This is a guest post from Ali Partovi, angel investor, startup advisor and serial entrepreneur. He co-founded iLike, acquired by Myspace in 2009, and LinkExchange, acquired by Microsoft for $265 million in 1998. His portfolio has included successes as far-ranging as Zappos, Facebook, DropBox and OPOWER. He was among the first to recognize the significance of the Facebook platform, and among the earliest to grasp the business opportunity of search.
Around Earth Day, we’re reminded about global warming and pollution, as well as the “green” technologies and consumer choices that may save our planet. We don’t hear as much about agriculture, one of the world’s largest polluters, nor do we appreciate the environmental impact of our diet.
According to research by the World Resources Institute, agriculture is mankind’s biggest contributor to climate change, generating at least 26 percent of greenhouse gas emissions worldwide — more than from all electricity and industry or from all the world’s planes, trains and automobiles. Other estimates suggest agriculture generates 36 percent of emissions.
Feeding the growing world population using today’s practices is increasingly unsustainable. Just as we need new technologies in areas like renewable energy, we need more “renewable” approaches to producing the most primal form of energy: food. Brace yourself for this two-minute video from the University of Minnesota, which summarizes the problem with some startling facts:
As an Internet entrepreneur and investor, my interest in food and agriculture began at home, taking care of my body and my kids. In 2008, my wife and I decided to adopt a healthier and more sustainable diet for our family. We switched to exclusively grass-fed meat and ate a bit less meat altogether, added more vegetables, and began raising egg-laying chickens in our backyard. That enabled our seven-year-old daughter to run a startup selling our egg surplus (image, below).
I was pleased to lose about 35 pounds within six months. But I was also surprised to find how inconvenient, obfuscated, and expensive it was simply to eat healthful, natural foods. I began studying the business and politics of food, convinced there must be investment opportunities that align with improving the system. Surely, I thought, there must be healthful, sustainable, yet scalable and profitable alternatives to our unsustainable food and agriculture sectors.
As a student of the space, I’ve seen enough parallels between food and energy to posit that food may be the next frontier in green tech. Like energy, food and agriculture are big, slow, and highly regulated sectors. But also like renewable energy, there might be opportunities for innovation and profit in “renewable food,” fueled by consumer preference today and by shifts in policy tomorrow.
Within the giant food sector the “organic” segment is growing fast thanks to a combination of consumer consciousness and government support. Organic food has enjoyed double-digit growth in the U.S. for two decades (from $1 billion in 1990 to almost $25 billion in 2009) and is growing to over $100 billion globally by 2015. Yet, organic agriculture still represents only one percent of U.S. farmland today. That leaves plenty of room for growth and opportunities for entrepreneurs and investors, especially given the increasingly apparent ties between food and global warming.
“The Other Inconvenient Truth”
We cannot forever feed ourselves on fossil fuel, deforestation, and greenhouse gas emissions.
Today’s food and agriculture practices consume enormous amounts of fossil fuel for transportation, operation of farm machinery, and chemical production of synthetic fertilizers and pesticides: roughly 10 calories of fossil fuel go into every calorie of food we eat, representing 19% of all U.S. energy consumption.
Agriculture emits greenhouse gases with an order of magnitude worse global-warming potency than CO2, such as methane (from intensive livestock operations and rice fields) and nitrous oxide (from fertilizers and factory farm waste lagoons). Another agricultural emission, nitric oxide, is the main driver of the new acid rain that is killing forests and fish. Run-off of excess fertilizer from cropland and excess manure from factory farms is the primary cause of enormous aquatic dead zones in coastal waters globally, devastating marine life (and ironically, threatening human seafood supply). These marine dead zones in aggregate represent 95,000 square miles (about 20 times larger than the area impacted by last year’s BP oil spill).
There is hope of mitigating these issues. Via “new” techniques it should be possible for the food and agriculture sector not only to reduce its own emissions, but also to offset emissions from other sectors by removing carbon from the atmosphere. (I say “new” because in many cases the solution involves a return to nature-based, less industrial processes.) More importantly, it should be possible to make money and improve the environment – because the current system is inefficient and wasteful, leaving enormous room to move the needle by eliminating waste.
