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By Food System 6  Digging into... VALUES-BASED PURCHASING This newsletter marks the first in our Dig In series, where we will be taking a closer look at some of the many facets of food system change, topic-by-topic. This new format will provide you with expert opinions, resources, and guides to better understand some of the most crucial elements of an often opaque, and deeply complex industry. First up is an examination of the systems in place that support and restrict values-based purchasing practices across local communities. A central component of this conversation is the role that institutional and mid-sized foodservice operations play in addressing the monopoly that large-scale distributors have on purchasing relationships.
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By Robert Egger
Over the last 20 years, thousands of small farmers and urban growers have entered the marketplace via a vast network of farmer’s markets. Located in every corner of America, these markets have helped sustain these fledgling eco-businesses, while also reinvigorating the community’s connection to our country’s agrarian past. At the same time, an even greater number of nutrition-based, social enterprises, B-Corps and, “upcycle” companies have opened with the goal of purchasing locally grown foods to produce healthy snacks, meals, juices, and supplements. This “maker movement” represents a powerful, emerging economic force that prioritizes local purchasing, fair wages, environmentally sustainable practices, and reinvested profits. At virtually every food-system and social impact summit held across the country, attendees hear about the virtues of local food systems, yet this network’s growth and impact has been limited by their inability to find a reliable middle market… one that is in-between the small scale of most farmers markets and the large volume required by major retailers like Whole Foods. The perfect fit for many of these businesses would be in contracting, or sub-contracting, with local governments for contracts to provide healthy meals and snacks to schools, summer meal programs, senior centers, hospitals, and even prisons By Renske Lynde
As we discuss the benefits of blended capital for early stage entrepreneurs (ESEs), the inevitable questions arise around benefits for both foundation and venture investors. “Intelligent capital,”(1) as Katie McCann calls it in the FS6 and Guidelight Capital Webinar, is capital that recognizes the value of early-stage sustainability organizations, and it is becoming increasingly important for investors on both sides of the aisle to recognize the potential impact of participating in these sectors. What we often see is that, in their early stages, mission-driven for-profit organizations need the support of philanthropic capital - whether grants, PRIs, MRIs, etc. - in order to get off the ground and open themselves up to more traditional funding streams. In her eloquent article on Catalytic Capital, MacArthur Foundation Managing Director Debra Schwartz applauds philanthropic funding as “patient, flexible, risk-tolerant financing.”(2) Looking back at the ROI trifecta of reward, risk and impact from Part I of this article, it can be seen that mission-driven ESEs offer a unique balancing of social capital with risk, in a way that traditional for-profits do not. As such, these ESEs should be viewed in conjunction with the non-profit organizations that are generally sought out for philanthropic funding opportunities. Even at their earliest stages, the impact of these investments is built upon the social capital of inquiry - learning more about the strengths and weaknesses of the systems that we are trying to change; exploring new outlets and avenues for innovation; and, perhaps most importantly, when successful, building an economic future where the mission-driven goals of foundation partners is built into the fiber of the new food system. In further reflection on the MacArthur Foundation’s investments in these types of ESEs, Schwartz points out: By Renske Lynde
Building a company from idea into a successful and viable entity is among the most difficult challenges anyone can undertake. For entrepreneurs attempting to bring solutions into the marketplace that will have a positive and demonstrable impact on the health and sustainability of our food system, the challenges are even greater. The food system is highly complex, heavily regulated, and incredibly interdependent. In addition, the food system is made up of living elements and people who are subject to changing weather patterns, intricate logistics, evolving consumer preferences, and complex supply chains that are often intentionally designed for opacity. The range and scale of the challenges in our global food system requires us to chart innovative new paths towards solutions. One way we can leverage all the knowledge and capital required is to support the paths of early-stage entrepreneurs (ESEs) who are building scalable solutions. Speaking to the constraints around relying on the more established players for innovation, Christensen, Baumann, Ruggles and Sadtler of the Harvard Business Review point out:
In this webinar, FS6 sits down with a diverse group of stakeholders to discuss the role of blended capital in supporting impact-driven solutions to food system change.
By Micki Seibel and Sarah Williams
Why Entrepreneurs Can Have an Impact In our previous Medium posts about traceability, we assessed what the path to better traceability standards will need to overcome. First, we laid out how changes in consumer demand are driving large-scale change in the food supply all the way back to the farm and boat. Next, we demonstrated how complex the food web can be throughout its many layers and international web of players. Third, we assessed how consumer brands are investing to substantiate their claims and meet regulatory compliance. In our final installment for this series, we explore something that emerges in each one of these arenas: opportunities for entrepreneurs to create new businesses. By Micki Seibel and Sarah Williams
What Stands Between Brands and Traceability No one feels the demands and costs of meeting traceability goals in the food system in the same way that established brands do. Demonstrating that a non-GMO product contains no GMO ingredients, ensuring that allergen declarations are 100% accurate, or otherwise proving sourcing and sustainability claims requires vigilance, and the cost of failure can torpedo a brand’s value, especially if health and food safety concerns concerns arise. By Micki Seibel and Sarah Williams
The Food Web Behind the Products Consumers want more transparency within the global food system, and that demand has already had an impact on the companies that produce and package food products. In the first part of our report, “Consumer Views of Truth,” we looked at that demand, along with the confusion in the marketplace around language, true meaning, and implications of claims related to sourcing, production practices, and nutrient content. In order to provide real transparency to consumers, companies need to provide full traceability that is founded upon verifiable facts on the ground and standards that inform the vocabulary. By Micki Seibel and Sarah Williams
Food Traceability Throughout the world’s food system, traceability has become a lightning rod for conversations and business activity in recent years. Drivers include consumer demand, new regulatory requirements, and increasing supply-chain efficiency, all of which play key roles easing and growing business operations. Definitions for traceability goals and obstacles along the path to realizing those goals, however, vary by stakeholder. Over the course of our four-part look at traceability challenges for consumers, the global supply chain, brands, and entrepreneurs, we will explore how these obstacles vary. In order to get closer to a larger solution, unique needs for each of those crucial parts of the food system must be met. |
Food System 6
Food System 6 (FS6) is a nonprofit based in the San Francisco Bay Area whose mission is to support impact driven entrepreneurs as they transform how we grow, produce, and distribute food. The organization runs a comprehensive accelerator program that mentors entrepreneurs by coaching them through a wide range of business and organizational needs. FS6 also works to educate stakeholders on the unique capital needs as it relates to redefining the food system. Archives
November 2019
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