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Food

Food Doesn’t Grow in Silicon Valleys

A focus on innovation can be an impediment to genuine progress in the food system.

We are living through multiple and simultaneous environmental crises of an unprecedented gravity—climate change, resource depletion, overpopulation, water stress, oceanic acidification, deforestation, and biodiversity loss. These crises coalesce in food production: Climate change is impacting agricultural yields, and the intensive practices of industrial farming are contributing to climate change; unsustainable farming techniques are destroying soil health and depleting fossil aquifers; synthetic pesticides are eradicating entire animal populations; genetically modified (GM) monocultures are driving deforestation; and agricultural run-off is polluting our rivers and oceans. Our system for feeding a growing population is making it impossible to feed that population.

Given the seriousness of the problem, it ought to be encouraging that some of the biggest names in Silicon Valley venture capital are trying to solve the problem by backing food start-ups such as Hampton Creek Foods, which manufactures plant-based egg substitutes, and Beyond Meat, which produces meat-free chicken. People like Bill Gates, Vinod Khosla, and Peter Thiel have radically changed the way we interact and do business, but will the new firms they are backing have a similar impact on the way we produce and consume food? I would be the first to cheer if they did fix our food system, but I am not sure that a venture capital model based on the pursuit of innovation, rapid growth, and game-changing technological fixes is adequate to solve environmental problems, which have themselves been brought about by a succession of technological changes, a model of growth that does not respect planetary limits, and a belief that innovation is an end in itself.

Because despite what the libertarian wing of Silicon Valley would have us believe, not all innovation is good. Some technological advances are obviously bad for society (poison gas or cluster bombs), and some ideas that seem good turn out to have unforeseen consequences. Ethanol derived from corn is a case in point. A technology heralded as moving society away from fossil fuel dependence turned out to do more harm than good; it diverts crops from feeding people, has a huge fossil fuel footprint via the synthetic inputs necessary for growing corn on an industrial scale, and contributes to a decrease in soil health and biodiversity. This technology should have stayed in the lab and been quietly shelved, but once the whole rigmarole of financing rounds gets underway, it is hard to put the genie back in the bottle—more and more people have a vested interest in keeping a company afloat regardless of its benefit to society. Starting a new company or choosing to finance one comes with a great deal of responsibility; the mere fact that a company is innovative does not justify its existence.

To be fair to Hampton Creek and Beyond Meat, their founders have a vision that goes beyond mere novelty; they would like to see an end to intensive livestock farming, which is inefficient, cruel to animals, and damages the environment. Their ambition is to knock factory-farmed eggs and chickens off their perches by offering cheap alternatives that mimic their taste and other qualities. This all sounds laudable and makes sense—it ought to be cheaper to turn plant protein directly into processed food rather than using it to feed animals. But the real question is whether it is socially and environmentally desirable to produce such food at all. Is cheap, processed food—whether it’s plant- or animal-derived—part of the solution or the problem?

Bill Gates has no doubts that more processed food is the best way forward; in singing the praises of Hampton Creek, Beyond Meat, and Nu-Tek Food Science (salt-free salt), he declares: “Our approach to food hasn’t changed much over the last 100 years. It’s ripe for reinvention.” In Gates’ worldview, the fact that something “hasn’t changed much” means that it ought to change. This is flawed reasoning—you should change something because it doesn’t work or is inequitable, not simply because it hasn’t changed. The fact that women were denied the vote and that slavery was commonplace were shortcomings of Athenian democracy; the fact that it lasted 200 years is not. But far more startling than this blind faith in change as an end in itself is the idea that innovation has been in short supply over the last century. This is incorrect not only because plenty of other processed vegetable products— margarine, soy lecithin, Quorn, tofurkey— have launched in that time, but above all because the food system as a whole has been in a state of near-constant change. When we start examining the nature of that change, these new companies look a lot less new, and their positive impact on society and the environment seems a lot less certain.

Almost exactly one hundred years ago, the Haber-Bosch process was scaled up to produce ammonia for German munitions; after the war, this source of cheap ammonia was used in the manufacture of nitrogenous fertilizer, which has radically transformed the face of agriculture. The Second World War, which again took farmers away from the land, brought the adoption of synthetic pesticides as a stop-gap solution to a labor shortage; as with fertilizer, what was originally intended as a short-term fix has since become the norm in the Western world. The post-war period was the age of convenience foods, supermarkets, and factory farming. The 60s and 70s gave us dwarf wheat and the Green Revolution, the 80s high fructose corn syrup, the 90s GM food. The last hundred years have probably seen more innovation in the food system than any period in human history, and the common thrust of that innovation has been to drive down food prices, impoverish farmers, and degrade the environment.

