What would I do for the Food Industry if I had €10 million?

It's spring-time in Roscommon (Ireland) and if you stand in any field of our farm, you will likely hear vibrant bird song, feel a cool breeze on your face that shakesaway the winter cold while accepting the milder airs of spring and you'll get a scent of nature's growth that only a farmer can detect. Standing in this field, the view is beautiful. Maybe no better to be seen anywhere in Ireland and even the world for some people. To us, our farm is a magical place. Stand beside any farmer on their own land and they'll say the same. And rightly so.

But for me, in recent years the view has become somewhat tainted. Perhaps even rotten. The point I want to make here is that I believe that the food industry is in serious trouble, and perhaps at a crisis point. Our current food industry is not serving its citizens with nutritious and sustainable food anymore. But, it did once upon an time.

We'll have to start back at the turn of the 20th century to understand why. Let us first congratulate the cause of our modern problem as it was also responsible for so much positive development in our food industry generations ago. It is of course "organised capital". Through organised capital we gave ourselves an infrastructure of great food at affordable prices, from far reaches and at reasonable convenience. We did have to suffer some minor inconveniences such as choice, seasonality and visually displeasing shapes of vegetables. On the whole, however, this was a well balanced system. We had a system where you could be nourished from local sources, and we could supplement our nutritional needs from further afield. Where possible, we traded what we had here with what they had there. We added the odd luxury item, as enjoying a treat or two brought more balance and enjoyment to life. Coming from the early part of the 20th Century and admittedly not perfect, this food system was developed and adapted nicely to meet the needs of a dynamic and rapidly growing population. Organised capital created this industry thanks to the ability to push boundaries, cross oceans and fly through the clouds. It was a revolution, and a successful one at that. However, another revolution came our way - from the 1950s onwards things start to change: organised capital finds new ways of doing things. Faster ways, cheaper ways and ways that created more margin that resulted in richer company executives and fatter, poorer people who bought their products.

Now I'll take you to the present day. It is 2018. Where are we headed? I have learned (by being involved in a farming and food business and studying the system we live in today) that our current food system has one main driver: "Shareholders return". 

Think about that for a second. Unless you grow your own, the food you eat is primarily designed for profit. Not to nourish or sustain you. Not to look after the planet. No. Its designed to make rich people much more rich. If we applied some logic here and you might be thinking that farmers would therefore be rich too. I'm afraid not. Here comes problem number two. Farmers have become enslaved in this new modern-day food system. Their business models are dictated by large corporates, who in turn answer to shareholders. The farmers' dilemma now is that we still need to make money. Take a traditional beef farm in Ireland, for example. The only way to make money is to specialise. Become highly efficient at one thing and use whatever technologies and techniques that helps us get there. And then hope we get paid enough. This effectively creates massive monocultures. How do you reconcile that with the age old advice of "eat a balanced diet"? 

In this "modern" food system, what are the outcomes? Open your eyes and look around. The rich are getting richer, farmers are getting poorer, consumers are suffering disease at epidemic proportions and the pharmaceutical and medical industries are booming!

The solution

So if I told you this story and you had €10 million to give me. What would I do?

Here goes:

Firstly what would the ideal food system look like? The main drivers would be health and nutrition, sustainability, fair value to all stake-holders, security and profits (if it isn't viable it won't last, we can still make money, maybe just not as much). The outcomes would be to have healthy nutritious food available to all at good prices, a generally healthier population, fair value to producers (and sad food and pharmaceutical executives).

So how do we make this happen? To start, let's pick a city. Galway in Ireland is the choice as it is the one I know best.

To begin we need route to market;

Access to consumers who purchase their food at convenient locations is essential to our success. In the Western World we have a superb supermarket infrastructure. So let's use that to begin with (we'll create our own later). To bring food into that infrastructure we need a distribution system. Now these do exist, but they completely control the market. They claim to work with food producers but the reality is that they dictate terms and keep producers blind to what's going on at the market end. This means that food producers don't know what customers end up paying, nor what their feedback on products might be. There is no feedback loop at all between the consumer and the producer. So we need to create a producer-centric food distribution company that can give any food company big or small route to supermarkets. We will build a hub on the edge of the city. Producers can come into the hub daily and we will distribute to retailers and food service outlets. We will need multiple hubs throughout the country so we can trade and move food throughout. Key to success here will be access to market data, accurate stock control and fast payments for producers. To solve these issues we will develop a software platform to manage this data with a fintech payments system that can automate money flow back to food companies. This will ensure that food producers can maintain positive cashflow to allow them to continue producing high-quality, nutritious food. The software will also allow us to engage and manage external operators in an Uber-style approach to distribution. We can post jobs for doing and individual operators can select these when it suits them. Let's add a layer here though. There are challenging times ahead for fossil fuels so let's make this company be the first zero emissions food distributor in the land.

This one short paragraph will likely use up to €4,000,000 of our budget and will need 3 years to really get going. Property purchases included.

