Growing Pains

Andrew Stout, owner of Full Circle Farm in Carnation, has enjoyed enormous success raising and selling organic produce, with annual sales of $11 million.

Most small businesses would be satisfied to grow by 50
percent to 90 percent a year. Not Andrew Stout, whose Full Circle Farm, based
in Carnation, has logged that rapid growth since he moved to the Snoqualmie
Valley in 2000.

You get bigger or you get smaller. And in order to do what
I want to do, I have to grow, says Stout, 41, who started farming with his
wife, Wendy Munroe, on three leased acres in North Bend in 1996. Stouts
mission is no less modest than his farms growth rate.

What I want to do, he says, is fix the food system.

That mission took shape, Stout explains, in the organic food
movement, which was just beginning to move into the mainstream of the food
industry when Stout and his wife arrived in North Bend, fresh from a stint as
apprentices on an organic farm in Minnesota. Growing food without chemical
pesticides and herbicides, he says, was a noble occupation.

Stout and Munroe were not alone. Driven by concerns about
food safety, nutrition and the environment, sales of organic produce like Full
Circles fruit and vegetables have been nothing short of spectacular in the
past decade. Profits for the organic food industry have climbed from $2.55
billion or 3 percent of the total American produce market in 2000, to $9.5
billion or 11.4 percent last year, according to the Organic Trade Association,
an industry group. While the rest of the food sector stagnated during the
recent recession, sales of organic fruit and vegetables have continued to grow,
with agricultural giants like Heinz, Dole, ConAgra and Archer Daniels Midland
now on the organic bandwagon.

Meanwhile, Stout has taken Full Circle from its tiny start
to become an organic marketing powerhouse. The Carnation farm currently raises
organic produce on 400 acres and delivers boxes of organic food to 12,000
subscription customers weekly from Washington to the Arctic Circle in Alaska,
making it one of the nations largest organic delivery services. It sells to
some 75 restaurants and 25 farmers markets and grocery chains. During the past
decade, Stout says, Full Circles annual sales have grown from $46,000 a year
to $11 million.

But like the organic movement itself, Full Circles road has
taken some twists since Stout started out as a 26-year-old idealistic novice
farmer with little experience or working capital but the desire to create what
he calls a values-based business. Over

The success of Full Circle Farm, which ships produce to members as far away as Alaska, has raised questions as to whether community supported agriculture is compatible with industrial-scale organic farming.

the years, organic methods have moved
from a handful of renegade small farms to corporate operations like
Californias Earthbound Farm, with 1,500 employees producing more than 100
varieties of fruit and vegetables on 35,000 acres. Wal-Mart now boasts it is
the nations largest seller of organic produce. And critics contend that
corporate lobbying has turned organic into just another marketing catchword.

Stout still recalls his early farming days fondly. We got a
write-up in The Seattle Times and 60
people signed up for our CSA. We were floored, he admits. CSA, or community
supported agriculture, lets customers pay a farm in advance for weekly boxes of
fresh produce, which they then pick up during the growing season. Stouts
subscribers, he says, would hang around his farm chatting with his wife. We
had collaboration with our customers, he recalls. It was as inclusive as the
kitchen table.

While Stout describes those early days as kind of sweet,
he adds they werent sustainable for a business whose goal was to grow as fast
as possible. Its like you always want to have a 3-year-old, he says, but
theyre also wonderful at 10 and at 15.

Full Circle doesnt encourage drop-ins anymore and Stouts
payroll includes a human resources specialist to keep track of his 150
employees. He spends more time talking with the bankers who provided $1.5
million in financing last year than with CSA customers.

I never imagined I would have a diesel tanker show up every
week or go through paper by the pallet, he says. Were consuming a lot of
resources and that looks counter to what we originally wanted to do.

To that end, Full Circle offers a case study for a dilemma
facing many entrepreneurs seeking to grow a small business into a big business:
How do you make that shift while retaining the small-business values that
brought success in the first place?

From Farm to Industry

For Stout, the decision to move Full Circle from a few rocky
acres in North Bend to the Snoqualmie Valleys rich alluvial soil was timed
perfectly. Organic agriculture was starting its growth spurt. The number of
farmers markets in Washington had more than doubled to 140 and organic vegetables
became de rigueur for upscale Seattle restaurants. The agribusiness
establishment started paying attention.

