Centralization takes center stage at the Commonwealth Club

As part of the “How We Eat” series at the Commonwealth Club this month, Slow Food Nation Policy and Communications director Naomi Starkman moderated a thoughtful panel discussion last week about the centralization of the food industry with Michael Dimock, president of Roots of Change; Paul Frankel, managing director of Ecosa Capital; and Don Shaffer, president and CEO, RSF Social Finance.

In the initial discussion about centralization, Frankel raised the important point that centralization is just a tool — it can be used for good or bad purposes. And it can have good or bad effects. The positive impacts for consumers include low prices (it’s important to note that our food system has many costs that do not appear on the price tag); the reverse include nationwide food-safety crises — the 2006 spinach-related E. coli outbreak, in which contaminated spinach from a single field caused suffering and death in 26 states (I mapped it last year).

The panelists agreed that the current focus on maximizing return on investment and seeking high profits is a major problem. When dollars are the primary goal, other things get ignored, such as health, local culture, and flavor. To help correct the elevation of profit above all else, Shaffer called for new thinking about investments; he explained how his company is trying to create alternatives to the equities market, such as setting up investment funds for individual investors that will make loans to worthy enterprises. Institutional investors, venture capitalists, non-profit foundations and so-called “angel” investors have always been involved in financing small businesses, but it is somewhat new to have an investment vehicle where ‘regular people’ can help cause change in the food system while also (ideally) receiving a return on their investment in exchange for sharing some of the risk (I haven’t seen any statistics, but would guess that the food and farming sector is a fairly risky place to invest).

There are many paths to building a food business that’s compatible with the Slow Food philosophy. California’s Cowgirl Creamery started out as strictly a cheesemaking operation but later added retail outlets on both coasts that sell many other producers’ cheese alongside their own. Others have grown by adding new producers to their cooperative business. Country Natural Beef, for example, started in 1986 with 14 ranches in Oregon and over the years has grown into a cooperative with almost 100 ranches across the country. Others, like New Seasons Market in the Portland, Oregon, area, have made a conscious decision to stay small and focus on meeting the needs of the local community.

The panelists also talked about a store that would seem to have little in common with New Seasons: Wal-Mart. Asked about the country’s largest retailer’s move into the organic food business and new $400 million local food initiative, the panel was upbeat. Dimock pointed out that the sharp rise in energy prices has required big companies like Wal-Mart and Sysco to try to source regionally, something “that’s going to be a beautiful outcome.” Frankel also had a positive opinion of Wal-Mart’s policy, saying that there could be other benefits like educating new groups of customers about the value of local food and reducing the price of local food. Over time, it could create a “virtuous cycle.”

I certainly hope so — but there are reasons to be cautious, as I wrote on this site after Wal-Mart’s July announcement. Will Wal-Mart demand absurdly low prices from their suppliers? Will it use its lobbying muscle to weaken organic standards? Or will it try to protect farmland from development? Like centralization, the entry of a huge company into the local food realm could have both good and bad consequences.

Near the end of the program, the topic of transition was raised by Paul Frankel. If Congress ever dramatically changes the farm subsidy programs, he said, farmers will need financial help to convert from subsidized crops like corn and soybeans to other crops. The discussion reminded me of two recent articles about two organizations that are helping food companies move to more sustainable practices. Chicago Business News reported on the Frontera Farmer Foundation, a non-profit foundation started in 2003 by Chicago restaurateur Rick Bayless (Frontera Grill, Topolobampo) to help small farms in the Midwest improve the sustainability of their operations or better meet the needs of their customers (which include Bayless’s restaurants). The foundation’s capital-improvement grant program has given $450,000 over the last five years.  And an article in the San Francisco Chronicle described the Sea Change Investment Fund, a new venture capital operation that aims to create a sustainable seafood infrastructure by providing capital to processors and distributors. Unlike the Frontera Foundation, Sea Change is looking for a return on its investments.

Converting our food system from its highly centralized and overly profit-driven condition will require efforts of many types and from many directions: political activism can help reorient policies and regulations in a more sustainable direction; personal and institutional investors can help create financial networks and instruments to help practitioners of Slow Food principles maintain or grow their businesses; and through our everyday food purchases, we can support those who share our values.

A few more “How We Eat” programs are scheduled at the Commonwealth Club before Slow Food Nation begins. The full schedule and ticket information is available at the Commonwealth Club website. If you are interested in hearing this or other Commonwealth Club programs, the site’s audio archive has most programs available for streaming.

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