it is back to work for me!

Our Christmas dinner of the organic roast was excellent, and my 20 year old daughter was kind enough to eat the meat off of my plate; this was to deflect comments about “the price of the meat” that I didn’t eat. Honestly, people should be happy that I did not elaborate on the sad cow in the documentary Small Farm Rising, toppling over after being shot by his friend.

As I think more about the complexities involved with producing food sustainably, increasing food access, and preserving environmental quality for future generations, I keep getting stuck in the same place: our food system has largely been shaped by corporations.  The result is a market based, low cost, efficient system, and as to be expected, the negative impacts on public health, the environment, and so on, do not factor into the decisions of firms. What makes this an especially wicked problem is that there are so many problems embedded in our food system, and they are often in conflict. Here is an example from a paper I am working on right now: “… there is a general notion that meeting the health needs of low-income consumers is best accomplished low priced, non-luxury food items.  On the one hand, the necessity of increasing access to food that sells for low prices appears to be a foregone conclusion; on the other hand, the focus on low prices requires the food be produced and marketed in our conventional food system….  Those aspects of the food system most often criticized– such as large farms, large processing facilities, mass produced packaged foods, environmental pollution and low wages – are exactly those that contribute to low food prices for consumers.”

I am wondering if the concept of “shared values” as described by Porter and Kramer, in their Jan/Feb 2011 article in the Harvard Business Review can be useful when considering the food system.  The premise of their paper is that capitalism can be reinvented by considering shared values rather than firm profit. Shared value arises from the recognition that a firm’s profits matter, but that society’s needs matter also, and in fact, the two are interdependent.  The authors state: “Not all profit is equal – an idea that has been lost in the narrow, short term focus of financial markets and in much management thinking. Profits involving a social purpose represent a higher form of capitalism – one that will enable society to advance more rapidly while allowing companies to grow even more. The result is a positive cycle of company and community prosperity, which leads to profits that endure.” (p 75).

In my opinion, the best example of shared value is portrayed not in the article mentioned, but in the book The Search for God and Guinness, which discusses how, at a certain point in time the company was committed to the health of its employees. For example, Guinness devotes energy to solving public health problems common in Ireland, educating workers about poor living conditions, financial management, and so on.

In their article, Porter and Kramer provide an example of Nestle and the nespresso pods, where Nestle developed strong and reliable sources to supply high quality coffee. Nestle worked with the suppliers, and through the use of contracts, was able to procure as much coffee as they desired; the communities where the growers resided benefited and earned enough money to be able to improve community infrastructure.

I like the concept of shared value. However, I am skeptical about the long run stability of shared value as a model for firm behavior. My skepticism arises from knowledge of how agricultural markets have evolved over the 19th and 20th centuries in the US. The best example is the broiler industry, where the use of contracts initially was beneficial to both chicken processors and chicken growers; as time passed, some growers felt the contracts were more favorable to the company than to the grower. I speculate that the reason the contracts were perceived as less favorable is that the broiler growers had fewer outside opportunities after contracting became commonplace.

Shared value might be a promising way to think about the food system, and deserves further consideration. That said, there are two important caveats. One, meeting environmental needs and human needs might still be in conflict in this model. Two, how might shared values (ie the company’s gains and society’s gains) shift in the long run?