Slow Food, Slow Growth: Emotional Capital and the Challenges of Large-Scale Solutions for Small-Farm Food

A year ago, Wen-Jay Ying was feeling depressed. Her for-profit CSA business, Local Roots NYC, was four years old and looking around the industry, it seemed like there were suddenly many similar businesses who were in talks with investors, getting huge boosts of capital or moving into big warehouses and new markets, creating massive scale. The kind of scale that could have the potential to change, or "disrupt," our entire food system. Ying had never started her business with that kind of scale in mind.
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A year ago, Wen-Jay Ying was feeling depressed. Her for-profit CSA business, Local Roots NYC, was four years old and looking around the industry, it seemed like there were suddenly many similar businesses who were in talks with investors, getting huge boosts of capital or moving into big warehouses and new markets, creating massive scale. The kind of scale that could have the potential to change, or "disrupt," our entire food system. Ying had never started her business with that kind of scale in mind.

"I felt like I was doing something wrong," she said.

Getting this week's harvest from a small, local farm is never as easy as ordering a pair of shoes on your mobile phone. But some companies have tried hard to bring consumers both the modern conveniences that they're accustomed to, and the local, small farm-grown ingredients that they're increasingly demanding. Through the economies of scale and proprietary software, these tech-based services believe in creating drastic changes throughout the food system. But we might wonder whether going for mass-scale leaves out some of the best things about supporting hyper-local, small-scale agriculture.

Before there were online groceries or meal-kit services priding themselves on small farms, of course, there was CSA, or Community Supported Agriculture. In these cooperatively-run groups members have the opportunity to meet one another at pick-up sites, meet the farmers supplying the shares, and pitch in by volunteering. New York City alone saw more than one hundred CSAs sprout up in its neighborhoods since the program's inauguration in 1995. In 2011, Ying created Local Roots--a more curated weekly pickup of food from local producers than your typical CSA share--with a desire to make the farm-to-table connection easier and more fun for New Yorkers and farmers; she also just wanted to get to know her neighbors and community on a deeper level. She started the company with her own savings and a staff of just herself, and used her networks from working in farmers markets. As with a traditional CSA (Community Supported Agriculture), Local Roots members subscribe for a season and generally pick up their shares--usually at a friendly neighborhood bar--rather than getting them delivered, a big difference from today's online-ordered food subscription models.

But five years ago, food and changing the food system had yet to become the darling category of tech startups that it is now. Fast-forward to 2016, and home-delivered meal-kit companies, featuring all the ingredients to cook specific recipes, are on the rise, projecting 5 billion in growth over the next decade. Ecommerce sites offering local food from small farms have emerged as well. Two of them, Good Eggs and Farmigo burst onto the scene quickly thanks to investment capital, only to shrink back; last month, Farmigo announced the end of its service.

"I thought my only option to become a real business was to focus more on my profit margins, gaining more customers and scalability, but I knew that wouldn't make me happy. As a business owner, I felt left out and inadequate," said Ying of her competition.

Then, she took part in a 6-month business class held by Etsy.Org for "Regenerative Entrepreneurs" and was introduced to the teachings of Judy Wicks. Wicks talked about businesses growing "deep roots" in your communities and leading with your heart in business, recalled Ying. "It was the first time someone told me that you can have success in your business not based purely on money but by a different value system--of cultural or emotional capital."

Over the five years, Ying saw her membership grow steadily, and she eventually increased her pick-up locations to a total of twenty throughout New York City with home delivery orders done on bicycle. She employs a small part-time team of seven, and continues to partner with most of the same farms that she began with. She views her network of farmers as family.

However, in the last year, there was an unprecedented plateau in new membership sign-ups, which meant that some of the farms who were planning ahead for their season with even more crops than they supplied Local Roots with last year had to find other avenues for their surplus.
That is a small obstacle for the farms to deal with, considering Local Roots NYC only buys around 60,000 lbs of produce per year. Still, it was heartbreaking and Ying worried about it putting a strain on her farmer relationships.

So what happens when an entire service and customer pool shuts down, as with Farmigo? In a blog post, Farmigo CEO Benzi Ronen listed resources where former customers could find its small-farm suppliers' food. "We're dedicated to doing all we can to provide support in the transition, and as a first step, we've created lists of all of our producers so customers can stay connected," he wrote.

Last year, another online grocer for regional food from small producers, Good Eggs, announced it was closing all its operations outside the Bay Area. Meaning, its customers and community of farmers and producers in New York, Los Angeles and New Orleans, were abruptly disconnected (as well as some 140 staff positions). The setbacks of both Good Eggs and Farmigo might leave people wondering whether growth-focused, software-based companies are an appropriate fit for distributing food from a number of small, local farms. Are the goals of rapid growth an inherent mismatch when dealing with slow, small-scale agriculture?

"Tech can scale very quickly, iterate on product very quickly. Distribution and infrastructure can scale with a little more of a natural handicap," said Josh Morgenthau, an owner at Fishkill Farms and the former NYC General Manager for Good Eggs. "But then farmland doesn't necessarily scale and for any given season, you're usually planning for it in the winter and then it's set in motion, and it's hard to have predictable supply based on the weather." In fact, this season his family's orchard is suffering from a lack of nearly all its stone fruit, as with many other Northeastern orchards thanks to a late frost in spring.

