Is the Ontario ag ministry pulling back from funding local food initiatives?
Saturday, January 9, 2016
The province's Local Food Fund wound down at the end of last year and the Greenbelt Fund, which supports local food distribution infrastructure, has also been cut back. But the ministry denies that the province's debt load is a factor
by MARY BAXTER
When it joined a local food initiative, Whitecrest Mushrooms Ltd. in Middlesex County was already well established as a supplier of Crimini and Portobello mushrooms to grocers province wide. The farm, near Putnam, regularly supplies grocers such as Zehrs, Fortinos, Longos and Costco (through Highline Mushrooms).
Murray Good, who owns Whitecrest with his wife Chantelle, says the initiative, a food hub pilot launched by South Central Ontario Region Development Corporation (SCOR), is helping to raise Whitecrest's profile locally and connect with more local markets. And that hub, of which Whitecrest is one of four aggregation points, couldn't have happened without the assistance of local food grants, he says.
"It's exposure. It's all about people knowing where you are and the food hub has helped with that for sure," he says.
The hub pilot involves 60 farmers from Elgin, Norfolk, Brant, Oxford and Middlesex counties. Launched a year and a half ago, the pilot connects farmers with buyers without having to depend on a middleman, Good says. Customers include two school food programs – their biggest customers – as well as an area hospital and other public sector customers. The hub has received financial support from both the Local Food Fund ($89,000) and the Greenbelt Fund ($125,000).
Good is all for ventures like the food hub standing on its own two feet as soon as they can. "You don't want to build something up with a bunch of funding and it falls on its face," he notes. But the government funding "has reduced a lot of risk, for sure, and has let us trial what some of the concepts would be."
Moreover, the pilot is "100 per cent R&D," he says, and no one else finances research and development. "Nobody, no angel investor, no bank – other than your family money if you see it being a (possibility)." For a business like his, participating in a food hub startup without government funding would have been unlikely because of the amount of investment into research and development that would be needed to assess it.
Nine years ago, when Luis Alves bought a "Mom and Pop" food distribution business in Thunder Bay which supplied lake freighters, the dream was to create a business his children could eventually take over. Soon after, he landed new clientele – remote mining camps and local restaurants. Then, three years ago, he recognized another opportunity: distributing local food.
In 2012, to establish the tracking, equipment and connections necessary to acquire and sell local food to institutions, Alves obtained a $45,000 Broader Public Sector grant from the Greenbelt Fund, which administers the grant program for the Ontario Ministry of Agriculture, Food and Rural Affairs. The next year, he acquired a grant of more than $100,000 from the ministry's Local Food Fund to add a retail store.
Alves' progress seemingly represents all that was envisioned when the Ontario government began efforts five years ago to increase local food consumption by supporting projects that move Ontario-grown product into local food service and distribution supply chains. By late May, sales at his business, Superior Foods, had grown 53 per cent over the past six months.
With Superior Foods' growth has come more opportunity for locally farmed products. Three years ago, Alves bought three skids of cabbage from Mennonite farmers near Sault Ste. Marie; last year he bought 60. He's established partnerships with local producers and is working on developing other supply chains, such as trucking barley to the Rainy River District to sell to farmers to finish their cattle and trucking back product from the Rainy River District Regional Abattoir Inc. to his business in Thunder Bay to distribute to clients. In June 2015, his staff numbered 13 – nearly double the seven people he had employed two years earlier.
Alves recognizes he wouldn't have been able to venture down the local food path if he hadn't received the targeted government support. Banks, he says, "don't really want to finance, especially in the food businesses. It's a perishable."
Ministry pulling back?
But despite these and other successes, not to mention a very public commitment to local food initiatives, the ministry appears to be pulling back on its local food funding strategy.
The Local Food Fund wound down at the end of December and the Greenbelt Fund, which administers provincial dollars for the development of local food distribution infrastructure, has also been cut back.
From March to September, the Greenbelt Fund had zero provincial funding. In October, the province announced $6 million to be spent over two and a half years, $4.5 million of which goes to funding programming. (The remaining money will be spent on local food education, the Ontariofresh.ca marketing website and administration.)