At the same time, shoppers started seeking locally grown
food. As the number of CSAs and farmers markets increased, more small farms
sprouted. While the number of large traditional farms in Washington fell
between 2004 and 2009, small farms of under 50 acres grew by 26 percent,
according to the Washington State Conservation Commission.

Stout ramped up Full Circles production to catch this trend,
expanding the farms CSA from 22 weeks to year-round and signing supply
agreements with farms and processors as far away as Hawaii and Ecuador. Only 35
percent of the annual content now comes from Full Circle itself, Stout says.

We realized we couldnt do everything on our own, he says,
so we made alliances that made our business stronger and provided an outlet
for other farmers. Everyone benefited.

Perhaps not everyone. When Full Circle began seeking
subscribers in Alaska, small growers there complained that Stouts much larger
operation was using a model designed to promote locally grown produce to push
deliveries of fruits and vegetables grown thousands of miles away. A group of
Alaskan growers around Fairbanks asked Stout to stop using the CSA label, and
Stout wrote back: I totally get it. But the best working definition of what we
do is CSA.

Full Circle attracted criticism in Washington state as well.
You are cashing in on the positive image the [CSA] term has gained over the
years, without honoring the concept, Carolyn Goodwin, a member of Sound Food,
a Bainbridge Island food advocacy group, said in a letter to Full Circle
earlier this year. In the letter, which Goodwin made public, she argued that
the companys expansion plans were harmful to the areas small growers.

When does a small farm get too big? she asked. Maybe when
it begins to use its size to the detriment of the small farm segment as a
whole.

That kind of resistance prompted Stout to drop the CSA label
recently and replace it with a new slogan: Farm to You. The term CSA no
longer fits what we do, Stout notes.

A Contradiction
in Terms

Down on the Farm Disclosing my ties to the land. By Bill Richards My partner and I have a small farm on the outskirts of Seattle, raising and selling organic produce on about three acres. And like Full Circlethough on a vastly smaller scalewe sell produce at farmers markets, restaurants, and to CSA subscribers. When Full Circle recently began seeking subscribers in Kitsap County, I wrote on our farms blog that I was worried that Full Circles clout would steamroller our small farms CSA, a concern shared by other small farms in our area. So in a sense, Full Circle is our competitor. But while we both agree that the industrial-based food system could use some fixing, Full Circle has taken the bigger-is-better approach, while we believe that small is beautiful.

In his best-selling book, The Omnivores Dilemma, food writer Michael Pollan describes the transition
of another successful Washington organic grower, Gene Kahn, who developed
Cascadian Farm from a quasi-communal hippie farm in the Skagit Valley to
Small Planet Foods, now a subsidiary of General Mills. Pollan also described
Earthbound Farms growth from a couple of acres and a roadside stand in
California to a $350 million business.

Both farms raise the question, he writes, Is industrial
organic ultimately a contradiction in terms?

Brad Jaeckel, a Washington State University instructor who
runs the schools organic farm and 110-member CSA, says that while theres
nothing inherently wrong in a farm getting big, at some point, it becomes
difficult to align farms like Full Circle or Earthbound with the original
models for CSAs and organics that spawned them.

The first part of community supported agriculture is
community, Jaeckel says. You need some boundaries to define thatfive
miles, 10 miles, some kind of foodshed.

For Stout, such criticisms miss the point. Self-limiting
attributes arent productive, he insists. In a sense, Full Circles business
cycle has been true to its name. To meet growing consumer demand for food
diversity, the farm needs to grow, says Stout. To do that, it needs a
year-round workforce and supply of produce. And to get those, it must get
bigger. Cascadians Kahn, now a General Mills vice president, offered Pollan a
similar description of his farms consumer-driven growth path. Everything,
said Kahn, eventually morphs into the way the world is.

Where that tipping point lies isnt always
clear, Stout says. There are moments when I can say we are corporatized, but
we did this with our eyes wide open. It isnt innocence just lost. You wake up
one day and you realize youve changed. But if you look back, youve been doing
it for days, weeks and years.