A new approach to finance and commu­nity involve­ment

When Kornelia Engler walks through her meadow orchards, she dreams of estab­lishing her own cider factory. She and her husband Lutz want to press single-variety apple juices from histor­ical vari­eties like Berliner Schaf­s­nase, Roter Winter­stet­tiner and Danziger Kantapfel. Until now, processing has been done by a friend, who retired in 2022. Now they need to build their own processing facility, with a ratchet mill, press and bottling plant.

With the total invest­ment required at around €13,000 (£11,188), the couple from Serwest Village, in the Schorfheide-Chorin Bios­phere Reserve (Bran­den­burg) could have raised most of this them­selves. “But the general polit­ical situ­a­tion and the energy crisis made us nervous,” says Mrs Engler. The couple were inspired after a health food store in Anger­münde suggested crowd­funding as a financing option. And consid­ering the added benefit of the funding method boosting their profile, they decided to have a go them­selves.

Kornelia Engler in the midst of her meadow orchards, with histor­ical vari­eties such as the Gdańsk Cantapfel.

Single-variety apple juice is to be pressed from the various apple vari­eties.

What is crowd­funding?

Crowd­funding helps finance projects with partic­i­pa­tion of the public. The initiator, rather than turning to banks or other finan­cial insti­tu­tions, instead directly addresses the public to find as many supporters as possible for their project. Depending on the crowd­funding model, supporters may receive some­thing in return for their contri­bu­tion. There are four crowd­funding models – each suited to specific project types:

• With dona­tion crowd­funding, supporters do not expect anything in return. This is suit­able for charity projects, like animal sanc­tu­aries.
• Advance sale crowd­funding is suit­able for smaller projects and acqui­si­tions, like orchards, agro­forestry, flow­ering meadows or advance product sales. This option is partic­u­larly inter­esting for agri­cul­ture. Here, supporters receive some­thing in return, for example a product or a special service.
• In the case of yield crowd­funding or crowd investing, supporters receive finan­cial compen­sa­tion. This can be, for example, a perfor­mance-related return. This model is suit­able for larger invest­ment projects, like a farm shop.
• Crowd lending, on the other hand, works almost like classic credit. Here, supporters provide a loan at a fixed interest rate. This form of funding is also suit­able for larger invest­ment projects, like installing a solar farm.

Regional projects related to sustain­ability are exciting for the commu­nity and there­fore promising for their initiator. In the case of the Engler family’s organic farm, the goal is to preserve older and regional apple vari­eties, whose tall trunks provide a habitat for many animals. Most of the juice produced is sold directly from the farm, promoting added value in the region. In the future, private tree owners will be able to have juice pressed from their own trees at the Englers’ cider mill.

Starting a crowd­funding campaign

A project is prepared and launched on a plat­form with a detailed descrip­tion. Next is the financing phase, where backers are recruited. If the campaign is successful, the project begins, and the agreed finan­cial backing is provided. The Englers opted for advance sale crowd­funding on the EcoCrowd plat­form, which exclu­sively finances projects in the green sector.
Advance sale crowd­funding usually works by setting target stages. For the Englers these included:

• Covering the trans­porta­tion costs for the cider plant system from the Voran Company in Austria (€230)
• Purchase of a ratchet mill (€2,540)
• Purchase of a packing press (€5,130)
• Purchase of a bottling plant (€5,100)

Advance sale crowd­funding promises donors’ compen­sa­tion, which can come in the form of, for example, spon­sor­ship, farm tours, or purchase discounts in the farm shop. Certi­fied crowd­funding website wirgarten.com recom­mends five to 10 services in return, each stag­gered in price. In the Englers’ case, the donors were partic­u­larly enthu­si­astic about the discounts offered on cider­making, which the couple included in the campaign at the request of regional fruit tree owners. In addi­tion, the organic farm offered supporters the following:

• For a dona­tion of €10 or more: A cup of coffee in its on-site court­yard café
• For €35: Three bottles of organic apple juice or three jars of organic jam
• For €50 or more: One night at the camping site or 20 litres of apple cider at half price
• For €100 or more: A whole weekend at the camp­site or 50 litres of apple cider at half price

Who can benefit from a crowd­funding campaign?

Mona Knorr is a certi­fied crowd funding specialist at wirgarten.com, and in her expe­ri­ence, most crowd­funding campaigns in the agri­cul­tural sector come from farms that already do a lot of external commu­ni­ca­tion or coop­erate closely with consumers. Ms Knorr, who has been advising project starters on campaign plan­ning for over six years, explains that anyone who already has direct marketing, or an online pres­ence can achieve the neces­sary reach much faster. Yet compa­nies marketing to whole­salers will find crowd­funding more diffi­cult, “they don’t have a court­yard envi­ron­ment that they can utilise for the campaign,” says Ms Knorr.

Dennis West­er­mann agrees. The qual­i­fied finan­cial econ­o­mist and tax consul­tant advises farmers on behalf of the Paulussen and Part­ners Tax Advi­sory Company in Diepholz. According to Mr West­er­mann, crowd­funding is most inter­esting for direct marketers. “Tradi­tional agri­cul­tural busi­nesses try to manage projects them­selves with the help of the Land­wirtschaftliche Renten­bank (Agro Bank), other financing insti­tu­tions, or indeed with friends in the industry or a busi­ness partner,” says Mr West­er­mann.

Yet classic advance sale crowd­funding is rarely just about financing, but rather a combi­na­tion of several goals like marketing, building a commu­nity around the farm, or marketing directly. “Receiving specific feed­back on your own project is a great advan­tage,” says Mrs Engler. However, Ms Knorr adds: “If it’s just about financing an invest­ment, crowd­funding is a complex option.”

Proper plan­ning is key to crowd­funding

A crowd­funding canvas can help with plan­ning a campaign. A good budget is impor­tant – both for the project and for the campaign. The project needs a good story, one with a well-thought-out concept, that will win over backers. As the commu­nity is funding the project directly, clear infor­ma­tion is needed. “If you just say you need money, nobody will donate,” says Mr Engler.

A good commu­ni­ca­tion campaign will keep the commu­nity informed throughout. “My impres­sion is that on many farms, there is simply no ‘free’ time,” explains Ms Knorr. It is there­fore best to clearly under­stand, before the start of the campaign, who will be respon­sible for this commu­ni­ca­tion.

The Englers are still a little unsure whether their crowd­funding will be a complete success. “Never­the­less, it’s a modern way of sourcing funding for a specific purpose. And the sustain­ability market is growing,” says Mr Engler. For him and his wife, it will be a valu­able expe­ri­ence – to see what can be achieved with crowd­funding. “Small projects can be imple­mented rela­tively easily,” says Mrs Engler. “It will be inter­esting to see if our crowd­funding works, and we’re able to fund a project that we couldn’t finance in its entirety alone.