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Growing Good Food in Chicago

Tue, Oct 14, 2014

“Good food” is organic, but more than that, it embodies values: it is local, it is sustainable, it is humane and it is fair, said Jim Slama, a leader of the movement for two decades and founder/president of FamilyFarmed.org, which is leading the Good Food Business Accelerator (GFBA).

The Good Food Business Accelerator will seek to provide mentorship, strategic support and access to capital for new or growing good food businesses: food artisans, craft beverage producers, farmers, food technology companies, food processors, restaurants, retailers, food packagers. The GFBA is accepting applications through October 20 for six to eight Fellows, who will participate in a six-month program starting this fall and who will pitch investors next May at a Good Food Finance and Innovation Conference. Workspace will be located in expanded areas of 1871, the digital entrepreneurship firm in the Merchandise Mart.

Clockwise from top left: Mark Schulman, Irv Cernauskas, Jim Slama and John Hall.

Clockwise from top left: Mark Schulman, Irv Cernauskas, Jim Slama and John Hall.

During a capacity presentation October 1 at 1871, Slama told prospective Fellows, investors and mentors alike that his intention is to build the supply of good food to meet strong consumer demand. Organic foods were just a $1 billion industry in 1990, but they are $35 billion today, he said. Sustainable local food is also a top 10 trend for the National Restaurant Association.

Yet only 1 percent of American food comes from farmers’ markets, while 99 percent moves through wholesale markets, he said. “Our goal is to make a supply chain for local food and move it into the wholesale chain,” he said.

The GFBA will facilitate this goal, he said, by getting businesses “ready for prime time:” helping Fellows to fully develop their ideas and pairing them with industry mentors to hone their business plans. Investors and mentors in the GFBA so far include the U.S. Department of Agriculture, with a $99,000 grant; the Small Business Administration; SLoFIG (Sustainable, Local Food Investment Group) a network of private angel investors; 1st Farm Credit; the Angel Food Network; Fresh Taste, the philanthropic food cooperative; the Chicago Community Food Network; 2x Consumer Products Growth Partners, a Chicago food and natural products venture capital group; and microlender Accion.

Whole Foods, which employs 9,000 people and which will have 46 stores by next year, is both a funder and a strategic partner in the Good Food Business Accelerator. Separately, it has supported local producers through its own loan program. Michael Bashaw, Whole Foods Midwest regional president, said the accelerator was timely, since local food has never been more important.

“This is the infrastructure that we need to build to be successful,” Bashaw said at the 1871 event. “Farmers, aggregators, all the steps between local produce, the retailers and finally our tables. This is the right time and the right group,” he said of FamilyFarmed, which has hosted good food trade shows for 10 years. “They are dedicated, very devoted and with your help this could be greatly successful. Thank you for letting me be here tonight and share in this very, very important event.”

Marc Schulman is president of Eli’s Cheesecake, a product his company has made since 1980, following a restaurant started by his father in 1940. Schulman told how he had been the only food industry representative at a jobs event with Mayor Rahm Emanuel and 1871 CEO Howard Tullman. The GFBA, he said, “puts it together for all of us.”

Schulman will co-chair financing of the accelerator and will also mentor, based on his work with the Chicago High School for Agricultural Sciences. Located at 3857 W. 111th St., the ag high school “is giving students a phenomenal education in predominantly the food industry,” he said in an interview afterward. Many of these low-income and minority students go on to ag schools at the University of Illinois or Michigan State and then food or food industry jobs, he said.

Schulman said that the good food business accelerator “will make Chicago a great place for local quality food. That could be on the supply side, the distribution side. Most of it’s done at the small business level. There may be venture capital behind it but Chicago needs to attract and retain quality people.”

What kind of jobs could the accelerator create?

“The whole gamut,” Schulman said. “The supply side could be in production, using the leverage of Whole Foods. Really, the thing is how do we use our geography, how do we use the resources to be as creative as possible. Big businesses come from little businesses.”

Ken Waagner, founder and CEO of e.a.t. spots.

Ken Waagner, founder and CEO of e.a.t. spots.

Illinois farmers grow only 6 percent of the produce consumed in the state, even as demand for local food has grown 260 percent in the last 10 years, according to the Chicago Metropolitan Agency for Planning (CMAP). Increasing food production in the seven-county Chicago region could create more than 5,000 jobs and generate $6.5 billion a year in economic activity. CMAP’s GO TO 2040 plan calls for access to land for farmers, help in obtaining infrastructure for distributors, and workforce training for entrepreneurs.

