3

Innovations in Food Production and Processing and Implications for Food Systems

Session 2 of the workshop, moderated by Helen Jensen, Iowa State University, was the first of several sessions focused on innovations and their implications for food systems. In this session, speakers described innovations in food production and processing. Jensen opened the session by highlighting a recent National Academies Consensus Study Report titled Science Breakthroughs to Advance Food and Agricultural Research by 2030 (NASEM, 2019). The report identifies the types of science breakthroughs and innovations needed, where barriers to achieving those breakthroughs exist, where there are opportunities, and the trade-offs to be considered. Jensen pointed out that food systems are dynamic and suggested that they should reflect changes both in the market environment and in science and innovation.

FOOD SYSTEMS LINKAGES TO RURAL ECONOMIC DEVELOPMENT

Becca Jablonski, Colorado State University, spoke about the food system’s linkages to rural economic development. She began by pointing out that there have been recent changes in consumer demand for products, including where they shop, how they buy food, and interest by urban stakeholders in value-based procurement for institutional buyers.

Leveraging Municipal Procurement

Citing data from Johns Hopkins University, Jablonski stated that as of 2016, there were more than 300 food policy councils in the United States

(Sussman and Bassarab, 2017; Johns Hopkins Center for a Livable Future, 2019). According to Jablonski, given that 80 percent of the U.S. population lives in urban areas, it should not be surprising that most municipal food plans are urban-focused and do not explicitly address linkages to rural areas.

Jablonski explained that many of these plans deal with food procurement issues, with the aim of leveraging the buying power of institutions. As an example, her home state of Colorado is working to leverage the buying power of the National School Lunch Program, a $13 billion program operating in more than 100,000 schools across the United States. Highlighting data from the National Farm to School Network (NFSN), she pointed out that most bills related to farm to school in 2017 or 2018 addressed local procurement (NFSN and CAFS, 2019).

Jablonski further used the Denver area as an example for considering the extent to which opportunities to leverage procurement can support linkages with an entire region, including advancing rural economic development and the profitability of farms and ranches. She noted that in 2017, Denver’s mayor signed the Denver Food Vision, which included a “vibrant” pillar focused on economic development that contained “2030 Winnable Goals.” One goal was that 25 percent of all food purchased by public institutions would come from Colorado. That goal prompted an examination of what Denver public institutions were purchasing and how much of it was Colorado grown or raised. Jablonski shared some initial data, but she noted that a more comprehensive analysis is currently under way.

Jablonski explained why strategies for food systems development need to include rural–urban linkages, pointing out that the farms and ranches that feed urban areas are usually located outside of metro areas. She used data from the 2017 Census of Agriculture showing that Denver County has only 12 farms, none grossing more than $100,000, to illustrate that Denver is unable to feed itself. She added that while she had used Colorado as an example, a similar situation exists in many other metro areas. She observed, for instance, that the majority of the farms and ranches that sell in the New York City farmers’ markets are from rural areas outside of the metro area.

Implications for Farmers

Jablonski questioned the American Farmland Trust’s statement that leveraging local procurement opportunities always means farmers and the community both win. Although farmers may “win” from selling foods through local markets as consumers are willing to pay a premium for their products (Low et al., 2015), she elaborated, producers selling through these markets have a different cost structure from that of farmers and ranchers

selling through traditional commodity markets. She again used Colorado as a case study illustrating the expenses and profitability of different local food market channels in that state, as well as the role of risk and farmers’ preferences. Her takeaway was that profit margins vary significantly for farmers selling through local food channels. For example, she highlighted tremendous variation in profit margin between the top and bottom performers in farmers’ markets and farm stands, whereas less variation is found for community-supported agriculture (CSA).

Using national data, Jablonski then reported that for farms and ranches selling through local food markets, labor expenses increase significantly as a percentage of total expenditures as gross income increases (Bauman et al., 2018). She suggested that a reason consumers are willing to pay more for local food is the opportunity to build relationships with farmers and ranchers and understand the story behind their food. Greater labor expenses result from the additional time required to build these relationships, combined with the need for producers to do their own marketing, processing, and distribution may make it hard to cut these labor costs.

Considering trade-offs, Jablonski observed that while using more labor could potentially reduce the profitability of farms and ranches, it might also support more jobs in rural places. Considering variation in profitability by sales class, she presented data showing that top performers with a strong return on assets exist even among small-scale producers (Bauman et al., 2018). With respect to variability by market channel, she pointed out that for farms using intermediated channels only, the return on assets for top performers is greater than that of those using direct-to-consumer channels only (Bauman et al., 2018).