Perhaps the new processed-food start-ups will buck this trend, and if they do, I will gladly eat my words. But it is hard to see how yet another branded product and yet another race to the bottom over pricing will do anything more than reinforce a status quo, where farmers are treated as unskilled laborers and soil is treated as dirt. Genuine innovation in the world of food would lead to more money flowing to farmers and less money to food processors, but as long as farming is treated as a high-volume, low-margin business, it will not attract new talent. And as long as weak legislation means that negative environmental externalities are not included in the price of food, then the food system will keep on destroying the natural capital on which it depends.

True progress (as opposed to eye-catching technological innovations) would mean spending more time teaching farmers holistic techniques that work with nature and less time selling them chemical inputs, and it would see farmers moving up the value chain and producing finished or partially processed food themselves rather than selling cheap raw materials to processors. If anything, these new companies seem to move things in the opposite direction; farmers no longer produce eggs or chickens, but a constituent part (yellow peas, chickpeas, carrots, soy) from which a “beyond egg” or “beyond chicken” is made. And unlike other forms of processed vegetable protein, such as tofu or hummus, farmers cannot manufacture these products themselves, so the value will aggregate to the firms that own the IP.

The way to address the appalling conditions in which we keep animals is not just to eat less meat (although that would certainly help), but also to correctly price the externalities of factory farming and accept to pay more for the animal protein that we do consume. The way to reduce the carbon intensity of agriculture is to stop using petro-chemical inputs and shift to agro-ecological techniques that have the added benefit of increasing soil organic matter, and hence improving resilience and the carbon capture potential of soil. The widespread promotion of such low-input, high-labor methods of farming would be a boon to some of the world’s poorest people by creating rural employment and combating the urban migration that feeds slum populations across the developing world.

Viewed in this context, simply replacing intensively farmed chickens with intensively farmed chickpeas looks less like genuine innovation and more like the emperor’s new glutamate. If these new companies succeed in wresting market share from the likes of Tyson or Kraft, then their shareholders will do very well in this (same old) new world order—indeed, the venture capital firms are probably hoping that one of these larger players buys them out. But if you are a farmer forced to produce as much as possible as cheaply as possible, then it is just more soul-destroying and soil-degrading business as usual. Because ultimately the drive for ever-cheaper food has done the greatest damage to the environment and to the welfare of the rural poor; all the other issues are just symptoms of this.

What we need is better policy guiding the management of our natural resources, shorter supply chains, and appropriate incentives for farmers to act responsibly, not another variation on the cheap food/wealthy processor theme. These would be truly innovative solutions, though I suspect they might be unpalatable to the many Valley venture capitalists who don’t care for government telling them what to do, and don’t like things that they cannot engineer and own. So be it: You can’t make an omelet without breaking some eggs.

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COMMENTS

  • Joseph Porterfield's avatar

    BY Joseph Porterfield

    ON March 12, 2014 10:37 AM

    Great piece and I wholeheartedly agree Mr. Quintavalle ! 
    Much good may come from VC activity, but as you note, this approach does little to our improve food production systems and may indeed accelerate the pace of trends that we know are detrimental to the environment and farmers.  There is a growing awareness that a holistic approach on the farm solves the problems you highlight, and can generate attractive returns for investors.  Unfortunately, this in itself is not something that a VC can list on NASDAQ.  However, i do believe that smart investors will gravitate toward ideas and companies that lever and better husbandry our natural resources.

  • Jiji Rentsch's avatar

    BY Jiji Rentsch

    ON March 12, 2014 02:29 PM

    Great article!

    It reminded me of Earth University in Costa Rica (http://www.youtube.com/watch?v=rMUPBBoOvgQ) training students from Latin America and Africa to sustainable agricultural practices, entrepreneurship, and more.  The developing economies can continue eating real food and the developed world will eat their innovative processed food. 

  • Hey Rufo,

    I’m the CEO/Founder of Hampton Creek, one of the companies included in your piece. We look at plants growing in open fields around the world, form strong partnerships with farmers, and use the all-natural plants instead of a caged, hyper-unsustainable eggs in food products. I think you might have gotten the wrong idea about what we’re actually doing. Happy to touch base with you on the phone if helpful - just let me know.

