Castanea Foundation and Creamery Form Ag Investment Model

A shortage of goat milk was the beginning of an innovative investment currently mid-stride in Vermont. Allison Hooper and Bob Reese, co-owners of Vermont Creamery, wanted to invigorate dairy goat farming in their state. Their creamery is a successful company 28 years in operation, manufacturing high-quality butter and artisanal cheeses from goat and cow milk.

Vermont Creamery does $16 million in annual sales and sources milk from 20 dairies in Vermont, but has to go outside the state to purchase additional milk. Would it be possible, Hooper wondered, to provide technical assistance and bring in business capital so Vermont goat dairy farmers could increase their yields? “We have several decades of experience developing goat dairy farming and we know what it takes to get this supply chain up and running,” she says.

Along the way Hooper connected with Tim Storrow, Executive Director of the Castanea Foundation based in Montpelier, Vermont, and one of Slow Money’s early founding members. The Castanea Foundation, which sees the use of its investment capital as key to its mission, invests around $1 million annually, with a focus on supporting diversity within the Vermont agricultural economy. “We try to be the tipping point by anchoring each project,” says Storrow. “What we’ve found is if we step up with our patient capital, it attracts other private investment.”

After examining the Vermont goat dairy industry, Storrow saw an opportunity to create a demonstration farm to model best practices for goat dairy farmers and serve as a catalyst for the industry. Even better, he realized, was the fact that the demonstration farm, which they’ve named Ayers Brook Goat Dairy, already had a proven market: Vermont Creamery would buy all of its goat milk.

Storrow knew that in order to achieve success, the investment model had to include a component in which the farmer could make a realistic income. “Our interest is, ultimately, the conservation of the working landscape in Vermont, but we don’t think that we can make an impact towards that mission unless people, families and individuals can make a living farming,” says Storrow. “It’s a lifestyle in which you’re not going to get rich quick, but it has to be economically rewarding. You’ve got to be able to pay the bills, pay for retirement, send your kids to college, and if you can do all of those things and farm at the same time, then we are truly going to sustain our local economies.”

Hooper found a farm with prime agricultural land for sale in Randolph, Vermont, near Vermont Technical College, providing access to students from the agricultural program and other schools and colleges. Storrow secured the land purchase by forming a partnership called Evergreen Conservation Partners, L3C, a Vermont low-profit limited liability company. The partnership led by Castanea also includes the High Meadow Fund, a supporting organization of the Vermont Community Foundation, and the Boston-based John Merck Fund. The three non-profit partners pooled their capital and purchased the farm for $800,000 and currently lease the farm to the goat dairy. Funding for a conservation easement has been secured for property, which will not only conserve the prime farm soils, but raise capital for the farm’s start up. Vermont Creamery recruited one of the nation’s top goat dairy farm managers to help design and manage the goat dairy operation.

Right now the foundation and creamery hope to raise $2 million for infrastructure improvements and working capital for the start-up phase of the farm. “We are running a viable business,” says Hooper. “We are not going to get that second generation of farmers or investors if we can’t make the investment model work.”

A key component of Ayers Brook Goat Dairy’s business plan is to improve the genetic quality of goats for more efficient, higher dairy yields. In addition to modeling how a commercial goat dairy operates, Ayers Brook will provide high-quality replacement animals for farmers wishing to start their own goat dairies or improve their herds. Hooper says it takes at least 5 to 6 years to get a herd up to scale and profitability. At Ayers Brook the plan is for a herd of approximately 800 milking goats, which produces the same volume of milk as a 250 head cow dairy. This scale is typical of many Vermont family farms.

“This model can go beyond goat dairy,“ says Storrow. “It’s a model that other philanthropic partners can use for any social-benefit enterprise.”

Castanea Foundation’s return expectations clearly reflect the values of the Slow Money Principles. “Our first goal is a return of capital,” says Storrow. “If we get our money back, plus a return that allows us to continue with our mission, that’s great. But if we get our money back, and that’s all that happens, but 15 years from now there are half a dozen additional commercial goat dairies in Vermont, that’s a home run for us. We’ve strengthened the local food economy, created economic opportunity and conserved land with responsible management. That’s the bottom line for us.”