Lloyd Nichols is an orchard owner in western McHenry County who has been selling produce at farmers’ markets since 1978. It’s a 65-mile trip to Chicago – longer than most people will drive for their produce, according to a video on the CMAP website.

“We need farmers to spend more time between the wheels of a tractor than the wheels of a truck,” said Irv Cernauskas in the CMAP video. Cernauskas and his wife Shelly Herman run Irv and Shelly’s Fresh Picks, an online grocery firm that buys from more than 100 small family farms and delivers to Chicago ZIP codes on set days.

The Fresh Picks website says that its support of over 100 farms has expanded food production, employment and income. Cernauskas said after the Good Food Business Accelerator presentation that he buys only within a 250-mile radius so that local truckers can make the round trip within the 11-hour day permitted by regulations. Beyond that distance – from southern Illinois to northern Wisconsin and into Iowa and Minnesota – he would have to use a broker, who is by nature more focused on the international market.

Because organic farming uses hand labor rather than large equipment, it is great for job creation but not for economies of scale, Cernauskas said. Increasing the supply through urban agriculture while also making the distribution system more efficient is the key to making local food more affordable, he said.

For entrepreneurs who think they can do it all on their own … and be Lone Rangers, you need something like Good Food and the Good Food Business Accelerator to knit things together.”
Irv Cernauskas, co-founder of Irv and Shelly’s Fresh Picks

Appearing on an entrepreneurs’ panel at the GFBA presentation, Cernauskas said that for the first six months, he and his wife did all Fresh Picks deliveries themselves, “kept the trains running on time” yet still took time to look up and to watch for changing trends. He said the accelerator creates a tapestry from the various strands of the good food industry: academics, researchers, policymakers. “For entrepreneurs who think they can do it all on their own and it’s in their DNA to hunker down and be Lone Rangers, you need something like Good Food and the Good Food Business Accelerator to knit things together.”

Other entrepreneurs on the panel included John Hall and Gene Mealhow.

Hall is the founder of Goose Island Beer Company and one of four lead investors in FarmedHere, the 90,000 square-foot facility in southwest suburban Bedford Park that is the largest vertical farm in America. “I got involved in vertical farming because I had read about aquaponics,” Hall said. “Thinking about the future it made sense, like craft beer made sense. How can you not believe in something that is close by, saves on water, saves on energy, makes better profits? So I got involved but I didn’t have connections. We were starting up and moving pretty quickly. Starting with Jim [Slama] I got introduced to Whole Foods and they were supportive and also introduced to 1st Farm Credit, [the largest agricultural lender in Illinois]. Everyone likes growth but growth takes money.”

Mealhow had just been featured in the New York Times that day for Tiny But Mighty popcorn, which he raises with his wife near Cedar Rapids, Iowa. Sold at Whole Foods, this artisanal popcorn – never genetically modified – has no hulls, which means children can’t choke on it.

Mealhow started with a handful of heirloom seeds kept in a jar. The accelerator will be helpful, he said, because investors tend to wait until a product is well developed. Few want to jump in at the beginning.

Slama asked Cernauskas to tell the audience about Fresh Picks’ experience with e.a.t. spots and StreetWise in putting formerly homeless people to work. The three entities converted vacant newsstands downtown into healthy food kiosks.

“StreetWise has historically employed people, trained them, given them an opportunity to reenter the workplace by selling the magazine when they may have fallen off the rails,” Cernauskas said. “Jim [LoBianco, StreetWise Executive Director] is a visionary in that he may have realized that print is not necessarily a growing sector of the economy a few years back and put food carts out. He started to see an opportunity in food. Ken Waagner [founder and CEO of e.a.t. spots] visited us and started talking about repurposing some of the newsstands, maybe into streetside kiosks like New York has had for years. They are up and running and actually have good food in the Loop. As far as sales associates, StreetWise did a great job of getting them prepared through some basic training to be ready to enter the job applicant stream for manning those spots. They are a great bunch, excited about an opportunity to work. As Jim [LoBianco] says, they are not looking for a hand out but a hand up.”

By Suzanne Hanney, StreetWise Editor-in-Chief

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