    Josh

  • As the director of a village based cashew processing facility, I couldn’t agree more with your goals but strongly disagree with the solution you propose.

    Your solution would require a massive shift in governmental regulations, incentive systems and a concentrated, focused effort to effect voluntary changes in the way our food system operates. I am not holding out hope for that to happen any time soon.

    I prefer the Gates/Hampton Creek/Tesla approach - let’s make money doing things the better way and people will support us and scale our efforts with their pocketbooks.

    Our food system has changed drastically in the past 100 years and has made some terribly wrong turns during that process. Let’s not forget that the world now has fewer starving people despite an ever growing population. Our industrial food system is to thank for that and, in my opinion, it can also lead us to a more humane and healthy way of life.

    Aaron

  • Completely agree!!!

    I am working on a writing project of which the title changes between “Cancer City” and/or the “Bad Seed”.  An old, old quote continually comes to mind, “the road to hell is paved with good intentions”.

    I completely agree with your premise, the American model of investment centers on technological innovation and ROI without taking social costs and externalities into account. The economic models do not look at people as people or farmers as farmers, they are just considered bodies with a cost associated with them and food is just food.

    I do think there is a complete disconnect between these investors, their values, their understanding of how central good food is to life itself.

  • BY Jennifer Curtis

    ON March 13, 2014 12:55 PM

    As the Co-CEO of Firsthand Foods, a NC-based meat company specializing in local, pasture-raised meats, I agree wholeheartedly that innovation in food systems cannot be all about making more cheap food thru better technology.  We sell fresh pork and beef from animals that live outdoors, on pasture, and are raised humanely by small-scale farmers.  What is our biggest constraint in terms of growth as a company?  Lack of supply that meets our stringent environmental and animal welfare standards….resulting from the fact that while we’re a huge agricultural state, very few farmers in NC are raising livestock for local markets or, for that matter, raising animals for food (vs. commodities).  In the case of beef, farmers sell their animals to feedlots out west for finishing and slaughter far from home.  Our innovation is thus our business model and its focus on building relationships within a short locally-focused supply chain—educating farmers, supporting small-scale slaughter plants with technical assistance,  etc…Yes, our meat is more expensive but it at least begins to be priced in a way that reflects the true cost of raising livestock on a scale that can be managed sustainably.  The good news?  More and more people are aware that when it comes to meat, it may be a good idea to, in the words of Michael Pollan, “Eat Less and Pay More.”

  • Charlene's avatar

    BY Charlene

    ON March 13, 2014 04:35 PM

    Actually, wonderful food—fruits and vegetables—grew in the Valley of Hearts Desire before high tech transformed it into Silicon Valley. Land use, urbanization and zoning are important components of the food production challenge.

  • Joseph Thomas's avatar

    BY Joseph Thomas

    ON March 13, 2014 09:03 PM

    Every government in the world is subsidising food production. Many in India have argued that the subsidy should benefit sustainable and non-polluting agriculture and not synthetic fertiliser or chemical pesticide use in agriculture. I hope to live long enough to see this change happen. Again in India Agriculture is a state subject rather than a federal one. One of our state, Sikkim, banned synthetic fertiliser and pesticides as early as 2003. They depleted existing stocks by 2008 and all farming within the state has been organic. This year approximately 15,000 hectares will be certified organic and within a couple of years the entire states agriculture will be certified organic. This will make Sikkim the first state within India to become fuly organic. A number of other states have developed their organic farming policy as well. There is still hope.

    Corn is the wrong crop for alcohol and Brazil has already shown us how to use sugarcane successfully. If white sugar is not made from sugarcane then 6 times more alcohol can be produced, but the sugar-food alsohol nexus is another story.

    The real problem facing agriculture throughout the world is the tyranny of companies peddling GM foods. While innovations like the System of Rice Intensification(SRI) are showing that farm productivity can be increased by changing agricultural practice, GM companies are touting their technology solution as the Holy Grail. All this with the threat that growing population will demand more food. Currently people are eating too much food and food is wasted in so many ways that better housekeeping alone can feed the growing population.

  • BY nandini nimbkar

    ON March 13, 2014 11:34 PM

    Mr. Quintavalle I agree with you 100%. Conservation agriculture is the way to go. Unless we can curb the soil loss caused mainly due to the wrong agricultural practices, all other efforts will have little effect in increasing food production.

