Iroquois Valley FarmsUIC MBA

PA 590 Social Entrepreneurs Leading Change

Team Challenge

Local and Sustainable Food Movement

• Sustainable foods are raised locally by family farmers who promote the health of their animals, land and local communities.▫ Minimizes the energy used in the production of the

food, its transport and storage▫ Foods come from farming systems that minimize harm

to the environment▫ Clean, fresh food is a good supplement to a well-

balanced diet and encourages a healthy lifestyle• The U.S. Department of Agriculture estimates the

local food industry's annual revenue at $4.8 billion• .

Organic Food Industry

• Organic Foods: ▫ Are grown or raised by a producer who uses practices

in balance with the natural environment▫ Are produced on land that is free of known and

perceived toxic and persistent chemical pesticides and fertilizers

▫ Are planted on a rotating basis from field to field, rather than growing the same crop in the same place year after year

▫ In the case of animals, are not given hormones or antibiotics, are fed organic feed, and allowed the space and freedom to behave naturally

Organic Food Industry

• Consumer demand for organic agricultural products has risen in the U.S. 20% or more annually.

• Organic farming operations in corn and soybeans use 30% less energy than conventional farms and conserve more water in the soil, induce less erosion, maintain soil quality and conserve more natural resources.

• The grass-fed meat industry accounts for an estimated 3% of total beef consumption in the U.S., expanding at 20% annually.

Iroquois Valley Farms as Social

Enterprise

• In every deliberation one must consider the impact of the seventh generation – Great Law of the Iroquois▫ Impacting sustainable agriculture and the family farmer

▫ Creating multi-generational solutions for sustainable farm ownership ventures

▫ Providing alternative investments that are secured by the soils that feed us

• Financials (as of 8.31.12)▫ Assets: $6,500,000

▫ Equity Capital: $4,200,000

Marketing Restrictions - Private FundsPrivate funds seeking to avoid registration of their securities under the 1933 Act in reliance on the Regulation D safe harbor must not sell fund securities by any form of general solicitation or general advertising.

A communication will be deemed a general solicitation or general advertisement unless it is directed only to persons with whom the issuer or its agents have a pre-existing relationship. This relationship must be sufficiently substantive to provide a reasonable basis for determining that the person targeted by the communication is an accredited investor and has the financial experience and sophistication needed to evaluate the risks of an investment in the issuer’s securities.

The Challenge

• Redevelop homestead property to promote Iroquois Valley Farms and engage potential investors

• Develop market for natural-fed beef and organic pork in Chicago metro area

• Build brand equity for Rock Creek Farm and Iroquois Valley Farms

Hedgehog Concept

• Huge flow of capital to promote certified organic and sustainable farming

• Unique opportunity for investors

• High level of investor engagement - meat delivered to their homes and access to farm experience

• ROI

Working Farm Operations

• 76 acres of tillable land, leased to local farmer▫ Corn, soy beans, wheat and edible beans▫ Rotate ¼ plot each year▫ First organic crop will be in Summer 2015

• Continue current distribution operations, including combining with existing farm:▫ South Suburban Co-op▫ Irv and Shelley’s Fresh Picks▫ Kankakee Farmer’s Market

• Rent set at $250/acre = $19,000

Natural-Fed Beef and Organic Pork

• Renovate barn and outlying structures

• Beef cattle will pasture on required 25ft organic land buffer

• Diversify livestock by including hogs

▫ Animals have similar needs; can use capital investments wisely

Barn will be updated to raise

livestock; also offers

opportunity for Iroquois

Valley Farms branding

Farm Initial InvestmentProperty renovations $ 18,000.00 Livestock

Beef Cattle (6) $ 4,800.00 Hogs (6) $ 3,000.00

Freezer(8x10 walk-in) $ 9,000.00 Total Investment $ 34,800.00

Community Supported Agriculture

• Form a meat-only CSA▫ Members pay up front for 3 or 6 month memberships

▫ Receive a shipment of meat either monthly or bi-monthly

▫ Pick up at pre-determined locations, usually farmer’s markets

• Offer priority membership to IVF investors• Distribution of cuts that are not typically purchased in

typical retail settings• Pre-payment of goods allows for better management of

financials• Creates brand equity in Chicago and local community

CSA Financial Estimations

CSA (based on Mint Creek pricing)Pounds of meat per cattle 450Pounds per member per month 10Members needed 45Cost per 6 month membership, monthly delivery $ 560.00 Total membership income per 6 months $ 25,200.00 Total membership income per month $ 4,200.00

Product Retail Price per # # per animalMeat income per animal

Beef $7.80 450 $3,510.00

$9.33/pound

Farmhouse Restoration

• Historically accurate and energy efficient (“green”)• Adaptable utility• Chef’s showcase• Both investor cultivation and stewardship• Meeting place and connection location for members and

staff • Exhibition center for local and organic agriculture

(where local and organic come together)• Rural farm office -- CSA business site• Rentable for neighbors & visitors• Showpiece kitchen for cooking demonstrations &

entertaining• Member fundraising and other special events

Western exposure—back porch

Suggested floor plan of first

floor with expanded

kitchen

Renewable Energy Budget

Geothermal heat

Solar panels—grid-tied

power

High energy-efficient

replacement windows and

doors

Total added costs: $38,700

5-year ROI

Brand Image: Community Engagement

Rural IVF Identity Urban IVF Identity

• Community Partner

• Good neighbor

• Showcase property

• Local landlord

• Connection to local history

• Contributor to local economy

• Unique and lucrative investment opportunity

• Business partner with high-end local restaurants

• Collaborator with organizations fighting food deserts

• Link for schools of culinary arts

• Supplier of quality meat products

• “Good corporate citizen”