According to Jablonski, the greatest benefits of urban agriculture may be to educate consumers about how food is grown and to provide a connection to the food, thereby encouraging its consumption, as urban farms are not always profitable. She cited data from a 2012 national survey of urban farms indicating that only 28 percent had a primary farmer earning a living from the farm, and only about the same number included economic motives in their mission (Dimitri et al., 2016).

Implications for the Community

Turning to the question of whether the community “wins,” Jablonski referenced several studies examining the short-term economic effects of local food markets (Hughes et al., 2008; Swenson, 2010; Gunter and Thilmany, 2012; Deller, 2014; Hughes and Isengildina-Massa, 2015; Jablonski et al., 2016; Schmit et al., 2016), which show a small but positive effect. She cautioned, however, that given finite resources, every decision involves a trade-off on the supply or demand side. Regarding trade-offs on the supply

side, she observed that most arable land is already in use, and producing more of one commodity means reducing production of another.

Thoughts About Moving Forward

Going forward, Jablonski recommended that legislators consider the implications for farmers of bills focused on increasing local procurement. She cited those implications as including whether these new markets would increase price points, enable producers to scale up production, or create a market for seconds, and whether intended producers have in place the food safety processes and other infrastructure needed to respond to this market opportunity. She also suggested considering the long-term impacts of local procurement, including how farmers’ markets may serve as business incubators, allowing farmers to generate new knowledge and business experience.

Jablonski also emphasized the importance of the interactions that take place between the farmers selling at farmers’ markets and their customers, other farmers, and market managers. She cited a study finding that 75 percent of farms had made or intended to make changes to their business operations based on ideas they gleaned from these interactions, and 82 percent had shared these ideas in rural areas (Schmit et al., 2017).

Looking to the future, Jablonski recommended that urban food policy councils include the farmers and ranchers that produce, raise, and process the food. She concluded by highlighting some of the work she and her colleagues are doing in Colorado in an effort to facilitate meaningful engagement between stakeholders in Denver’s food system and farmers and ranchers. As she explained, the Denver Sustainable Food Policy Council is considering a recommendation to the mayor that the city adopt the standards of the Good Food Purchasing Program, which include metrics associated with local economy, environmental sustainability, valued workforce, nutrition, and animal welfare. According to Jablonski, some are concerned that racial and gender equity is not pronounced enough in the framework, and that it does not fully consider differential impacts based on regional context.

Jablonski has been working in Colorado to bring producers of different scales and from diverse commodities together with urban stakeholders to consider how to ensure that the leveraging of procurement will meet the goals of both urban and rural stakeholders. She explained that she is collaborating with a broad range of partners on this initiative, including health advocacy organizations, commodity groups, and urban-focused organizations. Key questions, she said, include whether the new market opportunities will work for producers of different scales and communities, how various models may provide a competitive advantage for different producers, and whether the right infrastructure is in place. She closed by expressing her hopes that urban food policies can be leveraged to create

viable market opportunities that not just meet urban food goals but also support farmers, ranchers, and rural communities and economies.

URBAN FOOD SYSTEM INNOVATIONS: MULTISCALE MODELING AND ACTION ANALYSIS

In her presentation, Anu Ramaswami, Princeton University, took an interdisciplinary approach to food systems. Speaking about urban food systems modeling, she focused on four key topics: (1) an interdisciplinary framework, (2) the new urban agriculture lever, (3) innovations and tradeoffs within urban systems, and (4) partnering with cities and policy makers.

Background and Interdisciplinary Framework

Ramaswami described her participation in the Sustainable Healthy Cities Network, a multidisciplinary group of researchers focused on food systems, among a broad range of issues, across multiple sectors within a city, such as buildings, energy, food, green infrastructure, transportation, water, and waste, and their interactions. She explained that the group uses the social–ecological–infrastructural urban systems framework, which incorporates demands within a city and transboundary flows whereby issues produce effects outside the city borders (Ramaswami et al., 2012). While such issues as health, well-being, and equity have local effects, she stressed, they also have higher-level, transboundary impacts. The framework she presented (see Figure 3-1) depicts how changes in local infrastructure at the city level can have transboundary impacts on the environment, well-being, and climate change all the way up to the global level.

