Notes from Windward: #58

Unintended Effects on Capital Resources

caused by acquiring lots of used stuff

Intentional communities are multifaceted propositions intended to meet a range of needs. Some of those needs are social and spiritual, but others are just plain business. For a group to survive and prosper, it has to be able to pay its bills and fund growth. One of the earliest decisions a group makes involves the question of how much of its cash flow will be used to pay operating expenses, and how much will be available for investment in facilities, equipment, land, etc.

There are a number of strategies which can lower a group's expenses, and others that can make capital funds go farther. The key to most strategic planning is time management. In many instances, time and money are interchangeable. If you don't have the money to do something one way, by investing time into a situation, you may still be able to acomplish your goal.

By way of example, Windward was intentionally located halfway between a large, sophisticated metropolitan area (Portland, OR) and an abundantly fruitful farming area (the Yakima valley of central Washington.) By investing some travel time and gas, we can easily access the resources of either.

Given the way that food is marketed in this country, vast amounts are left to rot in the field. When a field of tomatoes is "ripe," a picking crew is brought in to harvest the fruit which meets the packer's cosmetic and maturation standards. The rest is passed over and left to rot.

In a week's time, fruit that was under-ripe will be ripening, but it isn't cost-effective for the farmer to bring back the picking crew a second pass. A farmer will usually allow you to go in a pick over such a field for next to nothing, and if you take the time to strike up a relationship and throw in a few quarts of home made salsa, he'll probably let you pick it for free.

Other crops, such as potatoes, onions and carrots are machine harvested. The combines take everything and the misshapened, or those too small or too large, are discarded at the wharehouse. With a little time and effort, almost free sources for these things are available.

Now comes the problem of what to do with a truckload of pumpkins. The traditional solution was to feed the surplus to cattle, pigs, etc., and then at some future date, you would harvest the surplus in the form of meat. More efficient options involve such technologies as freezing, dehydration and canning, which again require the investment of considerable amounts of time.

Even so, by investing that time, effort and know-how, we are able to provide quality food for ourselves without having to be fully reliant on the local grocery store. Having viable options allows us to purchase attractive items on sale, rather than when we need them. This is one of the key principles of creating a self-reliant lifestyle. If you wait to buy things until you need them, you'll usually wind up paying full price. By investing capital into purchasing things before you need them, like when they're on sale, in bulk or off season, considerable saving can be realized.

Tamara lends perspective
to a 500 gallon propane tank
An example would be our new 500 gallon propane tank. Propane is a byproduct of petroleum refining. When oil is broken down into its constituent parts, such as gasoline, jet fuel and tar, a portion comes off as propane gas. No one tries to make propane gas, it's just a byproduct. While propane has a value, especially in winter as a heating gas, it also has a problem. In order to store large amounts of the gas, it has to be compressed and stored in pressure tanks.

The upshot is that by August, the producers and distributors are fast running out of places to store propane. Since the refineries keep producing more regardless of the demand, that's when the bulk price for propane drops substantially. Now that we have a bulk tank, we also have a standing fill order. When the price bottoms out, our tank gets filled at a savings of 30%.

This tank was used, but with new valves, it does the same job a new one would, thank you very much. The savings are such that after it's been filled twice, it will have paid for itself, and from then on we'll be able to enjoy the benefits of propane heat for 30% off.

The fly in this particular ointment is that it cost $1,250 dollars upfront in order to be able to save that 30% down the road. While there are lots of way to save money in the long run, they usually cost more money in the short run. It's the old truth that it takes money to make money. Saving money will help you in the long run, assuming that you can afford it in the short run.

Again, intentional communities are businesses, and the most common reason that nine out of ten new businesses fail is that they were undercapitalized at start up. That makes them vulnerable to a number of potential problems; the first and foremost is a cash-flow crunch. Expansion takes capital, and enough of it so that you can simultaneously afford to both grow and maintain operations until that growth pays off.

One way to keep costs low involves using "previously owned" materials. Such things can often be obtained for a fraction of full price, and sometimes with luck, even for free. The rub is that "free" rarely works out that way. Even if you're not investing money in purchasing some asset, you're going to have to invest time and money into acquiring, transporting and storing your "free" stuff. And in time, if it turns out that you won't be able to use it, you'll probably have to pay to haul it to the dump.

