What innovations in the food ecosystem have been implemented so far in order to ensure more resilient supply chains and mitigate the impact of future shocks?
All of us can think back to the early weeks and months of the pandemic, and remember what it was like at our local grocery stores: barren aisles across the store from the produce section to the bakery. While COVID-19 has shed a light on the need for more resilient supply chains and innovation across the entire food ecosystem, we are facing a set of challenges ahead of us that extend well beyond any one future shock. Over the next forty years as the population grows to almost 10 billion people, we must produce more food than the entire course of human history. By 2050, if current trends continue, global caloric demand will increase by 70%. These are huge challenges. The good news is that innovation is happening across this sector. We will focus on three major innovation trends we see rising to meet these challenges. The first is an investment in data and transparency. We have seen companies like Farmers Business Network, which now has over 14,000 farmer members representing over 45 million acres, help put the power of data into the hands of farmers. FBN’s farmer members are able to compare pricing transparently, purchase low-cost inputs, access tools to improve profitability, and even get better healthcare coverage all due to the power of data. All of this builds tremendous resiliency as it puts the farmer back at the center of the food ecosystem, taking back much of the power that has been concentrated by only a small handful of oligopoly players who enjoyed much of the value capture in agriculture for the last 100 years. The second area is in the prevention of food waste. By extending the shelf life of food, suppliers can increase their geographic reach, and grocery retailers can reduce variability and uncertainty in their stock. This is also critical for modernizing the 21st century food system. Apeel Sciences, in Santa Barbara, California is a leader in this space. Last but not least, innovations in the way food gets distributed to food insecure communities represents a critical need made worse by COVID. Here, advances in logistics, food preparation and public-private partnerships are key. Revolution Foods, in Oakland, California, for example, has pivoted from selling nutritious lunches to low income schools to preparing emergency meals for food insecure communities, including kids, their families, and vulnerable seniors and now serves over 2 million meals a week.
How will global food systems of the future effectively balance resiliency with efficiency and sustainability?
As an impact investor, this question gets to the heart of what we think is so exciting about this sector and why the three areas of innovation described above; better data and transparency, eliminating food waste, and public-private partnerships are so important. In the first two cases, innovation in these fields not only balances resiliency with efficiency and sustainability – it makes all three better. Let’s take the issue of food waste: sadly, 40% of the food that we produce goes to waste. This is not just food waste, it is carbon waste. When food goes to waste, all of the carbon resources from the fertilizer, to the labor and energy to cultivate a crop, to the other inputs like water to transportation, all end up released into the environment at a high cost to society with little benefit. DBL invested in a company called Apeel Sciences that has developed a plant-based polymer that coats a fruit or vegetable, doubling or tripling its shelf life. Apeel is on track to save 20 million pieces of fruit from going to waste this year. This extension of shelf-life not only provides the supply chain benefits described above, it also provides a substantial carbon benefit. In August, Edeka, the largest German supermarket released results of their Apeel avocado program that showed both a 50% reduction in waste and a 20% increase in sales. Meanwhile, addressing resiliency, efficiency, and sustainability for the broader crop universe requires massive investments in data transparency, carbon scoring, and online value-oriented commerce, as we describe below.
What further initiatives and strategies are needed to scale the adoption of digital agricultural and supply chain solutions at pace?
As mentioned above, a unique sustainability opportunity is emerging for equipping farmers with better data to help make better decisions and purchases. Increasing transparency is a massive opportunity for scaling digital agriculture going forward because it reveals huge opportunities to save money and buy less. This data transparency is leading to a new era of sustainability unfolding in this segment of the sector, as well. Specifically, we are seeing the opportunity to validate and track the carbon intensity of different agricultural practices – and reward growers for low-carbon production. This summer Farmers Business Network announced Gradable™, which is a comprehensive environmental transparency platform that supports a market for premium, environmentally-scored grain & provides buying intelligence software that directly connects farmers with consumer packaged goods companies, animal feed providers, biofuel makers and the world’s other major grain buyers. Gradable™ will leverage Farmers Business Network’s 240 million acre-events of real world farm data, validate that data, and distill it into a single farm-level carbon score for farmers. The initial pilots are very promising, and have shown that they can reduce grain emissions by up to 50%, while increasing farm revenues at the same time. Reimagined supply chains that actually reward farmers and create value for environmental stewardship is how we scale this sector. finally, on the supply chain side, the use of advanced logistics algorithms, mapping and delivery tools, and sophisticated forecasting are allowing food suppliers to supply food at a lower cost. With more political will brought on by inequalities related to COVID and support from philanthropic organizations, more entrepreneurial companies are able to scale efforts to feed food insecure populations. Revolutions Foods for example, has gone from working with school districts to a wide range of partners including, World Central Kitchen, The Red Cross, city and state governments, places of worship, and homeless shelters. This teaches us that when it comes to food insecurity, political and civic factors play just as important a role as technological advances.
What are you most looking forward to discussing with fellow senior leaders at the second edition of the Global Boardroom?
How we are going to sustainably transform an industry that is over $5T in size, produces 30% of our greenhouse gas emissions, and employs almost 1/3 of the world’s workforce, and how can lessons from COVID allow us to address systemic inequities in our food distribution systems at scale.