NOBULL: Food Doesn’t Grow in Silicon Valleys, By Rufo Quintavalle

Food Doesn’t Grow in Silicon Valleys

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

By Rufo Quintavalle | 15 | Mar. 12, 2014

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.

Rufo Quintavalle is a private investor based in Paris and active in the environmental space. His focus is on real assets and impact investment, in particular the carbon sequestration and climate change mitigation potential of sustainably managed forestry and farmland.