Wrenshall farm members become lendersWith more than 100 member-customers, Northern Harvest Farm is one of 15 Community Supported Agriculture produce farms that have sprouted in the Northland. The member-customers contributed loans to help Rick and Karola Dalen make enough money to refigure their mortgage.
By: John Myers, Pine Journal
Rick and Karola Dalen bought their 34-acre Carlton County farm when land prices were high and rising in the mid-2000s, a dream come true for the budding produce farmers who met at the University of Minnesota Duluth.
Over the past seven years they have invested countless hours of blood, sweat and tears, building up the soil and fixing outbuildings to make their Northern Harvest Farm a success.
But even as their farm’s bounty and membership grew in recent years, the Dalens were inching closer to a problem.
They knew that the balloon payment on their contract for deed was due in September this year. And when they found out that the Great Recession had dropped the value of their land, house and outbuildings from the roughly $198,000 they paid to about $130,000, the problem turned into a quandary.
Today, using a little creativity and help from unusual sources, the Dalen’s farm is back on solid ground.
With more than 100 member-customers, Northern Harvest Farm is one of 15 Community Supported Agriculture produce farms that have sprouted in the Northland. CSA farms are different than traditional market farms because farmers earn an established income from members buying shares at the beginning of each growing year.
That guaranteed income allows farmers to plan ahead for planting, fertilizer, labor and other costs and know that the money is there, no matter drought, floods, insects or the vagaries of crop prices.
“We were making our payments just fine,” Rick Dalen recounted recently. “But the prices for this kind of land have dropped from when we bought it … and we found that we were under water. We really didn’t know what we were going to do. … We know we can run a successful farm. But the mortgage thing had us thinking we might lose the farm.”
The Dalens could get a traditional bank loan for up to 85 percent of the lower appraised value. But it would take a lot of money — some $56,000 — just to get to that point. It was money the Dalens didn’t have.
That’s when they stole an idea from their neighbors, the Fisher-Merritts, who have operated a similar CSA farm, The Food Farm, also in Wrenshall, for the past 20 years. The Fisher-Merritts used loans from their members to build a state-of-the-art root cellar.
The Dalens thought that concept might work for them, too.
Of their roughly 100 members, 18 came forward with loans to Northern Harvest Farm ranging from $200 to $5,000 each. The members set the interest rate between zero and 3 percent. Those loans from their members raised a whopping $26,000, Dalen said.
Seeing that support, the Carlton County Economic Development Authority came forward with another $26,000 low-interest loan. That $52,000 in local, unsecured loans was enough to push AgStar Financial Services to fund the remaining 85 percent due. The original owner also reduced the purchase price, and the Dalens and their Northern Harvest Farm were out from the under the gun on May 10.
Steve Adams of Barnum said any risk of loaning the farm money was offset by the benefit of locally grown food and a sustainable farming economy.
“We really want them to succeed. This is just an extension of our membership, really,” Adams said. “It’s win-win for us and the environment to have them succeed.”
Steve and Joanne Balliette of Duluth have been members of Northern Harvest Farm since it opened. When they saw the request for financing, they pitched in out of their retirement fund.
“I look at it as an investment, not just in our source of good food, but also in the community,” Steve Balliette said, adding that they’ve had a similar relationship with the Whole Foods Co-op in Duluth.
“We’ve been members at the co-op for 40 years, and have loaned them money when needed, so this seemed pretty natural to us,” he said. “Even more than a grocery store, though, these CSA farms really keep us connected to the source of our food. We can buy our food from anywhere in the world. But, to me, that’s getting more and more risky, both from an environmental standpoint but also in making sure we have access to food. When we keep it local, we keep that access.”
Now that the Dalens have their farm’s mortgage in line they can turn their attention to raising vegetables — at least when the sun cooperates.
“We’re a week or two behind right now, so that means we just go a little later into October, and that’s OK with us,” Rick Dalen said.