Finding the intersection of sustainability and profitability is proving structurally difficult, even if the intent is there.
November 30, 2020, at 11 am EDT
Written by Jessica Budz
From day one, business has been conducted between those who have a natural resource and those without said resource. Those without the resource give what they are willing to pay in exchange for it (i.e, salt for linen, spices for pork). But it’s 2020, and not many of us are farmers with acreage (not to forget the time) to grow our own crops and raise our own livestock in order to feed our families. We gladly give money in exchange for food. We all need it and we all pay for it. Food is a huge industry and there are many players involved: the farmers, the supply chain managers, processing plants, distributors, and the final stop, markets, and restaurants.
Our food supply chain is currently run by major distributors who swallow up farms, process the products, and then ship the finished products both domestically and internationally (think Kellogg, Sysco, Gordon Foods, Tyson, etc). This traditional supply chain model involves a lot of people and they naturally take their cut. The food industry is certainly profitable -- and certainly not sustainable. Is there even a way to accomplish both profitability and sustainability?
Based on current trends, the food system would have to undergo a massive revolution to have a sustainable relationship with the land, the consumers, and the regional farmers. The food system used to be much more local in terms of logistics. The farmers mainly reaped the benefits, not the corporations. Farming was also a family business, meaning the children of farmers were folded into the operation as they grew up. This ensured the longevity of the farm and the humble but decent lifestyle of the farm family. However, this is also no longer the case. The University of Michigan released these disheartening stats on the current U.S. Food System:
Farmers account for 1 percent of the population. Of this small percentage, nearly 28 percent are between the ages of 55 to 64.
Large-scale family farms and industrial nonfamily farms account for nearly 5 percent of farms, but 58 percent of production. Small-scale family farms represent nearly 90 percent of U.S. farms, but only 21 percent of production.
Only 15 cents of every dollar spent on food in 2018 went back to the farm; in 1975, it was 40 cents.
The top four food retailers sold almost 45 percent of America’s food in 2016, compared to only 17 percent in 1993.
Reliance on fossil fuel inputs makes the food system increasingly vulnerable to oil price fluctuations. Consolidation of farms, food processing operations, and distribution warehouses often increases the distance between food sources and consumers.16 Transportation accounts for approximately 14 percent of the total energy used in the U.S. food system.
I discern a few umbrella issues from these stats:
1. The amount of usable farmland is shrinking.
What farmland we do have is dominated by major food corporations. The majority of our farmers are approaching retirement age which implies there is little incentive for young people to enter the agriculture industry. Children of farmers are no longer sticking around to support the family business. There are better opportunities out there. Additionally, the schools that offer fruitful agricultural programs are few and far between, and they are usually four-year degrees with steep tuition bills. We need affordable (or free) vocational training and apprenticeships for the young Americans to have good reason to enter the agriculture space.
2. Food corporations are taking huge proportions of the industry revenue.
Established small-scale farms are making less than half than they used to. It is likely that more small farms shut down as the younger generations take charge. As more small scale farms close, there will be less land treated sustainably. Private small-scale farms are more likely to be conscientious of the soil quality to ensure prosperous crops in the long-run. Large food corporations can find another farm somewhere else to meet their needs if one farm fizzles out.
3. A centralized food system creates a relationship between fossil fuels and food, which does not have to exist.
Corporations have to ship their products across the country (and/or the world). This is unnecessary pollution, unsustainable, and almost foolish. Professor Elliot Campbell at the University of California claims, “Most areas of the country could feed between 80 percent and
100 percent of their populations with food grown or raised within 50 miles.” There is so much unharnessed economic power in regionalized food systems, as demonstrated in Campbell's heat map of feeding people through local food channels.
4. Local food is actually healthier for us, physically and emotionally.
Regions with a high concentration of Community Support Agriculture and community gardens eat more fruits and vegetables than those without. Programs like this encourage engagement and amongst the community members leading to higher social well-being. Additionally, the shorter the amount of time from harvest to plate, the more nutrients are retained.
It seems there is much research supporting regional agriculture, and this industry could find the intersection of profitability and sustainability — so why isn’t that happening?
The food industry mimics the Amazon model of buying up the little guys and centralizing the process. Whole Foods is (even after Amazon acquired the company) a decent example of regional food distrust. Whole Foods has regional offices that source products for stores within that region. They contract with existing farms who get to keep their labeling and thus brand identity (unless they become just a supplier for the Whole Foods brand, 365 Everyday Value) which is a wonderful way to support local agriculture as a distributor. So this is a great start, but Whole Foods is expensive and there are only 467 stores across the continental U.S. For reference, compare that 467 with Walmart stores, an economic alternative to Whole Foods. Walmart stocks groceries and much more for a one-stop-shopping experience (a valuable feature to someone that has a higher time opportunity cost).
We need an industrial agricultural revolution. Infrastructure (given it is efficient) is a near-certain economic boost to the industry. There is not a lack of interest or commitment to local food. “It is the lack of scale-appropriate infrastructure. The costs associated with distributing food from many small-scale producers to consumers have been a major barrier to long-term regional food system success," as stated by researchers Anuj Mittal, Caroline C. Krejci, and Teri J. Craven.
Investment in scale-appropriate infrastructure is the intersection of sustainability and profitability for the agriculture space. The rub is, which will happen first: The fall of corporate distributors or the rise of brave agriculture investors?
About the co-author: Jessica Cox recently graduated from Wellesley College, where she earned a B.A. in economics and international relations. She is a Daniels Fellow and is currently working for a Wellesley alum ('96) as a Food Safety Consultant, where she currently researches soil degradation, food supply chains, and the impact of regional agriculture on climate change. Jessica and her husband Hayden live in Portland, Maine. She is training to become a spin instructor and hopes to adopt a pet tortoise in the near future!