By MITCH LIES
Food Alliance, one of the original certifiers of sustainable agricultural practices, is ceasing operations.
The Portland-based nonprofit organization announced in a press release Feb. 12 it is "unable to endure financially under its current business model" and will shut down Feb. 15.
The board of directors stated in the release that "the grant support on which the organization depends has become less obtainable and more competitive" in recent years.
Scott Exo, who served as executive director of the organization from 1999 to May of last year, said he wasn't particularly surprised to hear the news, but "was very saddened."
"I'm sad for the staff, immediately, but also for the many farmers and food businesses that have grown to depend on Food Alliance as a business tool," Exo said.
"Fundamentally, it grew from an idea and a mission to something that was important for people's businesses. So to lose it was very tragic," he said.
Exo said the organization "was facing serious financial challenges in the spring of 2012" when he left.
After his departure, the board managed the organization without an executive director.
Board member Peter Bloome said the board eliminated a second position and scaled back the remaining five staff positions to cut costs while it sought a means of keeping the organization afloat.
"We spent time talking about partnerships," he said. "When we finally came to the realization that we weren't going to be able to find a workable partnership, we realized we had to change the structure of the organization."
Grants and donations accounted for more than 70 percent of Food Alliance's nearly $800,000 budget in 2011, Exo said. Fees charged for certifications brought in about $250,000 that year, he said.
According to federal tax filings, the organization's total expenses that year were $846,809. Its revenues were $789,157.
Ken Bailey of Orchard View Farms in The Dalles, Ore., one of the first farms to gain Food Alliance certification, said the certifier's business model was losing relevance in recent years as retailers began requiring their suppliers obtain retail-driven audits.
"Food Alliance was one of the original ones and they did things right all the way through," Bailey said. "But in my opinion they did not have the proper business model to beat out other certifiers who took a more aggressive stand."
Bailey said Orchard View, which is still certified by Food Alliance, hasn't used the certification in recent years.
"We found no reason to use it," he said. "It wasn't a good market builder for us. The people we were selling to didn't seem to care about it," he said. "Most of our sales are into California, or East Coast or export, and Food Alliance didn't add any additional value to our market place."
Orchard View has been operating under GLOBALG.A.P. certification in recent years, Bailey said. That certification is recognized internationally.
Producers, handlers, distributors and others certified by Food Alliance can continue to use the Food Alliance seal through Dec. 31, Bloome said.
The board plans to engage with clients on how best to use the intellectual property developed by the organization, he said.
"We're retaining the intellectual property created over the last 18 years by the organization," he said. "We will reconstitute the board and think about how the intellectual property can best be deployed and used for the benefit of the food system."
Food Alliance was established as a nonprofit entity in 1997, Exo said. It started as a project in 1993, he said.
The organization started with a regional base of customers, eventually expanding to an international customer base, with clients in 26 states, Mexico and Canada.