The New Urban Agriculture Lever

Picking up on Jablonski’s earlier presentation, Ramaswami noted that, given the interest in local production, a new urban agricultural lever has emerged. Globally, she stated, more than 500 cities have signed on to the Milan Urban Food Policy Pact, whose objections include increasing urban agriculture. She also echoed Jablonski’s observation that many cities have food action plans with objectives addressing health, equity, economy, and other priorities. However, she continued, quantifying the benefits of local agriculture may be difficult because of such questions as what constitutes local, whether industries within a city’s limits are also considered, and whether the demand is only for fresh products (e.g., a whole tomato) or also for products embodied in other products (e.g., tomato sauce).

Ramaswami explained that she and her colleagues assessed the current local production capacity of U.S. metropolitan areas and compared it with

expenditure data by food category to assess the extent to which local areas could be self-sufficient in their demand for various food products, even with today’s spatial distribution of agricultural production. She noted that even in areas where there is currently significant local production, those products may not necessarily be used in local supply chains.

Ramaswami described how her research considered variations based on whether the analysis included only an immediate metro area or a broader geographic area of 100 miles. The researchers also considered variations based on whether the demand was only for fresh products or for both fresh and embodied foods. Using milk as an example, Ramaswami pointed out that the difference between demand for a fresh product (e.g., milk) and for its embodied form (e.g., cheese and yogurt) varies significantly—by nearly four times in the case of milk. She reported that according to her research, 21 percent of U.S. cities or urban areas could be self-sufficient today in their demand for embodied milk and eggs, with a slightly lower percentage for vegetables (16 percent) and fruits (12 percent) (Nixon and Ramaswami, 2018). With respect to fresh products, she continued, more than 60 percent of urban areas could be locally self-sufficient in their demand for fruits, vegetables, dairy, and eggs if supply chains enabled local supply–demand connections. She characterized this as

quite a remarkable finding, one that indicates much agriculture currently existing in and around urban areas.

Innovations and Trade-offs Within Urban Food Systems

Ramaswami next described innovations in modeling and sustainability analytics by presenting a transboundary environmental footprinting framework (see Figure 3-2) showing how food, water, and energy systems are interconnected both within the boundaries of a city and in transboundary supply chains. While there may be some production within a city, she explained cities typically cannot produce all the food, water, and energy needed for the homes, businesses, and industries within their borders. She emphasized the importance of the food system’s interactions with the energy and water systems, as well as their impacts on the environment both within and outside the city.

Ramaswami next provided an example of how this framework was used to explore the interplay among food, water, and energy systems in Delhi, India, a large city of 16 million people with high rates of malnutrition and a shortage of clean water and energy. This example, she said, clearly illustrates that systems are multisector and transboundary, and that they depend largely on activities outside their borders. She added that the framework also allowed modeling of the impact of policy changes in addressing such issues as nutrition, urban agriculture, and greenhouse gas emissions, as well as identifying and prioritizing trade-offs (Boyer and Ramaswami, 2017).

Innovations in Food Actions

Ramaswami closed by describing some innovative food actions within the United States. One example she cited was Minneapolis’s launching of a Food Action Plan being developed through an 18-month community engagement process, with the goal of creating a roadmap for a more equitable, climate-resilient, and sustainable local food system. She stressed that within a city, the spatial design of urban farms is very important with respect to such issues as flood and heat island mitigation. She also highlighted opportunities to consider different types of gardening and their business case. Ramaswami and colleagues are developing a systems framework to help cities like Minneapolis prioritize their goals related to the spatial design of urban farms, whether those goals be local farming, diet and behavioral interventions, food-based management, or farm to school, for example.

BLOCKCHAIN AND IMPLICATIONS FOR THE FOOD SYSTEM

Dawn Jutla, Peer Ledger Inc., spoke about blockchain and its implications for the food system.

Definition and Overview

Jutla defined blockchain as “a set of computer science technologies, particularly from distributed data management, peer-to-peer networking, and cryptography, which enables us to, when put together, provide a digital encrypted set of transactions within a distributed shared ledger environment.” As she explained, previously clearinghouses for such information retained transaction information, and multiple versions could exist at different party sites. Jutla described how blockchain uses both a single distributed ledger with identical copies for multiple parties that automatically update and cryptographic methods, providing consistent data and transparency and helping to guard against fraud and promote traceability through

the supply chain. However, she added, a shortcoming is that blockchain may be unable to distinguish between who has ownership of an item from who has custody.