I’ve encountered promising opportunities, and in several cases personally invested in startups tackling these problems as an angel investor.
Reducing Food Emissions
One way to reduce the carbon footprint of our food is by eating locally grown food, reducing the fuel spent on transportation. However, the practicality of this varies regionally. Here are some companies making local food more widely available.
In the San Francisco area where I live, farmers’ markets and CSA (community supported agriculture) programs enable consumers to buy food from local farms rather than from thousands of miles away. A CSA is a subscription that delivers weekly food from a local farm. Although this offers advantages to both consumer and farmer, such programs are less prevalent in other regions and represent a negligible fraction of the food sector.
A tech startup I invested in, Farmigo, is stimulating this alternative food system for consumers to purchase directly from local farms, removing middlemen and reducing food transportation. Farmigo’s Web platform enables buying directly from a farm while simplifying logistics for farmers.
What about regions that simply don’t have the climate to produce fresh food year-round? If you live in the East Coast or Midwest, your lettuce and tomatoes have likely spent an expensive week riding thousands of miles in a refrigerated truck from Mexico or the West Coast. Another startup I’ve invested in, BrightFarms, aims to eliminate shipping costs by building greenhouses on the roofs of supermarkets, producing the most “local” food imaginable.
The business model is directly analogous to what’s scaled successfully in solar electricity– and not a coincidence, because both represent techniques of converting sunshine to energy that humans can use. BrightFarms is an excellent example of aligning environmental goals with profit by eliminating waste, because photosynthesis is very efficient, whereas trucking a tomato 3,000 miles in a fuel-guzzling fridge is not.
Transportation aside, agriculture’s carbon footprint includes the natural gas and petroleum consumed to produce chemical fertilizers and pesticides, as well as the nitrous oxide released to the air due to over-application of those fertilizers. A startup named Solum hopes to help on both sides, by enabling farmers to reduce fertilizer usage via more accurate, real-time measurement of soil chemistry. Solum is backed by Khosla Ventures, one of the world’s leading green-tech investors.
For millions of years, atmospheric carbon was trapped by photosynthesis and stored in the ground. Human agricultural practices have upset this balance.
For example, much of North America, once covered by carbon-trapping grass, has been transformed to grow corn, using fuel-intensive inputs and releasing greenhouse gases into the air from tilling and over-fertilization, largely to feed animals that eat grass in the first place. Cornfields require annual tilling, which releases soil carbon to the atmosphere. They conduct photosynthesis only part of the year, and most of the carbon and calories they capture stay in the kernels, soon to return into the air via digestion. Grass, on the other hand, is a carbon sink, burying most of its carbon and calories in the soil, where it remains.
Americans eat only a small fraction of the corn we produce and much of it in the guise of ingredients like high-fructose corn syrup that aren’t essential for human nutrition. About seven times more corn than what we eat is used to feed livestock like cattle (which can digest grass more easily than corn).
Livestock represents a disproportionate part of food’s carbon footprint. If more sustainable techniques are scalable, they might be among the most leveraged ways available to combat global warming. The Union of Concerned Scientists has recently stated that raising cattle on grass can be a net carbon sink whereas feedlot cattle operations are a net carbon emitter. Studies suggest that grassland sequesters more carbon than a forest. There is also evidence that grass traps more carbon when grazed, provided that the livestock be moved periodically (moderate grazing causes grass to grow back healthier, whereas clear-grazing kills the grass).
This sounds great for the environment, but is it economically feasible? The Savory Institute is using managed rotational grazing (MRG) techniques to restore America’s grassland while often doubling or even quadrupling livestock capacity at the same time.
The premise of MRG is to mimic the behavior of roaming ruminants that evolved over millions of years: a herd chews the grass, stimulating plant and root growth and letting sunlight reach the growth points. Then the herd moves on to greener pastures, leaving behind manure (fertilizer) and hoofprints that soften the soil and help water retention and seed germination. MRG mimics this by moving cattle from one plot of grass to another daily. Wild birds also fit in nature’s cycle: they follow a herd to feed on dung beetles, in the process providing pest control and spreading the manure. A new breed of farms mimics this by raising chickens in mobile cages and coops that are moved into a plot of land once the cattle have left it. Essentially, MRG uses livestock to do the job of fuel-intensive tractors, fertilizers, and pesticides.
