Food is a market failure: it’s nuts!
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Food is a market failure: it’s nuts!

Digital technologies for sustainable local agri-food systems
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This is a transcript of Ed Dowding’s presentation from summit on digital technologies for sustainable local agri-food systems organised by Imperial University and the Sustainable Society Network. It shares an introduction with evidence we gave earlier this year to the Sustainable Food Supply Chain commission and then goes on to talk about the inherent market-failure of food.

We want to be part of the mainstream, Future-proof AgriFood System which is working to create good food, for everyone, forever. – Ed Dowding

ABOUT FOODTRADE   [Next Slide]

My name’s Ed Dowding, and I started FoodTrade to democratise the data which will speed up this revolution.

Tesco, Unilever, Sainsburys, Nestle.. big food companies which depend on market- and supply-chain data to maintain and grow their position. I wanted to know what would happen if we took that same kind of data and made it available to ANY food business? To (literally) the 99% of of the industry across Europe working on low margins, who struggle to access the information, partners, and resources they need. What if the open-data revolution could create a food system which substitutes economics of scale…with efficient subsidiary-networks of companies trading locally, responsibly, and intelligently?

Foodtrade is an open and collaborative online service :

  • We map supply AND demand – allowing anyone to post their shopping list or their product list.
  • We’re a virtual market place which makes real-time trading as easy as tweeting
  • We offer market analytics to highlight cost-saving or market-growing opportunities
  • The online open data platform means it scales from farm-to-fork and smallholder to supermarket, urban to rural, and country to country.
  • We’ve connected over 1300 business around the world, and we’re growing fast (at last!) because – like Wikipedia and Google – we provide the tools and information our members need to live better.

WHY DID WE CHOOSE TO DO IT LIKE THIS?  [Next Slide]

Because if we want these these (see slide) Under these conditions, then it’s this that delivers that. However the mesh network that this creates then faces this set of problems.  

[Next Slide: Barriers to sustainable purchasing]

  • Price is only a factor for 52% of people.
  • The next few can be solved with better access to information and better access to a  bigger market – they’re imperfect market issues.
  • Multiple deliveries is a secondary problem we are working with couriers to mitigate. If we give them the information to work with, others can build on this platform to solve the next set of problems. But abundant data removes the first problem.
  • Finally TRUST: We don’t trust supermarkets, but neither have we learned to trust small suppliers. We think they’re flaky and will fold at a moment’s notice. Transparency and social credibility of their trade network changes that.

BUT THIS IS NOT ENOUGH   [Next Slide: laws of disruption]

AAFN working with Digital Technology are subject to this graph about the laws of disruption. The technology allows us to do cool stuff, we try to bring users as fast as possible, hope to hell the business model holds up, and eventually it’s regulated for failures. However this graph also shows us what is actually holding us back: Above a certain threshold, the gap between technology and politics is law-breaking – a failure of policy. Ask FarmDrop about the chain of custody issues they face — issues NOT faced in other countries in Europe. And the gap between social adoption of a technology, and business,  is a failure of economics to measure value. (Indeed many suggest that the absence of economic growth isn’t due to inactivity – data is generating social value in colossal quantities – it’s because we are no longer measure the thing which has value.) If we are to flourish, we have the change the rules of the game. Food and agriculture is currently a market failure. Any system which so depletes the environment, public health, and leads to such market concentration simply can not be said to be serving us correctly.

  • No one wants to be on a race to the bottom on price – we know it should be a race to the top on quality.
  • No one wants to pollute the planet, but until everyone values it there’s first mover disadvantage in spending money to protect something which your competitors are treating as free.

Food and agriculture is a market failure because it makes our solutions look like problems:

  • We have too much food – just not in the right place
  • We have an abundance of knowledge – just not appropriately distributed
  • We know what do – but there’s no money to do it.

Food and agriculture is currently a market failure, and we are subsidising its worst players.

And it is this which makes it so hard. Stop subsidising the incumbents and so many of these problems go away. The people working in this area face the challenge of trying to work within two socio-economics paradigms at the same time. The crude 20th century model, and a networked and blended 21st-century model. They are working with a huge range of stakeholders with wildly contrasting values, and urging them to adopt what we’ve been led to believe are ‘risky’ behaviour changes to ensure long-term and collective good. If you have the means, support these people. BUT changing the whole food system could be easy if we set the right goals, appropriate infrastructure, and then get out of the way. Here are some things you can do to make that happen.

  • Don’t be frightened to regulate – business is crying out for it. It knows that, like pruning a tree, the private sector needs regulation to help it perform.
  • Every new piece of policy accounts for its costs and benefits for its impact on food, energy, water, and health;
  • Give it an automatic sunset clause, and at least 100 year impact projections
  • Acknowledge that there are optimal scales for different types of business and revisit all regulation, taxes, and incentives to make them sliding scale
  • Insist on open standards and harmonised metrics to allow more market fluidity, generating that race to the top not a contractual pressure to collapse and resource depletion
  • Allocate research budgets not by economic potential, but by system impact

Everything is lining up. Technology is ready. Society is ready. Business is eager but worried. Most policy is lagging, but aware. There’s a huge market which is just looking for tweaks to existing rules to help it flourish – just the tiniest chink of sunlight through a crack to allow it to blossom – of which the microbreweries are a great example, and there’s a world of social enterprises like my own which are keen to drive through a new class of metrics to measure impact and find matching revenue models.

Let’s make sure that the things we discuss here work as far along that lever as possible – changing to goals and the governing paradigm, because we do not want to remain an Alternative AgriFood System, we want to be part of the mainstream, Future-proof AgriFood System which is working to create good food, for everyone, forever.

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