the Aspiring Impact Investor
The more he learns, the more Intrepid begins to realize how incredibly complicated the food system is,
and becomes confounded by competing objectives:
Should his target be the farmer, the buyer or the eater? What does local mean? How can he communicate that the good he’s going to do in the world will come from economic development and jobs, public health and nutrition, equitable access, and labor, living wages and values-based supply chains, not to mention deliciousness?
His straw man budgets for his platform concept are getting crushed on the rocks of low margins, high capital costs, perishability, complexity, and the fact that a monumental system has been created to allow Americans to pay little of the true cost of their food, and we’ve gotten used to it. Food safety regulations are as complicated as tax code. “The food system” is actually dozens of discrete and well-developed industries, the operators of which own their infrastructure and are doing just fine, thank you very much.
Data Sources: FoodHub, ODA, USDA ERS, AMS, NASS and FNS, OSU, OFB, NWFBA, NWFPA, OF2SSGN, HCWH, and Oregon Tilth.
We visited farms and ranches, leaned against trucks, walked warehouses, donned “freezer suits”, awed at banana ripening rooms with space age doors, and toured commercial chicken coops in greenhouses, horse stables, hoop houses and mobile trailers.
We asked nosy questions about sales and costs, looked at ingredient lists on bags of feed, drew boxes and arrows on white boards, and referenced this mythical report that would tell us where to point the hose of “catalytic capital”.
Then we bounced data and ideas off industry experts who asked smart, pointed questions.
PLEASE NOTE: “Ag of the Middle” is a conceptual framework, not a set of hard and fast rules. See www.agofthemiddle.org for more.
|How big are they?||$||$$||$$$$$|
|Who are their customers?||Eaters|
|What's their region?||Local||Regional||Global|
|How diversified are they?||Very||Somewhat||Minimally|
|Where's the boss?||In the field||On-site||At HQ|
|Who owns the business?||Family||Corporation|
|Who sets the price?||Producer||Negotiation (farmer/buyer together)||Market|
|Does the producer have an off-farm job?||Yes||No||No|
At the smaller scale, that means farmers’ markets and community supported agriculture (CSA). In wholesale, it means “Values Based Supply Chains.”
Ag of the Middle players do not have the economies of scale to compete with commodity producers on price, and therefore must differentiate. If differentiation doesn’t seem possible, it’s unlikely to be a fruitful investment.
$2.6 billionin agricultural products were exported internationally from Oregon in 2014
Source: US Department of Commerce International Trade Administration
“Historically, when people in emerging countries start making more money, they spend it on more food, better food, high protein food—things the US excels in producing.”
Wants to solve problems for aspiring Ag of the Middle producers
Sees market opportunity in differentiated food, both at home and abroad
Worries that vulnerable people in his community will be left behind
Ecotrust’s research shows that food aggregation, processing and distribution infrastructure is not readily accessible by Oregon’s Ag of the Middle farmers, ranchers and artisans, and the lack of access is inhibiting growth and development of a robust regional food economy.
Caitlin Welby, newly minted 32 year-old CEO of a family-owned, $100M refrigerated trucking business describes the situation much more colorfully:
“I’m committed to farm-to-table, but the ‘to’ is the gray area, for everybody,” she says. “We’re getting really good at what the farm is, know thy farmer and all that. And we’re really clear about the ethics of the retailer. But the ‘to’ is widely ignored, and for good reason: it’s a fucking mess.”
Our beef research showed that the conversion from cow/calf operator to cut beef producer requires more slaughter and processing facilities.
Like all infrastructure, beef slaughter and processing require steady throughput of animals in order to be financially viable. Differentiated beef is a seasonal product – the fall processing crunch leaves facilities and equipment largely idle for much of the year.
Pork can be run in the same facilities and on the same equipment, and can be raised year-round. Our pork research indicates significant demand for local, and an assumption that we can’t develop a hog industry because we don’t grow corn and soy.
Fun fact — pigs are omnivores. They’ll eat almost anything!
They love spent grains from breweries, fruit and vegetable silage, whey from dairies, and table scraps from foodservice and retail (provided there are no pork bits).
Wheat farmers need to rotate crops in their fields to build fertility, disrupt disease cycles, manage pests and weeds, and increase yields. What do they grow in rotation?
Stuff pigs might eat.
Who will create a Northwest blend of pig feed that helps wheat farmers monetize their rotational grains? Who will organize logistics to gather food byproducts from processing and get them to a network of regional pig farmers?
While we’re creating Salmon Nation Feed let’s also change the chicken game.
Our chicken findings suggest up to 60% of the cost of pastured, antibiotic-free, non-GMO chicken is feed (even higher if it’s certified organic).
The beach, the forest, the ranch where the cows from his 100% grassfed charcuterie platter were raised. Intrepid walks, and finds he feels better every time he gets outside and away from the churn.
Furthermore, he discovers that the calmness is the perfect counterpoint to the adrenaline rush he feels at the hackathons; he needs them both.
His business and technology roots re-emerge as Intrepid realizesNature is the original agile developer.
She starts with a minimally viable product and then iterates like crazy.
With his revelation ringing in his ears and rocking his worldview, Intrepid resurfaces.
Over time, he finds he’s comfortable embracing complexity and leaning into the not-knowing.
For more information, contact Ecotrust at email@example.com.