Increased consumer awareness is fueling demand for 100 percent “grass-fed” or “pasture-raised” meat and poultry raised using these practices. A growing sustainable food movement, the culinary equivalent of renewable energy, is enabling Bay Area meat and poultry producer Marin Sun Farms (image, right) to enjoy an enviable combination of high-margin sales and exponential growth.
The biggest obstacle impeding Marin Sun Farms’ growth today is inadequate capital. It cannot secure land, water, and animals fast enough to meet the growing demand. This dynamic reminds me of the early days of Zappos, when Tony Hsieh was desperately seeking capital to secure shoes fast enough to meet the growing demand.
One might ask, is this scalable, or is it an anomalous niche? As it was for Zappos, that is the billion-dollar question, and I don’t know the answer. But it certainly makes basic economic sense. Feeding livestock on grass is patently efficient. The animals convert inedible, naturally occurring vegetation to human food, while recycling nutrients to sustain the grass, without requiring costly fuel-intensive chemicals or machinery.
How did we end up with a system so inefficient?
In the U.S., we’ve had decades of corn subsidies that motivate farmers to over-produce corn, resulting in a surfeit of corn that has skewed market dynamics. This has made it artificially “affordable” to feed corn even to animals that were never evolved to digest it (salmon, for example). Such subsidies might have made sense if America’s problems included a shortage of food calories. But today, we face different problems, such as a health-care and budget crisis, a fuel crisis, and a climate crisis. Our policies ought to reward farming practices that alleviate these problems. Consumer consciousness may be enough to make sustainable food profitable in the short-term; but in the long-term, shifts in policy are necessary.
The good news is that governmental policy can be aligned to help in more ways than one. The most elegant but most politically infeasible solution might be to cut corn subsidies. But there are many other regulatory levers. For example, government could offer a “grass subsidy” to reward land use that traps carbon in the soil, aligning with a broader carbon policy. The FDA has suggested that it might regulate antibiotic use in livestock, which would make our food system not only safer but also better for the environment.
Health-based efforts to combat obesity will likely help the environment as well. Carbs in our diet and carbon in our atmosphere are closely linked, and generally lead back to corn subsidies (AKA “carb subsidies”). Lastly, the U.S. Department of Agriculture“Certified Organic” labeling program is a huge marketing boon to environment-friendly practices and can be expanded.
The government could offer additional subsidies to help farmers bridge the transition to organic, or tighten its criteria for animal products to support more carbon-neutral practices. For example, last year, the USDA released tightener standards for organic dairy, requiring that dairy animals be at least 30 percent grass-fed to qualify as “Organic.”
Our food and agriculture system is particularly broken, but we can’t simply wait for the government to fix it. As with clean energy, there are many opportunities for private enterprise to stimulate progress while making a profit. Some of the short-term opportunities in food might be to leverage consumer awareness and build a brand that stands for environmental consciousness, while aligning for longer-term regulatory changes to level the playing field.
Broader consumer awareness of the problem is critical, whether to make the private enterprise opportunities more scalable, or to precipitate political change. This is why I’m personally considering engaging more vigorously on this issue, using my background in social platforms and grassroots marketing to help more Americans discover the truths about their food and to build a movement to fix it. Please check out my one-day-old website FixFood.com and lend your voice there.
We cannot feed ourselves forever on the current system. The time for developing more sustainable alternatives is right now.
Thanks to Naomi Starkman of Civil Eats for editing this article, and to Nicolette Hahn Niman, Paul Lightfoot, Benzi Ronen, and Hadi Partovi for reviewing drafts of it.
Aerial view of the Amazon Rainforest, near Manaus, the capital of the Brazilian state of Amazonas, by Neil Palmer for CIAT, International Center for Tropical Agriculture under CC license
United States Capitol Building in Washington D.C. by Ken Hammond, via USDA
All other photos, courtesy of Ali Partovi and Partovi.org