Food Industry Benefits

Jutla believes that blockchain can bring important benefits to the food industry. For example, she explained that blockchain may be able to create new business models using “smart contracts” that embed the rules of buying and selling within the industry and trigger the rules based on events, potentially removing the need for an intermediary. She added that blockchain also allows for shared, consistent data, driving an increase in transparency. For example, Jutla’s company worked with the Canadian food inspection agency to use blockchain to share license information with customers and supplies, protecting against the use of fake licenses.

Jutla then described cryptocurrency aspects of blockchain, such as Bitcoin, that could provide a new medium for financial transactions. Blockchain could allow one to record, clear, and settle in a single transaction, she elaborated, removing inefficiencies in the payment system. She predicted that this capability could be part of the “future of the future of food” if the appropriate financial market and regulatory environment were in place.

Jutla turned next to the Hyperledger project, launched in 2017, describing it as modular and as providing the infrastructure, framework, and tools for many private commission blockchains. She reported that the project has hundreds of millions of dollars in funding for research and development from large corporations. According to Jutla, there is a great difference between the consensus mechanisms used in public untrusted blockchains and the contract mechanisms and known players of private-commission blockchains. She pointed further to trade-offs in speed, stability, and finality between public blockchains such as Bitcoin and private blockchains used by companies. For example, she elaborated, public blockchains have poor speed and finality but high stability, whereas companies need private blockchains that have high speed and high security. According to Jutla, Hyperledger fabric uses the permission voting-based algorithm for reaching consensus, has moderate scalability, good speed, and good finality, meaning a transaction can be completed quickly, meeting the needs of industry.

With respect to food safety, Jutla explained that blockchain allows for tracing a contaminant and identifying all parties that have touched a product all within minutes, a process that could otherwise take days or weeks. This capability, she observed, allows companies to respond rapidly in the event of a health-related outbreak, including directly messaging all relevant parties. She added that rapid response could also help reduce food waste by quickly identifying the source of contamination, thus avoiding the need to

dispose of those items not implicated. Jutla acknowledged that at the same time, rapid tracing could potentially increase food waste by quickly identifying a large number of products containing the contaminated ingredient, but she noted that this is a trade-off that could potentially save lives and promote public health.

As an additional benefit, Jutla observed that blockchain can also support corporate social responsibility and risk management by allowing for permanent recording of a company’s policies and practices related to the environment, treatment of livestock, or labor, for example, at each step in the supply chain. Additional documentation, including auditors’ reports or certifications, can be permanently recorded as well.

Jutla stated further that blockchain can be used to provide information to consumers about where their food originated and how it was processed. To quickly obtain information about where a product came from, for example, a consumer could scan a “Quick Response” code. Jutla suggested that this functionality could be integrated into retailers’ consumer apps. She added that the traceability and transparency aspects of blockchain could also benefit producers, who might be able to obtain a price premium by documenting their favorable policies and practices related to antibiotic use or sustainable production, for example.

Jutla noted further that because blockchain is immutable, it can provide quality assurance and increase trust in what a product contains and the manner in which it was produced, while also allowing for sharing of standardized data. She provided an example from the gold industry of the use of blockchain to authenticate the material, including where it came from and how it was processed. Similarly, she asserted, blockchain could be used to authenticate a food product through mechanisms such as DNA testing.

AUDIENCE DISCUSSION

Jablonski opened the discussion session by questioning the statement made by Jutla that producers would receive a price premium for providing additional traceability. In her work with field to market, for example, she found that verification at the farm level becomes part of the cost of doing business, and that producers do not necessarily receive a price premium for this additional effort. Jutla responded that she thinks it may take time for the marketplace to catch up, pointing to the many studies showing that consumers are willing to pay more for a better-quality product, as well as to experience with other products demonstrating price premiums for increased traceability. She suggested that more marketing may be needed to empower consumers with increased knowledge about the availability of such information.

Vivica Kraak, Virginia Tech, asked how the circular economy in urban areas may be involved in scaling up production. Ramaswami responded that she does not believe it is feasible to cycle all material and energy at an urban scale, emphasizing the importance of cross-scale. She noted that her team is conducting a comparison of food waste and value, and pointed as well to existing technologies that allow the creation of new plastics, for example, from sewage. Ramaswami also provided an example of “industrial symbiosis,” which involves industry groups, such as those involved in food packaging, paper production, and food processing, working together to produce and cycle heat and other valuable resources. For example, she observed, the European Union is extracting heat from large refrigeration systems in grocery stores and from computer systems being cooled. She suggested that using “waste heat” in municipal energy systems is equivalent to using free resources.

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