If you are a consumer interested in connecting with and financially supporting farmers in your local community, one option is Community Supported Agriculture (CSA). Similarly, if you are an agricultural producer interested in producing food for local consumers through an innovative business model, CSA could be worth considering. Interest in CSAs has grown in recent years as agricultural consumers and producers look for new ways to connect. This is the first article in a new series discussing the legal issues that are present in a CSA operation. This article will introduce the concept of CSA and forecast future articles in the series.
What is a CSA?
CSA is a farm business model where consumers sponsor the farm’s growing season costs by purchasing a membership in the farm, and in return receive a share of the season’s harvest. Under this model, consumers typically purchase the membership prior to the growing season and the farm will use the revenue from memberships on the season’s farm costs. Once the farm products are harvested, members receive a box on a periodic basis, either traveling to the farm for pickup or meeting the CSA representatives at a local distribution site. A future article in this series will discuss both the landowner liability issues that arise from on-site pickup and the legal nuances of deciding on an off-site distribution spot.
Variety in CSA Formation
A CSA box will typically include a variety of produce or fruit but could include meat or dairy products as well. Some operations will include options for “added benefit.” This could look like including a dozen eggs or a loaf of bread for an added cost. The legal issues created from “added benefits” will be the subject of another article in this series.
Usually, the distribution of farm product boxes will occur for a set number of weeks, and there might be different membership sessions with seasonal options in the boxes. For example, consumers could purchase a membership for a summer session or for a winter session. The summer membership would take place during the summer months and would include produce and fruit grown during the summer season. Similarly, the winter membership would take place during the fall or winter months and include produce grown during that season. However, it is notable that the structure of the memberships, frequency of box distribution, and even the of individual boxes is customizable for every CSA.
Additionally, some CSAs have adapted the traditional model to increase their scope and scale. One way CSA’s have adapted is to become a Multi-farm CSA, where several farms contribute to the operation. Other CSAs have entered into formalized cooperatives. Different than a multi-farm CSA, a CSA that is joined in a formal cooperative usually exists within an established legal framework and is guided by cooperative principles. To learn more about the role of cooperatives in agriculture, click here to view NALC’s Cooperatives reading room.
Benefits of a CSA
For the Farmer
The greatest benefit of CSA for a farmer is the distribution of potential risk. Since CSA shareholders are paying for food prior to planting, they are assuming the risk of crop failure, pests, natural disasters, and more and understand that a refund will not be issued if no crops are harvested. A later article in this series will look at the legal consequences of crop failure. In a typical farm business model, the farmer will pay for the costs associated with planting, growing, and harvesting, then will recoup the cost after the consumer purchases the harvested product. This means that if something occurs during planting, growing, or harvesting that results in a failure to produce a sufficient crop, the farmer will bear the risk of not making back the money invested in the season. In contrast, under a CSA structure, consumers and farmers share the burden of risk because members pay for the season’s costs prior to planting. The farmer also benefits from having a more guaranteed income. The economic stability that results when a farmer is not relying upon the outcome of harvest for income, enables the farmer to plan and manage the farm better.
Additionally, the nature of the CSA structure encourages farming operations to produce a variety of crops or farm products. While not all CSAs are the same, many focus on providing consumers with a variety of products in each box. This means that farmers are incentivized to focus on crop diversification to ensure there are multiple options for the shareholder boxes. A focus on crop diversification could reduce the impact from pests, disease, and nutrient depletion in the farmer’s soil.
For the Consumer
While the consumer takes a larger financial risk by joining a CSA than they would by going the more traditional route of purchasing food from a grocery or retail store, involvement in a CSA may be more cost-effective for a consumer. Typically, the cost of membership is calculated on the final number of CSA members. A farmer will usually divide total operating costs by the number of shareholders to calculate the final price of membership. However, a member is putting a large sum of money upfront to receive fresh produce or fruit for several weeks, and it could be more cost-effective than purchasing the same amount of fresh foods weekly.
Membership in a CSA also provides the consumer with a direct connection to the production of their food. Some CSAs even have a labor requirement for members – requiring that they volunteer a number of hours to the farm. This allows members to be directly involved in food production.
Challenges of a CSA
While there are many benefits to being involved in a CSA for both farmers and consumers, there are some challenges as well. Obviously for the consumer, there is a financial risk involved in purchasing a crop before it has been planted. Depending on the specifics of the member agreement with the CSA, there is a large chance that crop failure would result in a total loss of money from the consumer. The biggest CSA benefit for a farmer is simultaneously the biggest risk to the consumer.
Specifically for the farmer, it can be difficult to both manage the production of a large variety of crops and recruit and maintain a suitable member base. Marketing directly to consumers and gaining support for the CSA could become a time-consuming endeavor, especially if the farmer has never had to market directly to consumers before. Additionally, under the CSA model, a farmer will deal directly with consumers to handle product or distribution issues that arise. This also might take the farmer away from the management of the crops.
Farmers will also need to be very transparent with the costs for the growing season. Since members are essentially giving farmers the money they will use to produce crops, it is vital that farmers are clear with their monetary spending. To be transparent, a farmer should have an understanding before the season of its production costs. Some CSAs actually require the producer to create and present a budget for the season to members.
Legal Issues and future articles
Overall, when establishing a CSA, there are many legal issues that a grower may need to consider. Legal questions begin with the formation of a CSA, such as how the business is structured and how member agreements are crafted. Questions of liability arise when members are invited to the farm premises for pickup or when a CSA picks an off-site location for distribution. Questions about food safety arise when boxes are able to include an “added benefit.” Questions about labor laws arise when members are required to work on the CSA. Last, legal questions arise when pondering the ability of a CSA to be involved in various federal loan, commodity, conservation, or certification programs. Subsequent articles in this series will address these legal questions.
Click here to view NALC’s Local Food Systems reading room.
Click here for USDA Agricultural Marketing Service Resource “Community Supported Agriculture New Models for Changing Markets.”
Click here to read AATRA Sustainable Agriculture article “Community Supported Agriculture.”
Click here to read PennState Extension article “Community Supported Agriculture (CSA)”