  • Rufo Quintavalle's avatar

    BY Rufo Quintavalle

    ON March 14, 2014 06:24 AM

    Thank you all for your comments and Josh I very much look forward to talking.

    Aaron, you mention Tesla as a success story of the new economy.  To me Tesla is a poster book of what is wrong with the VC model and why I don’t hold out much hope for it (in its current form) solving the problems we are facing.  Tesla’s valuation is unconnected to its economic fundamentals and many analysts are predicting a significant correction. 

    http://www.ft.com/intl/cms/s/0/79bc9eca-9fcc-11e3-b6c7-00144feab7de.html#axzz2vwQvRdiS

    Tesla is also an example of something that looks innovative on the face of things but ultimately is just a continuation of the status quo.  If the two billion people who are projected to join the middle class all go out and buy a two ton car and their governments build the infrastructure to service that fleet then it doesn’t make a blind bit of difference if that car is electric, fossil, hydrogen or hybrid - we are still heading into a wall.  Genuine innovation would involve rethinking the design of the car, rethinking urban planning and infrastructure and rethinking models of ownership.  It may even involve getting rid of cars altogether.  Such changes will involve both the private sector and government but ultimately what it demands is a change in our value system and in our aspirations.

    Likewise in the food system, simply changing one component in a broken machine without asking broader questions about the purpose of the food system as a whole will never solve the problem.  The recent report by the UN Special Rapporteur on the Right to Food is well worth reading in this regard:

    http://www.srfood.org/en/democracy-and-diversity-can-mend-broken-food-systems-final-diagnosis-from-un-right-to-food-expert

    Joseph, you touch on many issues in your post.  That of food waste seems particularly important.  There are huge savings to be made here and a huge investment opportunity.  Financing post-harvest technology in the developed world would see an additional 30-50% of crops actually making it to market.  And the advantage here is that such technologies exist already - it is just a question of scaling them up. 

    I appreciate also your focus on government subsidies.  The current system of subsidies was put in place in the 60s to address what was considered the problem at that time.  On its own terms it was a success in raising the productivity of certain commodity crops.  But its effect on the environment has been disastrous.  It has also created a system whereby the food processors and the companies producing inputs (seeds, fertilizer, pesticides) have grown very rich, often at the expense of farmers.  This situation is unjust and unsustainable since unless farmers can earn a decent wage there will be fewer and fewer people wanting to farm.  Reorienting subsidies towards organic and sustainable techniques would be a step in the right direction so I will watch the situation in Sikkim with great interest. 

    Another solution would be to allow food prices to rise towards their real level rather than keeping them artificially low; subsidies would instead be used to protect the purchasing power of those in an economically fragile position.  Higher food prices would benefit farmers and would mean that there was a level playing field for sustainable businesses like Jennifer’s.  Certain forms of food production like organic or pasture-fed already factor in most of their externalities, and it would be great if such practices could become the norm rather than the exception.  Building local and regional businesses that will enable farmers to have choices other than direct sales or being at the mercy of the agribusiness behemoths is a vital step to effectuating this transition.

     

     

  • BY Laura Deaton

    ON March 14, 2014 08:52 AM

    Let’s not make “innovation” the baby that’s thrown out with the bathwater, please.  While some creative ideas may end up falling flat, discouraging the incubation and funding of innovative projects is a mistake. For example, Kitchen Table Advisors is strengthening the financial and operating skills of small, sustainable farms in and around Silicon Valley. Food Commons is piloting an innovative food hub in Fresno which will directly benefit both farmers and residents. Interfaith Sustainable Food Collaborative is strengthening the ability of faith-based groups to facilitate access to fresh fruit and vegetables. Nextcourse is helping people with chronic mentall illness nutritionally reduce the side effects of their medication. Healthy Food Action is putting health care professionals at the front line of advocating for better food systems. The newly-formed Animal Agriculture Reform Collaborative is a collective action project that is poised for amazing outcomes. And Change Food and the TedXManhattan “Changing the Way We Eat” conference each year convenes the innovators who ARE making a true difference across this country so that great ideas spread more rapidly.  These projects, all nonprofits, are working at the leading edge of food innovation.  Encouraging impact investors to fund them and other similar projects instead of pointing the finger at innovation that has failed, is a much better call to action.

  • BY Gilbert Storrs

    ON March 17, 2014 03:48 AM

    Great complete piece of work.

    Makes all the connections unlike most of the disconnected solutions offered to date.  It is only when we look at the entire system and consider the impact of individual actions on our life system that we will see what we need to do.  Unfortunately, the forces acting against natural life supporting solutions are so strong that truth may be unseated by well marketed distractions.

