I am giving a speech on March 24 to the ADAPT Council Annual General meeting on where I think that we have to go now to renew our food systems. Here is the essence of what I will be talking about
Here are some thoughts
When I came to Prince Edward Island in 1995, I thought that we could "rescue" our established agricultural system. As you know I worked as hard as I could to create a new future for PEI as a seed grower of genetically modified seed that could be adapted to meet the needs of subsistence food systems such as Ukraine. Our hope was that we could move back to our seed heritage but in a new way. I was wrong. Since that effort, I have come to see the world and our local situation differently. So I write this letter not only as my best effort to help us all on PEI, solve our real crisis but also as my mea culpa.
I now see that the heart of our economic and environmental food system crisis is not actually any farm practice in itself but the power of the agricultural supply and distribution system on the farmer and the consumer. Behind this I see also a fundamental misunderstanding of what is the market opportunity.
In this letter I will explain what I mean by these two statements and then I will go onto to offer a new model for economic and social success that we can build on and close with some specifics. My intent is to offer some hard won insight as to what we can and have to do now to pull ourselves out of crisis that threatens our future as a society.
Progress to finding a better way forward is being held up by arguments about how we farm and our need to answer the desperate appeals of those caught in the current system for relief.
How we farm is of course how we affect our biosphere but there is a higher order of pressure on how we farm and fish and that is our current economic model.
In every food group, the producer sells not to thousands or to millions of consumers but to an ever shrinking handful of distributors. The issue is power and concern. With thousands of producers and millions of consumers, the distributor sits in the middle and squeezes all. As the concentration narrows, Canada is the most concentrated in the world, the power imbalance presses inexorably back on the income statement of the producer who has to take the difference from his natural capital the soil, the water - the biosphere.
So it matters not a bean, if you become an organic farmer and sell into this system you must be squeezed and you must fail. This is my central insight - that the driver of our unsustainable system is the power imbalance. There is no accommodating or appeasing the distributor. Why?
They are good people at heart who mean no harm. Their flaw is that they work for a system that is organized to be in conflict with both its suppliers and customers. The issue is “who do they serve”? What is their concern? If you were the CEO of National Grocers, you have only one allegiance - to the bottom line of the firm. By law you are allowed no other.
Your business model is simple. You constantly push back at the supplier making them in effect indentured servants and you restrict choice to your customers. You seek more growth because that affirms your power in the centre.
It is not only the food distributor, but also the fast food industry that applies this model. In Canada more than 40% of our food is not purchased from a retail store but from a fast food outlet. Here the pressure on the producer is maybe even more extreme as the key to the business is price. Part of the obesity epidemic is related to this system as well.
The result is that the real cost of good food is exported to us as a society. Our biosphere makes up the economic deficit and our health as a society makes up the nutritional deficit. We pay the full price for food no matter what.
The central idea to making progress is to recognize that our interests as producers and as an agricultural society are irreconcilable with the agribusiness system that we currently serve. It is not I say again because the leaders of the corporate world are evil. It is our economic model that is wrong.
In a moment I will describe how this model is being overturned in many areas of life so that can gain hope that we are not alone and that there is indeed hope itself. But I need to make one more statement about our current model. Canada's success in the 19th and early 20th century owed a great deal to a food model that no longer works but which is still doctrine in all circles. That is to use our large land-mass to grow more of a series of important specialty crops and sell these to other markets outside our borders. The world has changed. Those that we traditionally sell to now have their own producers and seek to protect them by any means at their disposal.
We can rail at the Americans but they will not give us an easy time selling potatoes, beef, lumber or any commodity into their market. They and the Europeans will use any excuse, one sick cow, one corner of a small filed with wart to close us down. The grow lots here and sell it over there idea is dead. Those who have infrastructure dependent on this model are doomed.
So if what has worked for us in the past will not work what do we do?
First we have to face the hardest choice of all. If we choose to invest all we have in "saving" those that caught in the trap then we will fail in two key areas. First of all they cannot be saved. Open markets for commodities will not return and major supermarkets will not give up their power. Secondly, if we invest all we have in the hopeless task of saving the un-savable, we will not have the resources to create the new and sustainable model that we need top take us to the future. So if we choose to spend all we have to save them we condemn not only them but we also condemn all of us to having no future.
So what does a compassionate society do? We might take a lesson from the "Plan" and create a series of transition tools and funds to take them as best as they can from one place to another. The decent thing to do is to build a bridge from the industrial to the non -industrial world. Those who chose to take it will and those that cannot have made their own choice.
But if the old system no longer works, is there a model that we can trust. Is there a model that we can learn from that we can use to take us forward? That can give us hope at a time when hope seems lost. Yes there is such a model. We can find in in a new business model that exists today and we can find it if we choose to look in our past. Please let me start with a short reminder of our past.
At the turn of the century, Islanders had won freedom from the non-resident landowners and had settled into a yeoman society of 14,000 independent mixed small farms. In a way they had dealt already with one of our current problems, the domination of our economy by a few owners who had no stake or interest in us. But like us today, they had not found a way to make a living from their independence. Many Islanders had no choice but to leave as the farm could not generate enough cash to sustain say 8 children as adults. The beginning of the breakthrough was the establishment of the egg and cheese coops. This leveraged the individual efforts of the periphery activity of the farm and it exposed Island farmers to a cash market with direct producer owned distribution. All over the Island, the "Egg Man's" covered wagon linked farms that had always seen themselves as separate and connected farmers to a new set of customers. Prices were raised by 23% in the first year and production was increased from a start of 4,000 members to 6,000.