Joyce lends perspective
to a stack of short ties
Here's an example of what I mean. When they decommissioned the rail line that ran from Lyle, through Klickitat, to Goldendale, we had the opportunity to acquire lots of short railroad ties. These are some 40" long, and while they're not as nifty as full length railroad ties, they are very handy to have around. We've used them for all sorts of things such as shoring up Finney trailer while we installed a foundation, or building "Fort Souee" our 30' diameter pig pen.

All in all, we salvaged and brought home 1,500 short ties. That may sound like a lot, and it certainly felt like a lot after a day of hauling, but that's all of those we'll ever get. It was a onetime deal, and we brought home quite a pile of them.

While those short ties were "free," it cost real money to cover the cost of fuel for trip after trip to get them. Even more importantly, it cost us two months of capital time. Every day, much of what we do involves the day to day process of living, but once those tasks are done, there's time that can be invested in moving Windward closer to what we want it to become. We started with raw land, and it's a long and demanding road when you start from scratch. The time we invested in acquiring those ties could have been expended on other projects.

Another problem with buying used or surplus items is that they rarely come along when you need them. Many's the time when I look back at some auction, and remember the resource that got away. One of the great occasions of back country life is the estate sale, and those are must-go occasions for back-to-the-landers. When one of the old farms holds an estate sale, you'll see things that won't be available again. This past June, I watched an entire wagon wheel rim shop sold piecemeal. One tool went here, one there, and another bit of history was scattered to the wind.

At another sale, five years back, I couldn't stand by and let another piece of history slip on by. That time, a century old steam engine was brought out from the back of a shed and offered for sale. It was a five horsepower engine with a vertical boiler in almost new condition. It had been used to power the town's carousel at it's annual picnic up until it was replaced with one of the new fangled electric motors back in '23.

The 5 HP steam engine
I'm not sure just what we're going to eventually do with it, but since it's already mounted on a twin axle trailer, one possible idea is a traveling historical exhibit that could be hauled around to rural high schools. The eastern two-thirds of both Washington and Oregon are dotted with small schools that are quite hungry for enrichment opportunities. The steam engine could be used as the focal point of a traveling class teaching chemistry, physics, math, history and so on. If you hooked up a caliacaphy, you could even offer "music" lessons!

Modern people often aren't aware of the power of these machines to bewitch menfolk. I have it on the strongest authority that in many country towns at the turn of the century, there were men who had to be locked in their homes when a new steam thresher came to town, elsewise they were likely to mortgage the farm in a fit of mechanical ectascy.

While I've never regretted acquiring this particular piece of history, the reality is that it ties up capital which could be used to further some other project.

For now, the steam engine is in storage waiting for the right person to come along and fall in love with it. It's always nice when a new person shows up with enough funds to carry them over while they work on building their niche here, but one way we can work with unfunded folk is by utilizing one of the opportunities we have already "on the shelf." There are lots of ways that someone can work with what we've got and produce value, and over time this value can provide the basis for a comfortable and fulfilling life here. Without startup capital, it just takes longer to work it through.

Sometimes "used" translates to "used up." It takes a good deal of practical experience to separate out those things which can still provide good service from those things which will just become a maintenance nightmare.

The next picture shows examples of items which needed to be acquired long before they would be put into use. One advantage to building your own facilities is that you can lay things out according to the dimensions of what you have. In the long run, you'll end up with a facility in which the equipment appears to have been custom ordered, when in actuality, it was the space which was engineered to fit the equipment. If you won't tell, we won't either.

One of the joys of this lifestyle is the chance to enjoy foods and herbs fresh from the garden. There's nothing that compares with the flavor and texture of fruits and vegetable which have been allowed to ripen and mature naturally, and then picked at their peak. Food from the supermarket will satisfy your physical hunger, but that falls way short of the additional spiritual satisfaction and contentment that comes from providing safe and tasty food for those you care for.

Still, you can only eat so many tomatoes, no matter how delicious the first one might be. Some surplus will be canned, but it would be nice to go beyond that to produce and offer the fruit of your labor to your friends so that they too can enjoy the bounty. That takes you into the area of commerce, food safety regulations and product uniformity. Suddenly we've bumped a casual activity up into something which has to be conducted in accordance with public safety standards.