"I think there can certainly be expectations from venture capitalist-based tech startups, but to grow food distribution successfully, the models that I've seen that have worked better rely on quite a bit of industry and slow, methodical growth, which can be kind of antithetical to the growth mindset in the venture capitalist world," he said.

Morgenthau noted the farmer cooperative Lancaster Farms as an example of slow, methodical growth as opposed to the guts-for-glory approach of investment-backed tech startups. The food distributor, which has CSA and wholesale operations, was able to achieve scale through specialization amongst its farmers and pooling resources, which Morgenthau described as an "elegant solution."

"They didn't try to become in one fell swoop a full-scale grocer. It's a farmer cooperative so there's also a real sense of ownership and investment in the farms they work with and a level of collaborative investment," he said.

We might turn the restaurant industry, which has a long relationship--deeper roots, you might say--working with small farms in its region. Many of the restaurants who've pioneered local food actually reflect the business size and scale of the small family-operated, independent farms that they source from. And although it may be more time-consuming to get food from several small farms rather than wholesale restaurant suppliers, some chalk it up to the "emotional capital" that Ying has embraced.

"For me as an owner of a small independent restaurant I have been able to develop the best relationships with companies that are on the same level as mine in terms of size," said Jacques Gautier, chef/owner of the 10-year-old Park Slope restaurant, Palo Santo.

Gautier mentioned that he buys all his eggs from the same hatchery in the Hudson Valley (Tello's) each week, and has changed his wine list over the years due to the fact that he enjoyed working face-to-face with wineries in Long Island that direct-distribute, like Wolffer Estate and Channing Daughters.

"I find that when I work with other small businesses that are on that level, then I get better service. I'm working with somebody who understands me and my business, they're sympathetic to it and it's a much better relationship that I can form. It's symbiotic as opposed to me depending on some large company," he explained.

He felt that the startups that are bringing home-delivered local food en masse to audiences was a step "in the wrong direction": "I want to spend more time at the farmers market, have more direct contact with the farmers, I don't want a middle man," he said. Gautier noted that there have been many "middleman" startups that have approached both restaurant owners and small farms over the years, looking to tap into the market of those interested in local food. "It can't be genuine by nature because what we want is to change the fact that we've become so distanced from where our food is coming from. So one one hand they're making it more available but on the other hand, they're taking us away from the source."

But Michael Anthony, chef of Gramercy Tavern and Untitled, and another pioneer in championing local food and direct-sourcing from small farms, felt hopeful about the potential impact of technology to create greater scale.

"It's much easier for a chef to sit down at a computer and place an order from one or two vendors than 20 or 30," he said of the difficulties of sourcing from small farms. "We have to recognize that one of the primary goals of businesses' scaling up is finding efficiency--it's American, or maybe we give a high priority to convenience."

Clearly, he said, there is a growing tendency amongst consumers to want to know more about their food and connect with their farmers. And for a business to deliver on that, they'd need to put in the extra effort, think creatively and twist themselves. "Businesses have to let their ideals drive them, but it takes work," he said.

Anthony mentioned that Blue Apron, a meal-kit service that often puts the spotlight on the small farms that they source from, is one company he's interested in watching as they evolve.

"They have a very idealistic mission and they're growing at an astounding pace and they know how to differentiate powerful and positive local relationships but the question is, can they? What's the model that they'll put in place and how will they impact small agriculture?"

It would seem that emotional investment is prerequisite for any business taking on the daunting challenge of trying to create more scalable access to local farms. But when a large company goes belly-up, it takes down in addition to all the capital funneled into it all the relationships, trust and emotional investment built into it through its network of members and suppliers. Is that loss justly weighed into decision-making?

The modus operandi of startups is identifying a problem, getting the smartest people together in a room, and cracking that nut. Ronen and Rob Spiro, CEO of Good Eggs, are very smart and dedicated people who led talented teams. But for various reasons, their outfits have left behind many small farms who can't adapt as quickly and just shut down operations. And it can't be a great experience for a membership eager to get more involved in their local foodshed. CSAs are somewhat notorious for lacking in "user experience." But they're at least easy--and virtually cost-free--to get off the ground again should one fail.

Of course, it's never anyone's intention to fold, and responsible damage control is being pursued by Ronen, who wrote in an email that he's transitioning Farmigo to focus on software only "as a means to helping farmers."

Morgenthau, who has refocused his efforts on his family's Upstate New York farm, said he was hopeful for a middle ground between a full-stop competitor to Fresh Direct and small, CSA-like local distribution models to emerge: "My sense is that there is room in that in-between area to specialize and gain a market there."

For now, Ying said she's contented to keep her "head in the sand," and focus on introducing more events for her community and suppliers like cooking clubs, field trips and dinners. To the challenge of excess produce from this year's stagnant CSA membership, she was able to connect those farms through a friend to another local organization that needed to buy extra. That solution itself brought another sense of community partnership.

"Food is different from other industries because people feel an emotional and cultural connection with it, they want to feel purposeful through their food choices," said Ying. "It builds interconnections throughout so much of our lives that it's much more than just a simple commodity, so we shouldn't treat it that way."

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