Why We Need to Change the Food Game

Four Phases of Market Transformation for Sustainable Agriculture as per author Lucas Simons

Photo by Elaine Casap

We’re jumping into a season that is all about food: Thanksgiving turkey, figgy pudding, paleo hors d’oeuvres, pumpkin spice lattes, and the occasional egg nog. In honor of this jovial season, we should all take a moment to think about where our food comes from and how what we eat impacts the world.

I recently read Changing the Food Game: Market Transformation for Sustainable Agriculture by Lucas Simons, a worthwhile read, especially for business-minded individuals or anyone looking to better understand the market forces impacting agricultural sectors and sustainability initiatives. The objective of the book is not to outline sustainable agricultural practices, but to dissect a problem and its root causes, provide a framework (supported by historical examples) for market transformation, outline and characterize the distinct phases, and explain the triggers and success factors for each phase.

We might not all have space for reading an entire book on our to-do list, so I’ve provided a summary and a few of my unsolicited thoughts below.

Why do we need market transformation in the agricultural sector?

Simons discusses the three most pressing sustainability issues common to our current agricultural practices:

1. Environmental Issues: Loss of biodiversity, deforestation, soil erosion, water pollution, and high CO2 emissions all harm our planet and threaten the future of the farms from where we source our food and raw materials. They also contribute directly to the destruction of natural habitats, and according to many studies, indirectly to climate change.
2. Labor Issues: Human rights issues such as child and forced labor as well as abuse of indigenous populations and their land are common. Also, poor labor conditions and economic situations contribute to an aging farmer population due to aspirations towards a higher quality of life by younger generations who opt out of taking over farming practices.
3. Economic Issues: Lack of traceability, inadequate infrastructure, and volatile prices all contribute to low productivity, low wages, and wide-spread poverty in countries with agriculture as their main source of employment.

These issues don’t just impact farmers, but everyone involved in the value chain. In other words, if you are someone who likes to eat sometimes, or wear clothing, you are among the billions impacted. Agriculture is among the main drivers for deforestation and biodiversity loss, poverty, child labor, and forced labor.

Globally, we already use 40% of our total land and 70% of our freshwater to produce the food we eat. As our global population grows, our natural capital will become increasingly scarce unless we begin to rethink our food system.

Characteristics of Agricultural Sectors

Most agricultural sectors produce commodities that are subject to supply/demand price fluctuations. Lack of differentiation in a good leaves smallholders with weak bargaining power and often-high levels of debt.

Symptoms such as price volatility, environmental issues, and poor working conditions are further reinforced by reactions to the market by farmers.

Price volatility

Hogs-Cycle: Price for a commodity (i.e. hogs) goes up. Farmers, therefore, invest in raising more of that commodity, while all rational, profit-seeking farmers independently do the same. Therefore, by the time they are ready to sell, the increased supply causes a market flood causing prices to decrease, leaving the farmers in debt after spending money to have increased the supply. If the farmers had coordinated based on existing infrastructure or competencies the market would not have been saturated and all would have been better off. Being in debt could then lead farmers to opt for cheaper crops/livestock, lowering the supply of a commodity like hogs. This would again lead to increased price and the cycle to set off again.

Environmental issues and poor working conditions

The tragedy of Commons: Self-serving mentality and behavior. The Tragedy of Commons is an economic problem whereby self-serving individuals acting independently make a choice that will optimize their own short-term goals while negatively affecting others and/or having an adverse impact later in time. As a result, everyone suffers in the long-term.

For example, by letting cattle roam freely on common land, farmers yield better beef, but if everyone allows their cattle do this, the common land will end up exploited and useless for all.

Currently, the system rewards those who choose the easy way and punishes those that try to take the high road. Therefore, when making short-term decisions, individuals feel that they don’t really have a choice. Even if they choose the high road, the mass of the people will still act out of self-interest and they will only end up losing the short-term battle — as well as the long-term battle.

It is easy to point fingers, but if we look at the decisions happening at all phases of the supply chain (Refinery Plants, Manufacturers, Retailers, Consumers), we would see similar behavior as individuals react to market forces.

How do we begin to ‘change the game’?

Simons asserts there are four phases of market transformation: Awareness & Initial Projects, First Mover & Competition, Critical Mass & Institutionalization, and Level Playing Field.

1. Awareness & Initial Projects

Triggered by an event, crisis, or campaign. Driven by NGOs, media, outsiders, visionary individuals.

Effect: Public pressure starts mounting. Symptoms are presented through storytelling, but the root of the problem is not yet understood. If the pressure gets high enough, business stakeholders start to fear reputational damage and this drives initial conversations, projects, and, most importantly, cooperation.

Readiness for next phase: If this cooperation leads to a better understanding of the root problem and scalable projects, the sector will have a chance of moving into the next phase where sustainability challenges start to become strategic and competitive.

