Good Practice - Project
Pilot study: Securing regional food chains through citizen-supported financing
Assessing financing solutions for sustainable food systems in Sweden.
General information
RDP Priority
- P6. Social inclusion and local development
RDP Focus Area
- 6A: Diversification & job creation
RDP Measure
- M16: Cooperation
Summary
The pilot study: ‘Securing our regional food chains through citizen-supported financing’ investigated the possibility of creating a regional value company similar to that developed in Germany. The aim was to respond to the financial needs of a shorter food supply chain along with the external financial requirements of farmers for business development, ownership and generational change.
The project activities involved research including meetings and interviews, resulting in a report and a final seminar. The conclusions were that, while there are conditions for creating similar financial concepts in Östergötland, it would not be possible to replicate the entire regional value company concept due to legislative differences in both countries. However, a new model proposal was developed for Sweden and further studies have been inspired by the project work since then.
Results
The project has led to the following results:
- An analysis of the German regional value model including lessons learned.
- The development of a model proposal that could work in Östergötland and throughout Sweden.
Promoter
Vreta Kluster AB
Funding
Total budget 538 833 (SEK)
EAFRD 262 951 (SEK)
National/Regional 275 882 (SEK)
Resources
Documents
EU CAP Network - Good Practice - Pilot study: Securing regional food chains through citizen-supported financing
(PDF – 563.31 KB)
Context
In 2019, Vreta Kluster, a development centre supporting new innovations and development within the bioeconomy industries in Östergötland, Sweden, organised a seminar about external financing and capital options for companies in the green industry. A number of financial organisations were invited to attend the seminar, including Banks, Almi Invest (a venture capital intermediary) and Christian Hiss (founder of the German regional value company ‘Regionalwert AG’).
During the seminar, it became clear that the demand for financial return is often higher than what an agricultural company is able to generate in terms of growth. This creates a barrier for attracting external risk capital investment, especially when the need for investment relates to a new business development idea that has low growth rate expectations and where the farm might be already burdened with a mortgage.
This can be common in the agricultural sector or bioeconomy industries and companies often experience funding gaps between the banks’ appetite for low risk and the venture capitalists' requirements for high return. However, the idea of regional value companies was new and exciting and most of the seminar audience wanted to find out whether the same structure that had been developed in Germany could also be applied in Östergötland. In response, the ‘Pilot-study: Securing our regional food chains through citizen-supported financing’ was created in tandem with a project group and reference body.
Objectives
The overall aim of the study was to explore a new investment model that has been developed in Germany seeking to strengthen the connection between consumer and producer, and between the urban and the rural areas. The model is based on the approach of involving consumers in agricultural production companies / bioeconomy industries through investments.
The purpose of the project was to study the German model of regional value companies (Regionalwert AG) to investigate whether a similar structure could be transferred and re-created in the region of Östergötland to support relevant bioeconomy business developments.
Activities
The project included the following activities:
- Research involving several internal meetings for project participants.
- In-depth interviews with various actors from the industry to explore and analyse the German regional value model and to identify lessons learned.
- The implementation of a final digital seminar that was recorded and opened to the public (published on YouTube).
Main results
The project has led to the following results:
- An analysis of the German regional value model including lessons learned.
- The development of a model proposal that could work in Östergötland and throughout Sweden. The key points include:
- While the principle of the proposed structure remains the same, it differs from the German model whereby the proposal foresees the establishment of an investment firm to facilitate the investments alongside the creation of a separate non-profit association that will deal with activities such as lobbying, marketing and other services.
- The proposal is strengthened by the potential for including larger investors who seek to invest capital in the food chain and who are sympathetic to lower and more long-term returns.
- If appropriate, there might be consumer interest in investing in green industries that acknowledge the non-monetary values generated by agricultural production.
- The project has led to the start of similar projects and pilot studies in Sweden, aiming to change the food chain and to support agriculture with external capital.
Key lessons and recommendations
- The reason why the German concept is not entirely transferable to Sweden is due to legislative differences regarding the ownership of agricultural land by limited companies.
- A professional project group that has a forward-thinking approach can create concrete results despite a short project time frame and limited funding. The group was driven to investigate and was open to discuss various viewpoints related to agricultural "values" and what these stand for.
- Allowing for sufficient time for the preparatory work, consisting of finding the right people, resulted in a working group with an appropriate broad range of collective competence.