Provide manufacturing and processing capabilities for farmers

So we have route to market that is ideal for farmers/producers to sell products though as opposed to their other option of corporate processors. But products can't be walked off the land or pick and dropped into a van. A certain amount of processing and manufacturing is critical. We need to build out scaleable meat, dairy and added value processing capabilities on the door-step of our cities. We need to create the ability to turn raw product into the what customers want. This must be a scaled and efficient model as the prices need to make sense for consumers and food producers too. We will sell these products into retail and food service outlets that already have the consumer base. We keep the products true to a nutrition and sustainability ethos by only using real, raw whole foods, banning plastics where possible and other unsustainable or unhealthy techniques, of which there are too many to list here. This model will also ensure fair value back to those who produce the ingredients used. How do we ensure the fair value? Two ways: We give them a fair price and we offer shares in the companies that farmers and only farmers can purchase. The farmers can then receive dividends from business profits made from their produce. We must run this manufacturing business as a sustainable businesses model and suppliers will also need to meet sustainability standards. This will ultimately reward famers for implementing sustainable practises and create a healthier, more sustainable food industry for all. We will then be able to offer consumers sustainably produced products. 

I'll estimate this unit at a €3,00,000 investment. Property purchase included. Again 3 years development will be required to make a significant impact.

Our own Retail and Food service outlets

Part of the problem in the food industry today is the supermarket infrastructure and the margins they control. Discounters have shown that this can be disrupted to some degree but this only creates a short-term benefit to consumers with their perennial ambition of cheaper food. If cheaper food is coming at the expense of the farmers, producers and the environment, or the quality of the product itself then there is a long-term price to pay. But, what if we could develop both retail and food service models that were empathetic to producers, the environment and still gave customers what they truly desire? I believe that this is achievable. It is not rocket science by any means. It's simply a matter of ownership structures and ethical trading practises under-pinning retail and food service formulas. We can create new models of retail by creating a new style of supermarket where convenience and appropriate pricing is coupled with nutrition and sustainability values. Same for a food-service. We can create restaurants in partnership with industry experts that have principles and values that support and develop the food industry for the better. Our first flag ship store would be on the outskirts of the city, perhaps in conjunction with our distribution and manufacturing hub. We can then create smaller satellite stores in the city that feed off the mothership.

We'll need €1,500,000 to get this up and running.

Produce Produce Produce

We now have a distribution system, manufacturing and processing capability and our own retail and food service outlets. All of these are sympathetic to the farmers in the region and their plight to gain control of their business models. We have now created a market. We have a demand for produce, so let's invite our local food system to satisfy this need further. First to tackle will be the produce we import that can be easily grown on our doorstep. Lettuce, kale, spinach, celery, onions and (the list is actually endless). If a farmer can grow these as means of bumping up income and diversifying their product range, we should encourage this. It brings us back to a system of localised food. It will take time to ensure accuracy in stock control, but we need to start somewhere. We will not reject funny looking vegetables, we'll sell them cheaper. We can also encourage producers to develop products that will succeed through the market access we have developed. Maybe even fund some of these micro businesses.

This piece should be financed as individual business units and therefore no cash implications for our overall system.

Monitor and measure sustainability

A famous saying in business is: "what is measured is managed". We speak a lot about sustainability throughout this article. But we need to be clear about what sustainability actually means and how we can measure it. Sustainability has three components: Economic - Environmental - Social. Each aspect will have a series of data sets throughout the supply chain we have designed. We must take an approach of capturing this data from farm level through to the retail shelf. Next we process this data in a meaningful way, most likely using machine learning we will be able to determine an actual sustainability score for food items. All stakeholders will have access to their data and its meaning and can adapt their processes to improve their sustainability practises. To achieve this we will invest in a software start-up that is already doing this. 

We'll need the remaining €1,500,000 for this adventure.

The nice thing about all these businesses, is that combined, they will become the model a new food system. They work in conjunction and independently of each other. So the sky is the limit for them all.

Last components we need

A company structure - my approach to this would be to have a holding company that manages investments into the various companies tackling different aspects of the supply chain. Centralising the financial control would be beneficial but then each company would have its own managing director and teams to execute.

A deadly team - this project will require the best and brightest we can find. We need the people that can execute on ambitious and scaleable business plans. People that don't shy away from a challenge but embrace it.

Resilience - We are going to need shed loads of resilience. One thing I have learned in my 10 years of business to date is that things never go as planned and you get hit with many obstacles along the way. This project would be no different, so we'll need a large shipment of resilience to get us there. At least 5 pallets!

Adaptability - It won't go as planned. No matter how long we spend planning and how much research we do. I can safely say that from early doors we'll need to adapt. Adapting is ok as long as our core values always remain.

Belief - It's a must.

So there you have it. My take on how we start changing in the food industry. Ireland can be a model for a future of sustainable food. Real sustainability that is. And all for only €10 million. Truly a small price for a product that we use three times a day!