  • BY caryl levine

    ON March 17, 2014 03:31 PM

    Regarding Joseph’s comment about the System of Rice Intensification (SRI), this is indeed a great example of an ecologically benign and low-cost innovation that can help feed the planet and reduce wasteful use of natural resources. With dramatic reductions in water, seed and agrochemcials, small-scale farmers—who are the majority of the world’s rice farmers—can produce a lot more rice, and less labor for women.  We are working with farmers using this methodology in Cambodia, Indonesia and Madagascar, providing them with market channels in the US for some of their high-quality surplus rice.  We pay organic and fair trade premiums. In Cambodia, we are helping to fuel the development of a national organic rice sector together with the NGO CEDAC. This is leading to diversification of paddy production, local agri-enterprise, and now some communities are even investing in cooperatively owned rice mills to take greater ownership of the rice value chain.  The rice we import from Indonesia, for example, uses about 950 liters per kg of rice produced, as compared with the 2500 to 5000 liters/kg under conventional irrigated conditions.  And non-flooded paddies do not produce methane gas. SRI practices are open-source, which means anyone can try them out and adapt them for their conditions. Farmers are not dependent on proprietary seeds or inputs. This may explain in part why the innovation has spread so rapidly at the grassroots level without support from donors like Gates, USAID, and other major donor organizations, who are more likely to be working closely with US corporations to promote their products.  Moreover, for those of you who think of rice as a starch to be avoided, the biodiversity of rice has yet to be tapped. Whole grain rice, especially black and red rice, have higher antioxidant activity than all other staple grains we eat in the US, including quinoa. SRI is leading to a renaissance in the production of traditional varieties.

  • BY Ali Partovi

    ON March 21, 2014 02:40 AM

    Mr Quintavalle, like yourself, I’m an impact investor who invests heavily in sustainably managed farmland (via Farmland LP—http://www.farmlandlp.com). I’m also a Silicon Valley investor in Hampton Creek, one of the companies you mentioned.

    I applaud your summary of what’s wrong with the food system, and I wholeheartedly agree with your prescription of change, from agro-ecological techniques to eating less meat.

    Unfortunately, your thesis loses ground at the critical juncture where you imply that intensive chickpea farming is no better than intensive chicken farming.

    Hampton Creek Foods is part of the solution. If you haven’t already, do speak to Josh at HCF. I’d be delighted to talk with you as well. I know we’ll find plenty of other areas of mutual interest too.

    -Ali

  • BY Tim Gieseke

    ON March 22, 2014 01:39 PM

    Innovation that brings value to the farmer and landscape - that’s the ticket
    EcoCommerce 101: Adding an ecological dimension to the economy - is based on that premise.
    http://www.ecocommerce101.com

    Good luck,
    Tim

  • BY Gopinath

    ON May 6, 2014 05:24 AM

    We in India do not get good fruits and vegetables and prices of some fruits have gone so high that we cannot afford them. This is the result of all the new innovations and ideas which have no use to common man because his main need is not satisfied. What is the use if we get Chips and Coke at discounted prices….

    Think about it all you new enterprueners…..

  • Michael Jones's avatar

    BY Michael Jones

    ON May 8, 2014 04:30 AM

    Thank you for writing this article.  The article and comments made about the article further the understanding of the state of our global food supply.  It has been my lifelong goal to be a small family farmer.  My father was not able to purchase his farm until he was forty five and I purchased my farm when I was forty.  When we purchased the farm our children were two, four, six and fifteen years old.  My son desires to be a farmer and he will be the first son in five generations to inherit a farm.  It is true that technology has driven down profit for small farmers.  However, new technologies in communication are helping small farmers market themselves.  It is hard, but small farmers can provide choice to consumers.  Bill Gates and his kind have shown their ability to dominate and control an industry.  When you earn billions you are able to thrive on very small percentages of profit.  These ag-production models fall apart when they are used for small farmers generating less than $300,000 per year.  Mr Gates is quite capable of supporting small farmers in their ability to become more profitable.  Why would he?  For years I have been on the edge of failure.  However, I hold out hope that society is gaining awareness and will take action that is favorable to small farmers.

  • Jeffrey Steingarten's avatar

    BY Jeffrey Steingarten

    ON July 25, 2014 12:27 PM

    Correction:  Obviously, I read your piece a full six months ago.

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