What are the lessons? Alone we have no power. It is not enough to grow a product; we have to own the processing and the distribution. We have to disinter-mediate the current processing and distribution system and sell direct. We have to build a local food network that will serve not them but us.
What can the present tell that will reinforce this message?
We are living in the midst of a business revolution where a new model is emerging that not only gives the industrial model a hard time but also has the power to destroy it. It has many exemplars and here are a few of them. But please be patient with me. I am showing you a model underneath each example not claiming that we exactly copy them.
The purest form of the new model is eBay. eBay sells nothing but trust and it creates the primary condition of the new model - it creates trusted communities. Having no product to sell, it serves its communities and customers. It is in alignment with their need to have an ever-larger opportunity to trade with other people who share their interests. eBay is on track to become the world's largest retailer after Wal*Mart.
Dell has revolutionized the selling off PC's by making a direct relationship between the supplier and the producer. It has now only 2 competitors left. Dell is not interested in predicting what you and I want to buy. It instead, has built such a responsive interface that it reacts immediately to what we want. its interests are aligned to our won. Here is a strange example as we would do well not to sell to them but we would do well to understand them - Wal*Mart. Sam's story itself is the key to our future. He like all the new winners was rooted in a small town world and mindset. He created the world's most dominant retailer by spending 20 years in a small rural setting perfecting his big idea - how to have a business that would do well in communities of 5,000 - 15,000 and offer people choice and good value. Herb Kelleher did the same with Southwest. He too spent 20 years in Texas perfecting the model of how to make the most challenging airline model work. How do you make local/local short haul flight cheap, safe and fun. Howard Shultz spent 10 years in Seattle perfecting the model of how you take a commodity like coffee and make it an experience that we all want as he built Starbucks. Even the software industry is being challenged by a new model where thousands of volunteers are building standards based open systems that are significantly more robust and less expensive that proprietary software. I could go on for hours. My point is that the new model is here and it works. it only waits for a society to take it up and apply it.
So what are its features? What is its DNA?
1. All create a new set of organizational relationships. They are what are called "open systems'" above all they listen to everyone. They are the opposite of the traditional corporate culture of control that only listens to a few at the top. In this manner they are very democratic. Our new food system has to have at its heart an open culture where the full intelligence of all its participants can be heard. All have cultures of respect. all have the goal not confined as making the shareholder happy - whoever he may be - but in making the entire community happy
2. All create above all a customer experience and a customer community as their objective. Behind this external set of relationships is a community of employees that is different from many other organizations. eBay is driven largely by the user communities who dictate a lot of policy to the enterprise. While all sell value and compete on price, they tend to find a lower price by pursuing a more open system rather than by gouging the producer. They trade information for inventory. Dell has in effect no inventory because it has such a finely tuned customer response interface. Its suppliers follow it all over the world and make money. Southwest makes it margin not by exploiting its union employees but by deliberately engaging them in the operation of the key processes such as the turn around at the gate which is the key cost driver in short haul. All these firms offer the employees and the customer an experience and a community. It is no accident that at Southwest, we sing along with the crew, that at Amazon we enjoy the reviews of our peers, that at Starbucks we revel in our small luxury of fine coffee as we take our break from our hectic lives. Open Source software rewards participants by their status within the development community.
3. These models all started in the boonies and have small town values of what is right and how to treat people. They all have started at the beginning to do the hardest things of all and have not taken on the big boys until they were ready. Kmart laughed at Sam as they owned the big cities until he came to town. United and American laughed at Herb doing short haul in Texas as they dealt with the real market of the business traveler. Bill Gates laughed at Linus as he developed the Linux kernel. No one is laughing at them now. Tears are in order for most of their competitors. It is important for us to understand this aspect of a long rural gestation where serving the local market is the key founding process. None of the firms bounded out of the local until they were ready.
So what does this mean for us?
Our task is to create a local to local market where we can offer each other convenience, value, choice, fun and community in collectively producing and processing our own food.
We can learn from many related models and we will have at the heart of our system a combination of the internet and good old face to face. Food will be too expensive, you warn. Why should it be when we take out all the transportation and much of the inventory issues. There will not be enough choice, you say. Let's be serious here 90% of what I put in my trolley is grown here. I am prepared to trade for pineapple. I am sure that Kmart executives told each other that it was impossible to serve the small community. I am sure that the CEO of United was told that he should not worry about a short haul regional airline - after all no one can make money doing that! The issue is will and design. If we set out to design a local food system that will offer choice, value and fun and that will give producers a return then that is our design challenge. Just because it has not been done yet, does not make it impossible.
So where and when do we start?
Now and here. All great movements start with a few who have not given up hope and who are prepared to act. We start with the ready and the willing. We connect those will be connected and we show by our actions what we mean. Over time others will see the concrete reality of what we do and will join. We do not have to preach. We do not have to persuade. We do not even need to raise a lot of money.