Growing Local, Eating Local
Project Name: Appalachian Sustainable Development
Challenge: The Appalachian economy relies on industries that deplete local environmental resources and return little value to community.
Solution: Businesses that sell sustainably harvested lumber and local, organic produce.
When he got out of college, Anthony Flaccavento, the executive director of Appalachian Sustainable Development, thought he'd take his interest in economic development overseas. Instead, he took a job with the Catholic Diocese in Eastern Kentucky running their social justice office. Over time, he got bothered by the "whole jobs-or-environment controversy." So 12 years ago, Flaccavento helped found ASD to revive the region's economy and protect the environment.
NOW: How did Appalachian Sustainable Development start?
Flaccavento: We're about 12-years-old and were formed by a mishmash of groups that included strong environmentalists who were used to fighting fights - like against coal mining - and economic developers from the Chamber of Commerce concerned about the poor economy in the region. We took stock and saw that we were all losing in this game. What we've been trying to do in the ensuing 12 years is to redefine what a healthy economy is and what economic development is.
By redefining I mean that things like natural capital are viewed as capital - so when you deplete the timber you're depleting your capital. Which wasn't how it was viewed. Ironically, our ecological capital or natural capital we've tended to view not as capital but as a consumable resource.
The classic example is clearcutting of our forests and shipping those logs out for processing elsewhere - you get maximum use of that capital but minimum value. Part of what we decided we needed to do to create sustainable development was to figure out what we could do to recapture that value.
NOW: What kind of entrepreneurial projects do you operate?
Flaccavento: In 2000 and 2001 we launched two sustainable enterprises - Appalachian Harvest and Sustainable Woods. Those are not the only things we do but they are our heart and soul. We use a "field-to-table" strategy by which we mean if you want to create markets for new products — whether they're food or wood or fiber — you must build the system, the infrastructure, to connect these products directly with the buyers. Lots of people talk about labeling or branding but we found we had to connect the food to table or the field to buyer. We connect farmowners, landowners, loggers — talk to them about how they can manage this resource sustainably.
At the other end of the spectrum we do marketing for the end product. In the case of the wood product, that marketing is to small-to-medium shops that carry cabinets and hardwood trim. For produce and free-range eggs, our main customers are supermarkets.
In the middle of both of those is value-adding infrastructure. For wood products what helps us sell real stuff — flooring, trim, wainscoting, etc. — is a sustainable woods processing center that we've built. It has a log yard where we receive logs from environmentally managed forests. We work with private landowners. Most are small — 10-100 acres. We developed a thorough management plan for ecological sustainability. We oversee timber harvest. This comprehensive plan gives the landowner a blueprint to follow.
We buy logs from landowners and pay them a premium. At our facility we have a sawmill that saws them into boards. We have two green kilns — that don't use any fossil fuels — one is solar and the other is powered by wood waste. Then we contract with other local companies to do finish work.
So in the end, we've taken trees from a forest managed in a restorative and ecologically sound way from tree to finished product for the building industry. And sold it under the Sustainable Woods brand.
In food products we work primarily with tobacco farmers. When you think of environmental leaders most people don't think of loggers and tobacco farmers. Many of them initially come to us reluctantly but as they stick with it they become kind of environmentalists in their own way. We have about 60 farmers in our organic network - about 50 raise produce and 8 raise free range eggs. About three-fourths are former tobacco farmers. Around here they say they're "land rich but cash poor."
We have extension training and technical assistance programs we provide because it's a big change to go from raising tobacco to raising organic produce or free-range eggs. We spend a great deal on training.
Our buyers are supermarkets in our region. They've committed to buying from us on a weekly basis. We've gone from mom-and-pop chains and now we have seven supermarket chains while we're in season. That adds up to about 600 individual stores. From local to regional chains, like Lancaster, Ukrops, Whole Foods.
NOW: What are you learning about the possibilities of businesses with a social mission?
Flaccavento: We'll generate close to a million dollars in two enterprises this year. All the market analysis we've done points to that being just the first million.
What rural communities so often lack is that physical infrastructure between logging and buyers and farming and buyers. You can have interested consumers or farmers and landowners but without the infrastructure you can't create a business. You can create a model that is better for the environment and better for the economy.
When you build this basic infrastructure — this field-to-table system — you begin to see other economic opportunities. For example, much of the produce doesn't make the grade. Initially we threw it away. In one project, we raise money from churches and put it in a fund and buy these seconds from farmers and donate them to the Second Harvest Food Bank. That adds to community well-being and helps farmers because they're at least getting a break-even price. We began selling seconds to a salsa manufacturer called East Coast Fresh Cuts - they're thrilled to get organic supply at a good price. You just start to see all these synergies that emerge after you have the infrastructure in place.
NOW: Could other areas adopt the model behind Appalachian Sustainable?
Flaccavento: Increasingly I'm asked to come and share what I'm doing. I've been to Chicago to Central California to Arizona. Whether it's the wood or the food or both, rural communities are really looking for this.
I think the model is even transferable to urban communities with different resource streams. In urban areas there are some amazing projects — they're taking the land and resources of urban communities and transforming it.
NOW: Is your social enterprise a big part of your overall income?
Flaccavento: It's growing. I'll be candid and say for first seven years the enterprises have been a drain and we had to use grants and other fund to subsidize them. One of the challenges when you're doing a triple bottom-line business is that you're automatically setting a standard that is difficult to meet. Other businesses that don't have a mission of meeting environmental, social and sustainability standards — they can source products somewhere else, for example.
We're getting to the point where we understand what we need to charge. Probably in 2007 the businesses are going to break even for the organization and they should begin to generate net revenue for salaries in 2008. So we're just turning the corner to the point where [the businesses] will become a revenue generator.
We have as mission to keep our food and flooring as affordable as possible. We have moved away from a niche model. No arugula or lavender. Ordinary food for ordinary folks is our mantra.
We could probably command more for our products or our flooring than we do but we're trying to find pricing that makes it affordable for most people. We've found you can begin to educate ordinary people to spend a little more for a tomato — that it's worth it in the long run.
NOW: What does the term "social entrepreneur" mean to you?
Flaccavento: I identify more with it now than a couple years ago, but the main term I identify with is "sustainable development." Social entrepreneurship with a clear environmental foundation. We're very explicit about that.
I think social entrepreneurship is a good teaching thing for people because we live in a society that reveres the free market and private enterprise and the wealth that could be created from it. Then on the other hand we all step back and say, "Too bad it mucks up the environment or lays off a lot of people by sending jobs overseas." We have a love-hate relationship with the private sector. It's giving all of us who are consumers — there aren't many producers left in our country — the opportunity to pay the real cost for things that we use. It's true that the private sector is a dynamo. It's true that it generates more innovation than state-run enterprise. I've often said that what's happened over the past 20 years is that what much of public sector used to do is now being done by the private sector but the difference being we have to do it cheaper and better.
But at the local and state level, we have found that once you have tangible project on the ground it's not hard to build partnerships with local and state public people. We have increasingly productive partnerships with econ development departments, the tobacco commission, and the cooperative extension projects. Social enterprise seems to be best of both worlds: Harnessing the resources and energy of public sector, using the innovation of the market.
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