace the ducts in his restaurant. However, since farmers put all their cash flow into seeds and other inputs, they struggle to maintain or purchase equipment and infrastructure without accessing credit. This led to the question: Were farmers also able to invest in equipment and infrastructure due to the increased cash flow from VEE? If yes, this would mean that added cash flow could replace some of the need for accessing credit. The findings were more impressive than we expected.
Because of VEE, restaurants, farms, and food businesses invested approximately $10 million in infrastructure and equipment. This means that VEE directly bolstered the local food economy through purchases such as a new $200,000 facility for growing greens, an onion topper to provide onions to restaurants, a greens harvester, a labeling machine, an automatic planting machine, and a new seeder for salad greens.
ABILITY TO ACCESS NEW MARKETS
Another concern we often hear from small-scale producers is that they quickly outgrow farmers' markets and farmstands but face challenges when looking to access new markets. Further, it increases risks by only having one farmers' market available (what if that market closes down?) or one type of customer (what if you only sell direct-to-consumer and those consumers stay home during a pandemic?). An ability to access new markets can increase resilience because it means business owners are not putting all their eggs into one basket. Therefore, part of our research assessed if VEE helped farmers diversify into new markets.
From the restaurant interviews, we learned that 75% of restaurants interviewed increased their local food purchasing due to VEE. Although VEE only required 10% of ingredients to be purchased locally, an average of 36% of the food used in their meals was purchased locally.
The question remains: did VEE help farmers access new markets?
The data showed that 25% of farms and food businesses interviewed accessed new markets. That said, perhaps the following is more telling. The data showed that 80% of restaurants interviewed purchased directly from farms. Also, three-quarters of farmers interviewed said that they have grown or produced specific food products for restaurants.
One farmer noted in the interview, “We have begun working with a number of restaurants who were previously not interested in playing the game of working with a small farm like us. But that changed with Vermont Everyone Eats.“
These findings suggest that restaurant sales are based on relationships and that there is a high cost to bringing on a new customer. VEE helped reduce that transaction cost and supported new partnerships between restaurants and farms.
Many farms and consumers make value-based decisions
Previous research by David Conner, Agricultural Economist at the University of Vermont, focused on the motivations of sustainable food businesses in making decisions. “Results suggest that these businesses’ decisions are driven in part by their personal values and interests and their desire to support other local businesses and contribute to their communities,” reported Conner in his publication, Exploring Resource Management for Sustainable Food Businesses (2020, p. 99).
Conner’s findings are counter to the common belief that businesses are inherently profit-seeking in all decisions. After all, companies are made up of individuals. When these leaders make value-based decisions, they can result in business decisions based on factors other than price. To explore this idea further, we incorporated several questions into our interviews to surface information on farmer goals and values.
Our interviews found that about two-thirds of respondents use some form of label or certification on their food products. The most popular label is organic, with 47% of respondents using that label. Other labels include regenerative or sustainable, buy local, grass-fed, non-GMO certified and humane certified.
Both the farmers themselves and the consumers make value-based designs. Consumers look for products that align with their values. The organic label is a perfect example of consumers making value-based purchases instead of looking for the cheapest price.
VEE gave everyone a pathway to help each other during a challenging time. Businesses could give back to the community in a way that aligned with their current business model. Restaurants were able to promote their participation in the program, signaling to community members who could afford to purchase meals about the good they were doing and encourage more sales.
What can you do? Tangible actions for small farms:
If you want to ensure your small farm is both supporting and benefiting from the next disaster relief program, consider the following three tips.
1. When designed right, food security programs can be a source of revenue for local food producers and small farms, increasing their economic resilience. However, the benefits to small farms are stronger when you prepare and build relationships with key partners before the disruption happens. Key partners can include a variety of organizations such as economic development entities, hunger-relief organizations, farm-to-table groups, food security or local food system organizations.
2. Relationships matter when it comes to new customer acquisition. Advocate that future disaster relief programs also include a local food requirement. This helps reduce the costs of building new relationships, marketing to new restaurants, and ultimately, obtaining a new customer. Bonus tip: Many farmers were unaware that they were participating in VEE. More targeted messaging to farmers about VEE's opportunity might have incentivized even greater participation.
3. Stability and consistency help increase the economic impact of disaster relief programs on the local food economy. Towards the end of the VEE program, a farmer shared that he is part of the Deep Root Organic Co-op in Vermont. The farmer noted that the co-op was providing a significant volume of sales to restaurants because of VEE. There was concern that these sales would go away if VEE ended. This is a bit of an oxymoron to have stability during a disaster. While emergency relief programs cannot last forever, it is imperative to find ways to build continuity between disasters to ensure infrastructure investments and partnerships that support small-scale local food producers are maintained.
The VEE program provided numerous benefits to local, small, and organic farms. During the pandemic, these smaller-scale producers added resilience to the community. They provided food when the traditional food supply chains broke down or were disrupted. Consumers looked to local producers to feed their families.
The importance of local food and organic production was hard to see for many people before the pandemic. Prior to the pandemic, most consumers purchased organic or local food because they believed in the product. More recently, non-ideological consumers have been purchasing more from these farms. This gives farms access to more high-value direct-to-consumer sales.
However, relying purely on direct-to-consumers is not ideal for all farmers. VEE strengthened the food hubs and farm-to-restaurant connections, giving producers additional outlets. This offered producers diversification and risk management strategies in the form of new buyers and new desired products. Restaurants purchase larger volumes than individual consumers. Restaurants might take seconds that are processed into dishes. They may be open to purchasing more ground beef, which helps move meat.
They might take small or larger size products that are not ideal for farmers markets, helping farmers move more of their food products off the farm, increasing profitability and reducing waste.
Restaurant sales are not without challenges – a simple change in chef can make it difficult for farms to continue to sell to restaurants. That is why these sorts of programs are so crucial. Because the incentive of the requirement for restaurants to purchase a percentage from local producers can be a game changer.
Small family farms and organic farms should be proactive in ensuring they are part of the solution during the next disaster. Small farms are not homogenous and may have different goals and objectives. Most want to achieve more dependable revenue streams that are predictable. Some want to scale their business, diversify their business, or even downsize their operations. Despite these differences, it is clear that when programs exist during disasters to support small farms to meet their goals, we are building economic resilience and helping farmers survive the disruption. Then, after the disaster, farmers have greater capacity to choose whether they grow, downsize, or maintain dependable revenue streams.
Elizabeth Schuster and Michelle Klieger are agricultural economists specializing in the economics of local food systems and regenerative agriculture. The full report showing their economic analysis of the VEE program and contact information can be found here: https://sustainableeconomiesconsulting.com/sec-projects/economic-impact-assessment-of-vermont-everyone-eats/