• Partnership with local nonprofit

Paul VirantChef/OwnerPaul Virant is the chef and owner of Michelin-star restaurant Vie in Western Springs, Ill. and Perennial Virant in Chicago. His philosophy of local, seasonal eating stems from his childhood spent on his family’s farm in Missouri. He credits his grandmothers, both avid canners, for instilling in him a reverence for local ingredients and serving as the inspiring force behind his becoming a chefAfter graduating with a degree in nutrition from West Virginia Wesleyan College, he enrolled at the prestigious Culinary Institute of America (CIA) in Hyde Park, N.Y. Following culinary school, he joined March in New York where he further refined his skills under the tutelage of chefs Wayne Nish and Hilary Gregg. A move to Chicago two years later marked a turning point in his career as he worked at some of the nation’s most famed restaurants, including Charlie Trotter’s, Ambria, Everest and Blackbird.

In 2004, a desire to return to his roots led to his opening of Vie in a nearby suburb of Chicago. Utilizing his methods of canning and preserving, Virant serves up his contemporary American cuisine with a focus on the ingredients – their origin, production and quality. Since opening, the restaurant has garnered regional and national attention, including a three-star review by Phil Vettel of the Chicago Tribune and a spot on Gayot’s list of Top 40 Restaurants in the U.S. In the spring of 2012, Virant’s award-winning fare culminated into the release of his cookbook The Preservation Kitchen: The Craft of Making and Cooking with Pickles, Preserves, and Aigre-doux. It is the first canning manual and cookbook authored by a Michelin-starred chef and restaurant owner and creatively combines the technical aspects of canning with a chef’s expertise on flavor.

“I wanted to create an extension of my home, where people can come and enjoy good food and drink in the company of people they care about. My goal is to be a small part of my guests’ enjoyment of every morsel and drop of life.” – Paul Virant.

He has been featured in the Sun-Times, Time Out Chicago and was named the city’s Best New Chef by Chicago Magazine in 2005. In 2007, he was named among Food & Wine’s Best New Chefs and was a 2011 James Beard Foundation nominee for Best Chef: Great Lakes. He has also appeared on NBC’s Today Show and competed on Food Network’s Iron Chef America.

Prestigious awards to Chef Paul Virant include:•Best New Chef, Food and Wine Magazine•Best New Chef, Chicago Magazine•Jean Banchet Rising Star Chef•Rising Star Chef, Restaurant Hospitality Magazine•Rising Star Chef, StarChefs.com

“Sustainable and local food has quickly become critical to the success of Chicago restaurants. You can’t survive in this market without sourcing locally and being transparent about where the food comes from. Its good for the customers and its great for the local farms.”

- Chef John Vermiglio, Graham Elliot

Bistro

Sample of restaurants in Chicago

using organic and local-sourced food• Longman and Eagle• Nellcote• Cafe Lula• Revolution Brewery• Farmhouse• Brown Trout• Perennial Virant• MK• Nightwood Cafe• Ruxbin• Vie• G.E.B.

Potential investors in

Iroquois Valley Farms

Loyal customers

of high-end restaurants

serving local and organic

food

Other Possible Community Partners• Kendall College of Culinary Arts

▫ Field trip for students▫ Retreat center for staff

• Streetwise▫ Supplier for “Neighbor Carts” providing fresh food to food deserts▫ Venue for fundraising event

• University of Illinois - New Illinois Farmer Program ▫ Natural fit for IVF▫ Courses include: land acquisition, business planning, organic production

methods, etc.• Listing with eatwellguide.org

▫ Local, sustainable organics food suppliers▫ 25,000+ listings

• Listing with localharvest.org▫ Real food. Real farmers. Real community. ▫ List in directory and sell products online for delivery or pick-up.

Regulation D prohibits general solicitations and general

advertisements only if such communications are being made for

the purpose of offering or selling the securities

• Chicago Public Radio is supported by Iroquois Valley Farms, a private equity company promoting certified organic and sustainable agriculture. Information at iroquoisvalleyfarms.com

Hurdles to implementation

• Specific budget not developed for farmhouse restoration

• Financial projections involve lots of unknown variables (nature of the industry)

• Tight constraints on advertising investment opportunities

• Brand development will take lots of resources, both in time and money

• CSA markets are growing competitive• Sales through farmers’ markets labor intensive• Products have a premium price point

Hiefitz and Linksy: Leadership on the

Line• Managing passionate people

• Addressing deeply held values and ideas

• Thinking politically

Websites

iroquoisvalleyfarms.comcuttingedgecapital.combealocalist.orggreencitymarkets.combuygreenchicago.com millcreekfarm.commintcreekfarm.comeatwellguide.orglocalharvest.orgsustainablefoodrevolution.com

Sources and Interviews

• Steven Adler, account executive, WBEZ • Bob and Barb Benenson, former owners, Rock Creek Farm• Marilyn Florek, private consultant, Preservation Wayne• Constance Grizzel, president, Castle Rock Technology Inc. • Heidi Hedeker, chief pastry chef, Kendall College of Culinary

Arts• Jim LoBianco, CEO, Streetwise• Andrew Lutsey, Iroquois Valley Farms• Aaron Moore, farmer, Rock Creek Farm• John Moore, farmer, Rock Creek Farm• Tom Perry, partner, Iroquois Valley Farms• John Vermiglio, sous chef, Graham Elliott Bistro1. King, P. (2010, June 10). Ordering Up Beef That Roamed

The Range. Wall Street Journal