Interested in Funding for your Pastured Raised or Heritage Breed Poultry Business? Blockchain enables poultry to thrive, and Lokaal.Market is building the system.
eFowl is working with the high-profile blockchain based startup, Lokaal.Market to connect the institutional investors and non-profits with the farmers and producers that make up the “good food economy“. If you are a farmer or business owner interested in connecting with funding sources that offer grants or friendly funding terms, you should fill out this super quick, no-obligation interest form to let them know who you are and what you’re about.
What is the “Good Food Economy”?
Good Food is the term to encompass the emerging paradigm that encourages sensible production, distribution, reasonable accessibility, and consumption of high-quality food to construct an equitable, sustainable, and healthy food system.
What are characteristics of “Good Food” and how does this relate to poultry?
- Eggs and chicken are nutritious and healthy, providing a clean source of fat and protein.
- Eggs and chicken are delicious staples in a healthy, well-rounded diet.
- Chickens and other poultry require relatively low investment capital to create a productive operation.
- The meat and eggs can be sold by the farmers at profitable levels while remaining affordable for the consumers.
- All of the participants in the supply chain of poultry can receive fair compensation and fair treatment in their services, from the hatcheries, to the farmers, to the marketers, to the consumers.
- The widespread nature and biological environmental adaptability of chickens make poultry products a physically accessible and culturally suitable food source for everyone.
- Localized production and processing characteristics make poultry a sustainable food source. The environmental impact of pasture-raised poultry can even be a net benefit, as poultry can be raised in a restorative manner with the land they occupy.
- Heritage breed poultry represents an opportunity to restore and build up genetic biodiversity in our food supply.
What type of funds are out there for poultry producers in the good food economy?
There are myriads of non-profit social impact investment funds and even for-profit financing institution with the strategic imperative of allocating funds to participants in the good food economy. These institutional investors want to put their money to good use and are often required to do so in their charter and governance mandates. The problem is in the distribution of the funds. It is exceedingly difficult for a large organization to distribute funds to the economic actors that can use them for the most social, environmental, or nutritional benefit. Some of the reasons this distribution is a problematic bottleneck are as follows –
- Decentralization – A good food system is made up of many small, localized actors (farmers, markets, retailers, distributors). The administrative cost of sourcing and funding smaller actors can exceed the social impact benefit. Thus, institutional investors need to seek larger regional entities as funding sources which are further removed from the paradigm of a good food economy.
- Minimum Investment Amounts – Often times, institutional investors have a minimum investment amount for any individual transaction. For example, a social impact fund may not be able to consider funding a project with less than $100k. However, this can simply be too large for the project profile of a poultry farmer who is developing their local good food economy. Thus, there is a disconnect between the funding source and the recipient who would yield the most benefit.
- Administrative Cost of Vetting Recipients – Institutional investors and social impact funds have strict criteria on viable funding targets, along with comprehensive due diligence processes for any applicant. Normally, this is done on a one to one basis, meaning a farmer is going to go through this due diligence process with each funding entity. There is no distributed database of good food economy participants and their characteristics to reduce the overhead of vetting and selecting applicants. Thus, it must be economical for the investor to source the funding targets, meaning they can only go through the due diligence process with targets at a critical mass in size (for example, eligible to receive an investment of $1M+). This disqualifies many of the good food economy participants in the pasture-raised and heritage breed poultry space.
- Lack of Simplicity and Clarity – Farmers are very discerning of financing sources, and rightfully so. All too often a blessing can become a curse regarding loans and funding because of complex financial jargon that supersedes common sense. This causes many farmers, especially in the poultry space, to not even consider their funding options. All the while, many banks and financiers view poultry as a too high risk of an activity to even be fundable.
All these factors (along with several others) create a system where institutional investors and non-profits cannot fulfill their mandates of investing in good food systems. The funds go to the larger regional entities due to the transactional costs and minimums, rather than to the smaller food production and distribution participants who require less money to do more good. This disconnect between good food funding and good food actors is a bottleneck to the growth and development of the good food economy, specifically in poultry.
How does Lokaal.Market fix this problem using blockchain technology?
Blockchain technology is an emerging and ground-breaking leap forward in our economy’s ability to conduct financial transactions with minimal fees in a secure and trusted manner. You’ve no doubt heard of the blockchain based cryptocurrency Bitcoin, which offers a new form of money for individuals to exchange. Lokaal.Market is building the infrastructure to overcome the disconnections described above between institutional funds and the good food economy participants. They will create tokens holding a cash value which institutional investors will buy. These token sales will in turn fund good food economy producers and projects (read their white paper for more info).
Ultimately, blockchain technology is the key to making it all work, and overcoming the difficulties that are massive hurdles in our current financial system. Lokaal.Market is using blockchain to solve these difficulties of funding distribution in the following ways –
- Extremely Low Transactional Costs – Blockchain transactional costs of minuscule compared to fiat currency. Funding need not come with copious origination and servicing fees that are ultimately passed on to the funding recipient. This allows relatively small funding amounts (perhaps less than $10k) to be economically viable.
- Easy to Fund a Massive Number of Entities – Blockchain makes it such that funds can be distributed to hundreds or thousands of farmers and producers without the extreme overhead burden associated with each transaction. This means that investors and non-profits need to work with high minimum dollar amounts for a project to be viable, opening the door for small farmers to receive grants and friendly financing.
- Blockchain Can Create a Distributed Database of Funding Targets – The due diligence process required for a funding transaction is a tedious but necessary exchange of comprehensive data and records. Blockchain can store much of the non-sensitive data and make it readily available to investment funds and non-profits such that the costs associated with due diligence are minimized, and the funding recipient vetting is done automatically.
- “Smart Contracts” Create Simplicity and Clarity – Agreements between investor and fund recipient need not be massive documents of impossible to understand the legal and financial jargon. Blockchain (specifically the Ethereum blockchain, in this case) allows for participants to create a “smart contract“, written in computer code. Transaction participants can agree to simple events and covenants that are enforced automatically, rather than via complex and high-cost legal agreements.
Where is Lokaal.Market on this project now?
Lokaal.Market is currently in a pre-ICO stage (meaning the tokens are not yet publically available), and raising money to fund the development of their good food funding distribution system. If you are interested in potentially receiving grants or friendly financing from institutional investors or non-profits for your farm or good food business (it need not be related to poultry), you can really help out by letting their team know a bit more about you. Their application is simple and takes about 5-10 minutes to complete. All the information is confidential, and will only be used to determine what type of funding targets are the most viable.