Tag: business case

Food Systems and Distances Traveled

Food is an essential requirement for life. A certain degree of psychological preoccupation is prompted if there are risks associated with getting the need for food met. As a result, securing food is one of the fundamental building blocks in Abraham Maslow’s “hierarchy of needs.”

Distance from the source of food is a sticky wicket for food consumers. We are left in the hands of government regulations, enforcement agencies, businesses, and various special interest groups in between us and the food we need for survival, health, and well-being. Questions range from plant and animal genetics to methods of production, processing, and preparing foods, to the logistical systems that transport, store, and stock what we eat as it moves from the point of production to the point of consumption.

So how far is it from the point of production to the point of consumption? According to a 2003 study, “Checking the Food Odometer: Comparing Food Miles for Local versus Conventional Produce Sales to Iowa Institutions,” by Rich Pirog at Iowa State University it can be further than one might think. For a synopsis of Pirog’s study, please read Consumers Prefer Locally Grown Foods published by the WK Kellogg Foundation.

Drawing from Pirog’s report, Jane Black offers the following analysis in her article in Slate entitled, “What’s in a number? How the press got the idea that food travels 1,500 miles from farm to plate:” 1

All statistics, of course, are based on a series of assumptions. And Pirog is quick to point out that whether or not the 1,500-mile figure applies to everyone and everything—or how it’s been misused—it has raised consciousness about where food comes from. It sends a message: It matters what you buy, and where you buy it.

The graphic below illustrates some of the critical relationships in the current, globalized food system relative to distances food travels.

Essentially, the diagram is a continuum from local to global with regional and continental “zones” setup to offer arbitrary hash marks at the 100, 1,000, and 10,000 mile intervals in between. Clearly, the distribution of distance favors production, processing, and preparation encompassing more than 1,000 miles. Also, the interplay of production, processing and preparation, and consumption is embedded within a logistical system that supports the movement of plant and animal materials from one location to another while transferring from one production / processing stage to another.

This diagram does not attempt to quantify the complete distance traveled, but offer a way to visualize the approximate distribution of mileage when looking at the overall food system. While Pirog’s report focuses solely on fresh produce and excludes various stages of processing between production and consumption, if one included the distances incurred by these additional steps the total mileage traveled would be considerably further. Also, due to the economies of scale favored by globalized operations, processing and preparation are centralized in specific locations that enjoy advantages of lower cost labor or closer proximity to large scale production operations. This adds to total distance traveled when completing the cycle to the consumer.

In his book, PERMACULTURE: A BEGINNER’S GUIDE, Graham Burnett offers a diagram entitled, “The Industrialization of Tea” that captures the notion of distance in the globalized food system and its consequences. When the total costs of fossil fuel consumption is treated as an externality and there is relative assurance that globalized food sources are secure and can provide safe food at low cost the food system functions effectively. But what if the formula changes due to increased fuel costs? What if we cannot assure food security and safety? What is an alternative? Mr. Graham begins to explore this question by providing a second diagram, “The Permaculture Cup of Tea,” posted on the same website.

In carrying the philosophy of a “permaculture cup of tea” further, the diagram below follows the same general format as the previous graphic, only the food system is more localized than globalized.

Now, 60 % of the food system functions within an area under 1,000 miles of the point of consumption. While this stops far short of 100% under 1,000 miles, it does suggest that simply moving a mere 30% of the total food system output from over 1,000 miles to under will have a profound impact on the issues like fuel consumption, food security and safety, and community sustainability, health, and well-being. But how much difference would this really make?

While there are no data to tell us for sure, there are reports from studies in related fields that offer some insight. In The New York Times article by Matthew Wald published December 30, 2006 entitled “Travel Habits Must Change to Make a Big Difference in Energy Consumption,” the author states,

…picking a large sport utility vehicle that goes two miles farther on a gallon of gasoline than the least-efficient SUV’s would have an impact on emissions of global warming gases about five times larger than replacing five 60-watt incandescent bulbs. The dollar savings would be about 10 times larger. And the more-efficient light bulbs would have a negligible effect on oil consumption.

This suggests that shifting the 30% of the current food system activity to under 1,000 miles from the point of consumption would make a substantial difference.