Burkhard Mausberg, the fund's CEO, says overall funding is "slightly reduced" compared to the Greenbelt's previous agreement with the province, and estimates the cut to be $240,000 over the agreement's 30-month span.
Art Lawson, SCOR general manager, says a lot has changed since the province targeted local food for support. Consumers are looking "for more local products on the grocery shelf. When you're eating out, you'll see more restaurants featuring local things. It's become part of culinary tourism," he says. "This is a trend that will continue on its own. Maybe it's a good time for government to step back."
Others, such as Lauren Baker, health policy specialist with the Toronto Food Policy Council and the city public health unit's food strategy team, say it's too soon to reduce support. "It has been really successful," Baker said following a meeting co-ordinated last June by Sustain Ontario to address how to develop regional food strategies in Ontario. "I think that, if we're really going to have deeper food system reform, we need long-term investments in some of the work that's happening. Systems change – it's not something you can do on a six-month grant."
Kimberly Earls, SCOR's business development officer, says more long-term support would enhance the food hub pilot's ability to scale up as well as ease a planned transition to ownership by the farmers involved.
Even stretching the Local Food funding they have received, which had to be spent by last month, would achieve the same effect, Earls says. "Obviously we have a lot of potential in this area and there are a lot of year-round opportunities." But extra help is needed to influence broader public sector purchasing patterns and help farmers and buyers determine how to meet each other's expectations.
SCOR is now applying for funding from organizations such as the Ontario Trillium Foundation, as well as the organizations and collaborations stream of Growing Forward 2 to make up the difference. "We've had to be pretty creative," Earls says.
She's especially concerned that, if loss of the local food-specific funding affects the outcome of projects like SCOR's and access to other funding is suddenly cut off resulting in quick wind-downs, producers will become hesitant to become involved in other local food initiatives.
Without local food funding, "there's the potential for many great projects, not just ours, not to go as far as they could. You risk losing the capacity of the people involved in those projects to other areas," she explains. "And then it makes it that much more difficult to either continue on or refresh at some point in the future if there are additional funds set aside for local foods."
Competition for funding
Alternatives don't appear to offer the same specific support for developing local food infrastructure that the Local Food and Greenbelt funds do. The Trillium Foundation, for example, does not support for-profit initiatives. The SCOR food hub has applied for support of activities related to the school food programs and educational outreach. "Certainly it doesn't look at the full picture," Earls says.
Local food projects will also find themselves competing against many other different project types for funding. Records on the Agricultural Adaptation Council website in early July indicated that local food initiatives received less than 10 per cent of the total funds issued ($13.8 million) to Growing Forward 2 organizations and collaborations category recipients. The council administers the category on behalf of the province.
The Rural Economic Development program (RED), renewed in October, might fill some of the local food funding gap. But, as with the Growing Forward 2 funding stream, under the RED fund local food projects would be expected to compete for dollars with other project types. The program annually issues $14.5 million in grants.
Established this year as part of Ontario's $2.5 billion Jobs and Prosperity Fund, the Food and Beverage Growth Fund might be considered another possibility. Certainly an October announcement of $1.5 million from the fund to support a new packaging line at juice maker Lassonde Industries in Toronto fosters that impression. "It will create 15 new jobs, help retain 114 current jobs and continue to add to Ontario's agri-food value chain," writes Christina Crowley-Arklie, the provincial agriculture minister's press secretary, in an email accompanying the announcement. "Lassonde sources their apples for their juice line from 91 Ontario apple growers in the province."
But projects like the SCOR hub, which has projected $500,000 a month in sales of dairy, fresh fruit and vegetables for its first full year of operation and is currently reaching about 65 to 70 per cent of that target, are not large enough to meet the requirements of the Food and Beverage Growth Fund. Indeed, none of the projects that received support from the Local Food Fund would be large enough to qualify.
Under the Food and Beverage Growth Fund, applicants must be considering a project of $25 million of total eligible costs to meet eligibility criteria for up to 20 per cent of funding. The fund will issue $40 million annually over the next 10 years.
