RFSI’s Director of Business Development, Anthony Corsaro, shares his top 3 takeaways while at the recent Organic Produce Summit (OPS).
What is top of mind for the largest organic produce brands in America and the customers they serve? I traveled to the recent Organic Produce Summit (OPS) in Monterey, CA to get a better understanding of this. A robust agenda greeted me and the other 1,600 attendees – here were my biggest learnings:
- Regenerative Agriculture Is Here to Stay
- Consumers Only Care About 3 Things
- Can Ag Sustainability Play Nice Together?
Regenerative Agriculture Is Here to Stay
After over a year of thinking, “when are the large players in produce going to make a statement on regen?” I was excited to see an entire education session dedicated to regenerative agriculture at OPS. Large produce operators have lagged behind livestock, dairy, and row crop producers in terms of advocating for regenerative agriculture practices and defining the “playbook” that works for their production systems and commodities. At OPS, I got an update on how the industry is looking towards the regenerative future of food.
Even though a four-person panel is a small sample size, the session can be taken as a reliable indicator of the macro landscape given the panelists present. Bolthouse Farms, Taylor Farms, and Braga Fresh Farms are no small operations, and they were all equally resolute in their prediction of the current and future necessity for regen ag. The group was in agreement that regenerative is here to stay, spurred by increasing consumer demand for chemical-free, low-carbon products and new regulatory pressures.
Consumer Only Care About 3 Things
John Ruane of The GIANT Company did a keynote titled, The Growth of Omnichannel Merchandising That’s Driving Retail Sales. He showed a slide with a Sears Roebuck ad from 1894 promoting three value points to consumers:
- Unlimited Assortment
- The Best Prices
- Great Quality
The idea behind the graphic was to express that the most important consumer values have not changed in over 100 years, and they most likely will not anytime soon. It reminded me of a quote from Jeff Bezos that shows how Amazon used a similar focus to become who they are today.
So, what does this mean for regenerative agriculture investors and stakeholders?
Regenerative agriculture will never scale if regenerative products are exclusively sold to wealthy consumers at an intense price premium. In a separate session, Richard Gonzales, Vice President Global Produce Sourcing at Walmart spoke about the retailer’s focus on “price-sensitive” and “mid-market” consumers. These two groups make up 80-90% of the overall market and drive much of Walmart’s decision-making. Until we prove that we can profitably produce, process, distribute, and sell an affordable supply of regenerative agriculture products to these two consumer groups, there will be no significant transition to regenerative agriculture production. Gonzales emphasized how a lack of consistent, year-round supply was the biggest barrier to spurring sales of more organic produce. If a retailer cannot count on having the product to put on the shelf consistently, they have to find other options to fill that space.
What has historically enabled large-scale production that produces affordable and consistent supply? Things like technology, vertical integration, and multi-region sourcing. What will these things look like in a regenerative context? Are they even possible to do in a regenerative context? What are the enabling investments that could solve for this? We won’t know for another 3 to 10 years, but these are the investments that will have produced above-market-rate returns and massive ESG impact.
Walmart is retail in America, with 90% of the US population having a store located within 5 miles of their residence. Until we see a swath of regenerative products on the shelves at a place like that, are we really making an impact?
Can Ag Sustainability Play Nice Together?
I was struck by a long quote from T. Bruce Taylor during the regenerative agriculture session:
“Today, a lot of the sustainability in agriculture discussion is being led by CEA (controlled environment agriculture). I had three customer tours yesterday, and all of the questions yesterday were about CEA. And what the customers were saying was, ‘Hey, like we’re being pitched by these companies. They’re presenting CEA as this environmental silver bullet. And they’re casting organic as a scam that’s bad for the environment.’ And I think that dialogue is extremely dangerous for a couple of reasons. One, I think it doesn’t help grow our industry. It doesn’t inspire confidence and encourage consumers to eat more healthy vegetables which our consumer needs. And then two, it doesn’t tell the full story. It’s a cherry-picking of data that fits a narrative while ignoring aspects of the data that don’t quite fit that narrative.”
He goes on, “If you look at Cornell studies and other university studies that compare greenhouse and vertical (farming) versus field-grown, on water use and land use, greenhouse and vertical have tremendous benefits, and we should celebrate those benefits because we’re in severe drought. And if we’re able to farm with less water, that’s powerful. But if you talk about energy consumption and you talk about greenhouse gas emissions, it actually flips. And field-grown, particularly organic field-grown, has significantly lower greenhouse gas emissions, and a significantly lower carbon footprint than both greenhouse and vertical, even accounting for food miles. And then layer on regenerative. We’re now further enhancing our carbons sequestration, further lowering our greenhouse gas emissions, and we now have multiple tools in our toolkit to solve different environmental problems. So, when we talk about sustainability in agriculture, I think it’s important we take a holistic view, we focus truly on the problem we’re trying to solve, and we pick actions that solve that problem, rather than just creating one problem for another problem.”
As Taylor suggests, we will need many sustainability strategies to overcome the climate, biodiversity, water, and human health crises collectively facing humankind. But can all the leading sustainability strategies in food production play nice together? What does the future look like for regenerative agriculture and controlled environment agriculture existing symbiotically? To date, the results have been far more competitive than collaborative. That doesn’t even add food-tech into the conversation, which seems to be leading the way in terms of investor interest. I do think there are enough seats at the table for multiple solutions, but time will tell who wants to collaborate and who wants to compete.