Sectors in this phase: Declining populations of honey bees

2. First Mover & Competition

Triggered by: The persistence of problems in the sector and increasing insight into the ability to use sustainability to gain a competitive advantage. Driven by first-mover companies, standards organizations, and occasionally the government.

Effect: As companies realize pressure for change will continue to increase, they decide to build this into their business strategy and scramble to gain the first-mover advantage. They start building sustainability into their core business/product (to become more marketable) and seek out partners that will not pose a competitive threat. Yet, this helps create best practices/standards that, if successful, inevitably spark competition and put pressure on laggards. During this phase, change for farmers is mainly driven by certification programs with increasing costs that have a limited reach.

Readiness for next phase: As companies start to realize that sustainability is more than just a marketing booster, but a real threat to the future of the sector, they being to accept the need for strategic change. As the marketing value declines, companies also eventually realize that supporting fragmented projects becomes counter-productive due to inefficient use of resources. To tackle the root of the problem, collaboration will be required to change the rules of the game.

Sectors in this phase: Palm oil, sugarcane, soy, tea, livestock

3. Critical Mass & Institutionalization

Triggered by: Continued persistence of problem in the sector and realization of the need for collaboration to avoid ultimate obliteration of the sector (which would be considered bad for business). Driven by convening industry groups, including former competitors and sometimes governments providing support.

Effect: Though initially cautious, competitors start working together, bringing industry leaders together. They create an overarching vision and create a clear transition road map, frameworks for measurable success, and roles accompanied by accountability. In this way, the new strategy becomes inclusive, enabling synergies, and putting even more pressure on laggards.

Readiness for next phase: If these newly formed dream teams can build enough trust to collaborate and share knowledge effectively, they can create more clarity around where the industry works together and where it competes. Organizations may start lobbying for policies that reward more sustainable practices or for policies to make unsustainable sourcing practices flat-out illegal.

Sectors in this phase: Cocoa and coffee

4. Level Playing Field

Characterized by: harmonized initiatives, joint capacity building, institutionalization, and involvement of national governments and international bodies. Driven by a need for businesses to comply with mandatory standards, governments, and law enforcement.

Effect: There is a ‘new normal’ and therefore a new starting point for ideas to emerge and restart the transformation curve. Businesses have adapted and begun strategizing on how to compete in the new playing field.

Readiness for next phase: Eventually, new areas for improvement are identified in the new playing field and this sets up the sector for a new transformation cycle, beginning from phase 1.

Sectors in this phase: Eggs, lightbulbs, phone chargers

What does this mean for consumers?

In my personal opinion, it all starts with consumers. At any point, attention to sustainability could decrease and the sector could fall back into its old behavior. But, consumers have the power of casting votes for what they want to see in the world with each dollar they spend, and businesses are likely to be interested in gaining as many of these ‘dollar votes’ as they can.

What role do the media play?

The media have the power to bring pressing issues to light. If they build a strong enough case to get consumers to care to the point of changing their consumer behavior, then they have already succeeded in creating pressure for businesses to respond to consumer demand.

Key lessons for change catalyst media: Hit the key players (those that most benefit from the status quo) where it hurts. Make actionable demands. Once the first companies comply, frame them as heroes and celebrate them to set an example for other companies.

What does this mean for me as a business-minded individual?

I will speak for the common good and advocate for businesses to make socially responsible decisions and assess the impact they make through their operations and use of end-product. Yet, I will also advocate that we should not leave social good initiatives to rely on goodwill. Businesspeople with decision-making power have a role to fulfill and results to deliver, and if making a profit is not among those results, then an initiative is not likely to succeed in the long-term. Therefore, we should seek solutions that achieve impact effectively while making sound business sense. Yet, this all ties back to realizing your power as a consumer to make profitability possible for a business by spending money on sustainable and ethical products, even if this means paying a slightly higher price and adjusting your consumer behavior.

Controversial Topics (IMHO):

Standards and certifications. How useful are they really?

While certifications (i.e. Fair Trade) provide a sustainability paradigm towards which farmers can strive and a brand for consumers to trust, these programs are quite costly to implement, and they often exclude smaller farms that may not be able to afford buying into a certification program.

While standards represent a first step in the right direction, industries should be wary of blanket solutions and constantly reassess the impacts. At each iteration, pain points identified should be turned into opportunities to improve a standard and continuously raise the bar.

Direct Trade standards, for example, were developed as an alternative to Fair Trade, and are determined and regulated by the roasters themselves. The buyers must then truly develop the relationships and grow trust with the farmers and their practices and organic quality. Through this system, there is no need for expensive certificates and imposed methodologies from a third party.

Never Waste a Good Crisis

While it is true, as Simons asserts, that the only way to truly set off the transformation cycle is through a crisis, to what extent should a company take advantage of a crisis such as a natural disaster or a widespread catastrophe?

Book suggestion: The Shock Syndrome by Naomi Klein