Friday, October 29, 2010

Carolina Ground, L3C-- it's official!

After wheat prices spiked in 2008, it became more than evident to the bakers here in western NC (and beyond our borders-- see blog post dated 5/25/09) that the gaping distance between the baker and farmer had run its course. Clearly, the commodities market cared little for either the farmer or baker, or an honest loaf of bread, for that matter. In regards to the price spike, at the time the news reported floods in Northern Europe, drought in Australia, the displacement of wheat with corn for ethanol, but in Harper’s recent July 2010 article "Food Bubble How Wall Street starved millions and got away with it" author Fredrick Kaufman eloquently delineates what else happened,

…in 1991 nearly everything else that could be recast as a financial abstraction had already been considered. Food was pretty much all that was left. And so with accustomed care and precision, Goldman’s analysts went about transforming food into a concept. They selected eighteen commodifiable ingredients and contrived a financial elixir that included cattle, coffee, cocoa, corn, hogs, and a variety or two of wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known thenceforward as the Goldman Sachs Commodity Index. Then they began to offer shares.


The first meeting of the NC Organic Bread Flour Project took place in February 2009-- seven bakeries and one spent baker (me) pulled our chairs into a circle and began discussing the possibility of existing outside the commodities market-- the possibility of establishing direct relationships with growers. Everyone agreed that the grower should get the best possible price for his/her grain, but at an affordable cost to the baker. The mill could be the entity to make this happen.

About a year into this project and many meetings later, a discussion ensued amongst this group of bakeries about whether this mill ought to be for profit or not for profit. One of the smaller bakeries voiced the concern that if the mill was not driven by profit, it may loose the incentive to press on into the future; another bakery responded that profit alone would never be enough of an incentive, and that to ensure the longevity of this future mill, it would need to be sustained by something bigger than simply profit. This mill would enable our many bakeries to become more sustainable; it would allow for long-term relationships to be established between growers and bakers, with the hope of building our knowledge base of local grains —both in the field and in the bakery.

But still, a non-profit mill?

I sought assistance from Wake Forest’s Business and Law Clinic and UNC Chapel Hill's Center for Sustainable Enterprise. We examined the coop model, felt as a legal entity it was too restrictive, and learned through a conference call with a number of growers on the line that joining a coop was of no interest to them, although they would be happy to sell grain to the mill.

After four teams of law students and two teams of business students, along with my own networking and research, we finally arrived at the answer to the question that we struggled with-- how to define this mill, legally. And now it's official-- we are registered with the State of North Carolina as Carolina Ground, L3C.

Most of you are probably scratching your heads wondering what an L3C is… and that is to be expected. It is a fairly new entity, just signed into law in NC in August 2010, initially established in Vermont in 2008 (to my knowledge, thus far L3Cs can be formed in: Michigan, Vermont, Illinois, Wyoming, Utah, Louisiana, North Carolina, and the Indian Crow Nation and the Oglala Sioux Tribe.)

An L3C is a sort of hybrid between an LLC and a 501 C-3, in other words, it is a mission-driven for-profit business; it's also know as a "low-profit" company. Carolina Ground, L3C will be structured as a bakers' owned co-op mill, but incorporated as an L3C. Because what we hope to accomplish with this mill is to enable the farmer to get the best possible price for his/her grain at an affordable cost to the baker-- to exist outside the commodities market-- it is our stakeholders -- the farmer and the baker-- that we want to see thrive, not necessarily the mill; although we need the mill to do well, exist in the black, provide jobs, ect... The L3C felt like the perfect fit for us and I think it is going to conjure a lot of dialogue (hopefully) about the way we do business-- a triple bottom line approach (with economic, social, and ecological value) whose ecological and social value are the direct benefits of keeping it local.

Harper’s author Fredrick Kaufman describes Wall Street bankers whose riches did not come from the sale of real things like wheat or bread but from the manipulation of ethereal concepts like risk and collateralized debt.

Carolina Ground, L3C, dedicated to grains grown and ground on Carolina ground is real and tangible. From seed to loaf, we are working to rebuild sustainability in our communities.

from the ground up,



  1. Great post Jennifer! An NPR article discussed hybrid-type entities that do what you described, and it does seem like a great solution that draws from the best of both worlds. Sounds like lots of hard work went in to coming up with this...Congratulations! Ruth

  2. Bravo!Brave new world!I want to be kept up to date on this movement!

  3. This is a great idea for NC! Thank you for your dedication to this project. I just pledged and put out a post on the Asheville Foodie blog to support as well.

  4. Am I nut for thinking an overlooked element in the supply chain might be a return to the old-school Bread Man--that is, bakery-to-home deliveries which get fresh-made bread to the home's breakfast table?

    May I point out there are excellent trailers made for bicycles?