Appalachian Harvest Network

At the heart of AHN’s business model is what Anthony calls a “buyers’ matrix”—independent health food stores, local grocers, and regional chains that are the main purchasers of AHN’s produce. This weekly process of assessing demand begins in the late fall and carries through the winter. Every week AHN “plans and pools production to meet demand”: it assembles a list of buyers’ requests, shares the information with its growers, and then recruits local growers to meet these demands. Wherever necessary, it offers direct technical support and training to growers so that they get the proper seeds, plant their fields properly, get organic certification, and fulfill the buyers’ requirements for high quality. Participating farmers then bring their harvest to the AHN certified organic packing and grading facility, where the produce is washed, packaged and readied for sale. AHN goes back to the buyers to let them know what is available and when. Once the orders are finalized, it delivers the fresh produce directly to the retailers’ centralized delivery docks. Some of the retailers redistribute the product to their own sites via their own networks.

Three of ASD’s full-time staff are also farmers, and this grounds AHN’s farm-to-market system in hands-on experience. At the height of the season, an additional 15-16 people work at the packing facility and up to five extra truck drivers are brought on.

During the peak of the 2008 growing season, AHN was distributing produce from over 50 small-farm growers, and nearly 70 are on board in 2009. The majority are former tobacco growers, mostly middle-aged men, although there is increasing interest among younger and newer farmers as well. Most are poor and white, though AHN is actively reaching out to Hispanic and African American farmers.

AHN currently distributes over 30 core produce items to about a dozen stores, who in turn help their products reach over 650 sites. Participating retailers include Whole Foods Market, Food City, Ingles Markets, and a few other local chains like Ukrop’s. AHN is also developing purchasing partnerships with local colleges like Emory & Henry College in nearby Emory, Virginia, and Washington and Lee University in Lexington, Virginia (about 175 miles from Abingdon). The roster of distributed products is steadily expanding and now includes free-range eggs.

AHN benefitted from the fact that Appalachian Sustainable Development, the parent nonprofit, was far ahead of the curve in operating as an entrepreneurial nonprofit. Says Anthony, “Appalachian Sustainable Development is a combination of an extension service on one hand—we provide a great deal of training, often in conjunction with Virginia Tech and University of Tennessee—and a working business on the other.” With this philosophy in its roots, ANH, too, was intended to be something more than just a grant-dependent nonprofit. Anthony is working to make the program 100% funded by revenue and individual donors.

Today, Appalachian Sustainable Development operates two other in-house enterprises alongside AHN: a wood- products processing initiative, and a school-based gardening project. All three projects are effectively overseen by the nonprofit’s Board of Directors, composed of some farmers but mostly of academics, community activists, and representatives from other economic and sustainable development organizations.

Eventually, the ASD board intends to spin AHN off as a for-profit subsidiary. In so doing, they hope to improve its capital base and business functions, while maintaining the triple bottom line mission. One virtue of being a nonprofit is that AHN has been able to be capitalized through foundation grants. Appalachian Sustainable Development has also received significant support from the Virginia Tobacco Commission for its work enabling tobacco farmers to transition to other crops. Despite fundraising successes, Anthony describes his organization’s approach as “constant skin of our teeth fundraising” because “at the outset, people were curious but didn’t think our programs were something a nonprofit should or could do.”

Another important source of support for AHN has been individual contributions. In 2004, Appalachian Sustainable Development launched a “community support” campaign, and by 2008 annual donations from individuals had reached $80,000. Anthony notes that the organization has been able to retain between 40-60% of these small donors, demonstrating the high regard the community has for the work. “In our region, there is not a great concentration of people and also not significant income levels, so this is really tremendous support.”

According to Kathlyn Terry, the AHN business operations manager, the enterprise should reach “breakeven” (above all cost of goods sold) in 2009, with projected sales of $700,000. In the years following, AHN expects to generate net revenue to help cover the costs of farmer education and training, community outreach, and marketing.

To the residents in southwest Virginia, AHN’s work has been invaluable. It has helped tobacco growers who might otherwise have abandoned farming, adopt a new strategy to continue farming. It has improved the quality, and sales, of its regional buyers. And by keeping more dollars circulating in the region, it has contributed to the region’s economic well-being.

AHN also has made more healthy, local food more accessible to community residents. Its Healthy Families, Family Farms program raises funds from churches, local businesses and individuals to purchase “seconds”— produce that fails the quality standards of participating retailers yet is still useable for other purposes—at a discounted price from AHN growers. These are then distributed to needy families when the AHN delivery truck stops at the regional food bank. In 2008 over 88,000 pounds of local organic produce was distributed through Healthy Families; over 200,000 pounds have made it to the tables of families in need over the past five years.

ASD also sells seconds to college dining services and to supermarket in-store delis, where produce is chopped and need not be perfect. In this way, AHN can offer affordable local organic foods to large purchasers. AHN has more plans for the seconds. It has a feasibility study underway, for example, for a proposed artisanal food center that would allow AHN farmers to make added value products like salsa.