There is a business case in this for sure; but how would one go about putting the business model together that leads to viable business plans and startups in localized agriculture? The key is in designing a framework that ties the critical elements of food production, processing and preparation; renewable energy and environmental remediation; logistical systems; and community sustainability together into a set of dynamic, interactive, and adaptive relationships. And that will be the topic for subsequent postings…

Wishing you all the very best in 2007!

Originally posted to New Media Explorer by Steve Bosserman on Tuesday, January 2, 2007

  1. The original article, “The Issues: Buy Local,” is no longer available online ↩

Oil Addiction and the Business Case for Change

One responsibility that comes from communicating with readers through media such as blogs is to define terms as they are going to be used in various postings and follow-up by consistent usage of those terms according to their stated definitions. In this instance, three terms are offered for consideration in this and related postings about business opportunities: business case, business model, and business plan.

Wikipedia defines “business case” in the context of an existing business wherein certain changes are being considered. While this is certainly a useful construct in project management practices, it need not be limited solely to that purview. It is also a valuable tool for entrepreneurs to draw upon when determining start-up possibilities or expanding an existing business far beyond the boundaries and scope of its original charter.

Business cases lead to “business models.” A business model is the approach a business intends follow in order to generate revenue, control expenditures, and make a profit. More than one business model is possible in response to strong business cases. The challenge is crafting and adopting an appropriate business model that leads to a successful business within a given set of circumstances. It is a bit like playing chess and determining the opening one is going to use based on personality and temperament as much as intellect, skill, and experience. Determining and applying business models in response to business cases spawns creative experimentation that typifies entrepreneurial efforts.

A “business plan” covers comprehensive information, in-depth analysis, and detailed description about how practical application of the business model is accomplished successfully over time. Putting a business plan together demands that one think past overly optimistic assumptions about revenues and underestimates of capitalization costs and operating expenses. This exercise brings a critical level of discipline to choosing a business model. And if support from others is required to get the business going, a business plan is an excellent communication medium through which one’s attention to detail and exercise of due diligence is documented.

An earlier posting, “Addicted to Oil,” points out that such a level of dependence drives concern for quantity and quality of the addictive agent and consequences of use for the addict and the social systems that support the addict. It also turns up the heat in the addict’s thinking to consider the possibility of not succumbing to the powers of the addictive agent and choosing an alternative path of recovery. The foundation for an addict’s travels to a clean and sober life is a totally different structure and behavior than the basis for the one that supported the addiction. It requires significant sustained commitment to move from the addictive structure to the clean and sober structure. And there are many bumps in the road that test commitment and resolve. This is an act not to be taken lightly.

Recovery from oil addiction entails securing energy from renewable sources rather than fossil fuels. This is a costly route to take since the current global system is setup to generate, deliver, and consume energy from fossil fuels, not renewable sources. To make the switch requires a considerable investment of time, money, and talent to develop and apply the technologies that will make renewable energy system feasible. Such investment will not happen without the assurance that there is a business case for doing so.

Making the shift from fossil fuels to renewable energy sources requires a business case based on irrefutable evidence that not doing so will result in highly undesirable consequences. In recovery, the addict must “reach bottom” before beginning the long ascent out of the dark pit. With oil addiction that point is reached when the realization that to continue unchecked is simply an untenable position. In other words a “tipping point” is reached from which there is no turning back.

In a December 22, The New York Times 1 editorial by Thomas Friedman entitled “And the Color of the Year Is…,” he writes:

We reached a tipping point this year — where living, acting, designing, investing and manufacturing green came to be understood by a critical mass of citizens, entrepreneurs and officials as the most patriotic, capitalistic, geopolitical, healthy and competitive thing they could do. Hence my own motto: ‘Green is the new red, white and blue.’

It appears that in the minds of some the point of no return from black to green has passed. Regardless of how far beyond this point we are, it is safe to conclude that business opportunities in the renewable energy sector and the proliferation of business models and plans they spawn are nigh. We are taking first, but strong steps out of the black hole of addiction along the green path of recovery. And this growth in business possibilities will not remain within the realm of the energy sector alone. Due to the tightly woven interconnections among them, the fuel, food, feed, floriculture, and fiber industries as a whole will be transformed. A budding renaissance for agriculture is in the making. Stay tuned for more!

Originally posted to New Media Explorer by Steve Bosserman on Friday, December 29, 2006

  1. Original posting to the Stop Global Warming website is no longer available online ↩