Norm Beal, Food and Beverage Ontario CEO, says the fund does address one of the industry's big challenges, which is scaling up, and describes it as "very well thought out." The local industry competes with "some very large corporations worldwide," and to be able to compete internationally is critically important, he explains. But he'd like to see eligibility for the fund expanded by lowering the minimum funding criteria. The majority of industry growth right now is coming from small to medium-sized players, he points out.
David Sparling, Agri-Food Innovation and Regulation chair at the University of Western Ontario Ivey Business School, says the Food and Beverage Growth Fund will continue the local food momentum while helping build exports as well. "It's about building the entire industry and economic opportunity. And some of that will be focused on local food," he says.
Nevertheless, he'd like to see the Local Food Fund continue for the next few years. There is still plenty of opportunity to grow local food's market and infrastructure and that growth translates into economic and consumer benefits, he explains.
As well, what makes a program like the Local Food Fund a good investment, he says, is that most of the projects it supported were small "and probably low risk from a local food building capacity." Moreover, they're spread across the province, they're developing new markets "and probably developing some more capacity building for both the people who are doing these projects but also the people nearby." They foster awareness of local food in a way that is often larger than the project itself.
Sunsetting in 2016
There has been a lot of speculation as to whether the province's high debt load played a role in tempering a strategy that appears to be working.
But Crowley-Arklie, provincial agriculture minister Jeff Leal's press secretary, denies that Ontario's debt played a role in the fund's demise. She has offered different reasons for the fund's wind down at different points. In May, she noted the fund was slated to "temporarily pause to take a review of its design." Such reviews are something "we do with every funding program, so it's not just local food funding."
In October, however, she said that the fund was never intended to be ongoing: "We've been clear from the beginning when we launched the local food fund that we were committing $10 million a year for three years, so it's sunsetting next March 2016. Sunsetting means that it's not going to be renewed and we were very clear on that from the beginning."
There is also some question whether the funding program may have been a victim of its own popularity. Carolyn Young, former director of Sustain Ontario, noted that, when the fund was launched, the ministry was overwhelmed by a number of applicants. All of the money being issued generated a high level of excitement and may have also led to the pressure of more public scrutiny.
Sparling observes that a large volume of small grants can sometimes be difficult for governments to administer and results can be hard to measure.
Everyone interviewed regarded the province's local foods funding strategy as a success and, other than delays that sometimes ran upwards to three months for reimbursement on project expenses under the Local Food Fund, mostly well administered.
Most also step lightly over the decision to award nearly one seventh of the $30 million Local Food Fund to Ontario Mushroom Farms, which operates as Greenwood Mushroom Farm, to help build a $16.5 million odour-controlled mushroom compost facility at its Ashburn site to address a longstanding odour problem.
Sparling, for example, reasons that the project qualifies under the fund because most of its product would be distributed in the Ontario market. "For me, that's local enough."
Lawson says sometimes solutions are found to problems by channeling them through a program that doesn't quite fit. "Maybe helping salvage that company is a good thing in terms of saving jobs and doing other things" and there might not be any other way to address the problem.
Crowley-Arklie made the following statement via email: "OMAFRA's Rural Programs Branch staff, as well as technical specialists from other ministry branches, assess all Local Food Fund (LFF) applications. The Rural Economic Development Advisory Panel (REDAP) members then review the projects and make recommendations to the Minister for funding decisions."
She noted that the European technology will be used to remove odours in the new mushroom farm facility. The provincial funding contributes not only to the import and installation of the scrubber and biofilter technology but also to staff expansion and training.
The technology supports "the continued operation of the mushroom producers to meet consumer demand" and educates other producers in better practices.
Time may be the only way to answer whether the loss of targeted funding will affect the momentum of the local food movement. The funding has definitely helped put more local product into local markets, but no government can fund everything that comes down the line, nor does it need to, observes Lawson.
"If it is a great idea, somebody will get behind it," he says. "Sometimes things will find their own way. It will happen more slowly but, if it is a good project, it won't fail just because it wouldn't get government funding." BF