So long as you're just feeding yourselves, you can get by as a private kitchen, but once you cross a certain line, you need to be conforming to state health and safety standards. My strong advice would be to adopt those standards as soon as possible, rather than waiting until the last minute, since the health and well being of your people is essential to your organizational survival. More than one intentional community has collapsed because a moment's carelessness resulted in an outbreak of hepatitis.

The most essential element in the creation of a public kitchen is stainless steel. It lasts, it's cleanable and it really impresses the health inspector. You could try to get by with a formica countertop, but it won't stand up to wear and tear like stainless steel. During use, the plastic will get scuffed and scratched, and each of those little crevices can serve as a resevour of contagion. For example, the skin of poultry frequently carries salmonella bacteria, and the simple act of laying cut up chicken on the counter can start a chain of infection which could lead to a serious case of food poisoning. While mistakes can be made, even in all stainless steel kitchens, the more possibilities you can eliminate, the less chance that a mistake will cost you.

Heather lends perspective
to the stainless steel sink
and the six goat stantion
So why doesn't everyone use stainless steel? Because it ain't cheap. A small, simple three basin sink (the code standard for washing dishes) can set you back six or seven hundred dollars new. A mammoth sink and counter such as the one pictured can easily run more than two grand. Fortunately, we were able to pick this one up from one of the salvage dealers we work with for two hundred dollars.

In all fairness, that wasn't a price, it was a present. Which just goes to reiterate the importance of cultivating good relationships with your suppliers. He knew we needed such a sink; he got it really cheap, and passed it along to us knowing we would put it to good use.

When I drove into the city that morning, I had no idea that I would be bringing home such a marvelous addition to our kitchen. When it was offered, the only thing I could say was "Thank you. Let's load it up." The price was low, but it was still two hundred dollars earmarked for other purposes. On balance, those other things just had to wait. The point is that even a good deal can be a source of disruption and delay.

The strange contraption behind Heather in the picture is a goat stantion. It will feed and hold six goats at a time, which is good because it makes the milking process more efficient than when you're handling goats two at a time as we're now doing. Both our herd and our flock are small (between 20 and 30 key animals each), so matters of efficiency aren't as key as they would be if we were to take them up to professional levels. When we have more facilities completed, the goats will support two people and the sheep a third.

For now, we're still in the process of gathering together the needed gear. While some things can be purchased, others have to be tracked down and acquired when they're available. We picked up the stantion, and other critical gear, about four years ago when a herdsman near Salem, OR retired. Perhaps the most critical item we acquired was the legal pasteurizer. While there are kitchen pasteurizers which will process a gallon of milk for home use, in order to market dairy products as "pasteurized," you need a unit which meets dairy code standards. It also has to be large enough to do a substantial quantity of milk at one time.

There are a couple of problems here. The day of the small cow dairy is long past. Modern dairies just feed and milk the cows. The milk is then collected every other day and taken to the main plant where it's bulk processed. I can't think of a single cow dairy in this county that sells it's own milk.

Since there isn't a cow market for small capacity equipment (50 gallon sizes), goat dairies have to look far and wide to find old equipment when it becomes available. When it does, they have to be quick since it turns out that equipment in this size range is also prized by the micro-wineries so popular in this area. Since these "Califoreigners" have lots of money, it's easy for them to snap up this stuff when it comes on the market.

We were able to acquire a number of key components well below market prices because we're goatherds, not vintners, and the old farmer knew that we would use them to keep the tradition going. So, the equipment has been tucked away to await the day when we'll be ready to put it to use. Having these critical pieces of equipment means that we will be able to put together a grade-A goat dairy; the rest is just a matter of details and timing.

Still, this peace of mind has come at the price of tying up a thousand dollars in capital for more than four years. We feel that's money well invested because of what the equipment will allow us to accomplish down the road, but it's always a trade-off since that thousand dollars would have bought a lot of materials for other projects.

Well, I hope this has given you a better idea of how used equipment and resources, while helping in the long run, can retard the early stages of a project. The recovery and utilization of "previously owned" items certainly has an important place in the creation of a sustainable community, but it comes with its own set of conditions. Furthermore, a bargain is only a bargain if it's really what you want. It's important that you don't let the availability of certain resources channel you in the wrong directions.

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