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Expanding Beyond the Incubator: Silva Organic, Acevedo Organic, and Chelito Organic Farms

When asked about his harvest for the 2018 season, Luis modestly responds that his yield was “bastante bien” or “fairly good,” demurring rather than boasting of his characteristically stunning produce. Specializing in organic celery, strawberries, and mixed vegetables, Luis Silva started Silva Organic Farms at ALBA in 2015 after over 20 years working in agriculture. For the majority of that time he picked strawberries in the Monterey Bay region. In June 2018, Luis joined forces with Acevedo Organic Farm and Chelito Organics in their search for land.

Gerardo started Acevedo Organic Farm in 2011 on half an acre at ALBA. Since graduating from the ALBA incubator in 2016 and moving onto land outside of the program, Gerardo has faced a variety of land tenure issues and reflected, “I have dedicated myself to working hard, and thus I have been able to reach a peak, I feel proud. Although I have had challenges including getting out of the incubator‒it was difficult to achieve that transition.” Supported by Kitchen Table Advisors and FarmLink, Gerardo has persevered in growing his farm businesses, despite issues with landowners, poor soil quality, and heat fluctuations at properties in San Benito County. Gerardo sought land in Watsonville for its good soil and temperate climate, ideal for growing organic strawberries and mixed vegetables.

Chelito Organics started at ALBA in 2014, growing organic mixed vegetables with a focus on baby bok choy and specialty produce. The husband and wife team complement each other well in their business practices: he is charismatic and ambitious, she is driven and focused, both work tremendously hard to expand their increasingly successful business. Having grown to 4.5 acres at ALBA, they decided it was time to expand their operations beyond the farm incubator program to meet the increasing demand for their product.

All three businesses were searching for certified organic land with good soil quality and water access, close enough to established sales channels and a reasonable commute from home. Gerardo reports, “We’re applying the concept of diversity in nature and as a farmer, I think about diversity when looking for solutions and experimenting.” Most difficult was the scale, finding parcels small enough to fit their operations but large enough to enable expansion, at a reasonable price per acre. The threesome finally found success by finding and sharing 60 acres of certified organic land in Watsonville.

The three farms started their leases in June 2018, with 20 acres allotted to each business. Highly motivated to share the land in an equitable way, they modeled their shared usage similarly to ALBA’s system. They split the 60 acres into blocks and established annual rotations to ensure that each business has land that fits their crop plans. Sharing equipment and a water system, the three businesses are working together for shared success. FarmLink is providing tailored support for each one to help realize that success.

Chelito Organics, Silva Organic, and Acevedo Organics approached FarmLink for assistance understanding their lease and its implications for their businesses. Staff reviewed the lease, drafted improvements to better support the three businesses, and served as translation support in negotiating the final lease. The additional lease support proved crucial to their success from the start, as within a month of starting to prepare the ground for planting, issues with existing irrigation pipes were discovered. The lease allowed for a clear understanding of what each party was responsible for in fixing the lines, ensuring that planting would not be delayed and expenses would be allocated fairly.

All three businesses are repeat borrowers with FarmLink. Just as the capital from our loans helped each business to get established, FarmLink funds are now supporting expansion onto the new acreage. Given each business’s unique crop plan and financial position, loan staff worked closely with Chelito, Silva, and Acevedo to identify financing plans that would best fit each individual business. A nuanced combination of financing packages emerged. For Silva Organics, this resulted in a $140,000 operating loan guaranteed by the Farm Service Agency. The Northern California Community Loan Fund (NCCLF) jointly financed a $100,000 revolving line of credit for Chelito Organic and a $50,000 operating loan for Acevedo Organics. Additionally, FarmLink has partnered with Coke Farms to provide an innovative and useful accounts receivable advance line of credit for Chelito Organic.

Beyond the loans supplied by FarmLink, lending staff provided technical assistance to ensure that the businesses would be positioned for success. This included crop projections for all three businesses, introducing Luis to the Farm Service Agency to access crop insurance, and recommending that Gerardo work directly with a tractor dealer to get an equipment loan at 0% interest.

The owners of the three businesses are excited to see what 2019 holds for them and what operating on 20 acres will allow them to experiment with. Chelito Organics is eager to find ways to make their organic produce more accessible and affordable to people in their own community. Gerardo hopes to establish stronger market channels, given his ability to focus on one property instead of being spread between three smaller parcels. Luis continues to mentor his son Hugo as they work together on paperwork and on planting, preparing for an eventual succession of the business to the next generation. FarmLink hopes to continue supporting all three farms through continued financing, technical assistance, and land tenure support. Gerardo concluded a recent visit by saying, “FarmLink understands that I am an honest person, and more than anything I am grateful to Farmlink, the people there trust me. My goal is to grow.”

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