Monday, April 25, 2011
Griffith Laboratories - a tank of savory flavor?
I attended a trade show in mid-March and I’ve been muddling around trying to write about it ever since. There is no direct Bridgeport connection in it. Though it is about the food sector, and Bridgeport has one, and about reinventing the local economy, and if a blog is partly a way to nudge the world in the direction you think it ought to go by acts of selective description, take this as a suggestion for how Bridgeport Food might evolve.
The conference was the Farm to Fork Expo. Family Farmed, a local non-profit, launched the event 8 years ago to match up buyers and sellers of local and sustainably produced foods. It’s grown in dimension over the years.
There is a consumer trade show -- this year there were over 150 vendors showing off their local food products, and a lecture tract with workshops on how to make your own cheese, or be a conscientious carnivore by consuming the whole carcass.
But the meat of the conference is aimed toward lifting the local foods industry beyond its current scope. That includes building demand among big buyers -- both the Chicago Public Schools and the State of Illinois have set local food procurement goals and Family Farmed helps them source product.
And it includes building an infrastructure in finance, distribution and realistic regulation to bring local foods “to scale” -- which is to say, something between the scale of mass distribution that dominates the food industry now, and the volume small farmers can distribute themselves by making deliveries, or selling their own produce at farmers markets.
Illinois used to have a mid-sized local-foods infrastructure – it wasn’t until after World War II that the state’s farmers gave up growing vegetables for local markets, and for themselves for that matter, and focused almost exclusively on commodity grains for export. Today some estimate Illinois produces just 4% of the food consumed in the state.
The measure is imprecise. Cash receipts reported by Illinois farmers for crops that might be counted as human food add up to about $2 billion (as of the 2007 agricultural census), which is just 4% of the estimated $48 billion Illinois residents spend on food each year – though that $48 billion includes premiums from every station on the food chain that brings it to the table. On the other hand, a good portion of the human food grown in Illinois probably follows the food chain out of state.
The net result is that Illinois is both the nation’s second largest exporter of corn and soy products, and a net importer of food. As little as 0.2% of Illinois farm sales are sold directly for human consumption, and the average food item consumed in the Midwest is said to travel 1,500 miles before it reaches the table.
I got the last statistics from the preamble of the Illinois Food Farm and Jobs Act of 2007. It is part of a movement to remake the state economy by recapturing trillions in Illinois food dollars. The Act commissioned a plan to expand the state’s infrastructure for processing, storing and distributing locally grown foods.
Or as Ann Wright of the USDA described it at the Farm to Fork Expo, to build a companion economy to production agriculture, one that keeps wealth in farm communities.
The State’s plan set local food procurement goal of seeing 10% of Illinois food dollars spent on products grown and processed in Illinois by 2020, and 20% by 2030. State run cafeterias are charged with reaching a 20% local food procurement goal by 2020. Twenty percent is roughly the market share that organic foods have now.
Jim Slamma, the founder and director of Family Farmed, spoke enthusiastically about how the state’s local food goals would reverberate through the economy. He says food spending has an economic multiplier of 3 to 5 times. Illinois’ 12.5 million consumers spend almost $50 billion on food; if 20% of that food were produced locally, the local food industry would be worth $10 billion, and its impact would echo through the economy to $30 billion, or more.
Ed Miniat still makes cooking oil from tallow just east of the CMD
My own interest in all this is less about the kind of food I want to eat, than the kind of economy I want to live in. I gravitate toward any evidence an artisanal economy is making gains on the big-business old-industrial one.
Because I think an economy where things are made by skilled craftsmen with some independence, with control over their process, and pride in their product, seems inherently more wholesome than one where things are made by workers who occupy one station on an assembly line, who sell their time in increments, and accept the tedium of their jobs in exchange for a paycheck they’ll spend fueling the machine that employs them by buying more stuff.
I also recognize that big business and old-industry have real virtues. The number of people who can choose to pay extra for distinctive products is limited, and the great majority of consumers may be best served by a mass production machine -- by economies of scale in manufacturing, and distribution by giants whose size gives them leverage to urge their suppliers toward the lowest possible price.
In fact, food is a good illustration of both points. Because everyone has to eat it, and as world population grows by leaps and bounds there is a real ethical obligation to maximize production, and make it cheaply available to everybody.
But in this country, food is relatively affordable for a lot of people, and the pool of people who can afford to be choosy is much broader than the pool who can commission a house full of custom furniture, for instance. Demand for artisanal food reaches beyond the bobo class.
Clearing the former Fontanini sausage facility for something new.
One reason the Farm to Fork Conference is so interesting is that participants like Bob Scaman, President of Goodness Greeness, an organic produce wholesaler in the Englewood neighborhood, sit on panels and testify that the biggest brake on their ability to move local-organic product is a shortage of supply.
In fact, Scaman is concerned enough about generating more supply that he actively works with local farmers to build their capacity, and he’s helped Family Farmed develop a technical manual on post- harvest handling to encourage more of them to sell to wholesalers.
He says Goodness Greeness’ business is growing fastest in minority and ethnic markets; for instance, he points out one of the biggest growth segments in organic foods nationally is among Hispanic mothers who want to feed their babies organic milk.
But even beyond proving and building demand, there are moments when the Food to Fork conference challenges the big-business mass-production model where it seems to be strongest – in its claim to be the most efficient way to produce and distribute food.
The last of the Swift buildings: one prospective buyer reports this building contains an old fashioned laboratory that was left untouched after a small explosion.
Bridgeport food got its foothold on the border of the Union Stockyards, where the meat packing industry once pioneered those claims. As William Cronon describes it in Nature’s Metropolis, the innovations in the stockyards were as much organizational as technological, starting on the disassembly line – live animals varied in their body shape as individuals, and human eyes and hands could slice them up better than machines could, but by breaking down each process to the simplest component the human assembly line achieved the efficiency of a machine.
The packers bought efficiencies with huge capital investments. They built slaughterhouses, refrigerated cars, and a network of cold store facilities to penetrate provincial markets. The capital investment increased their capacity, and their incentive, to grow.
Both farmers and butchers complained bitterly about the big packers. Ranchers had fewer places to sell their herds, and the price fluctuations on distant urban exchanges seemed like conspiracy. On the other end, as the packers entered new markets they put smaller butchers out of business, they were willing to sell below cost if they had to, they needed volume to pay for their plants.
And yet the big packers’ ability to compete on price seems to prove their efficiency claims. They could sell meat for less than the cattle cost them, because they found ways to make money off of the refuse. Bone, bristle, blood and offal could be made into buttons, brushes, fertilizer and tallow when they were collected in volume; the average independent butcher didn’t collect enough material to open a sideline businesses in glue.
The ranchers benefited too, despite their complaints, because the big packer’s investment in infrastructure and especially in cold store facilities guaranteed a more stable, year round market for cattle, while providing more affordable meat, in some cases more safely, to the consumer. It was the small middlemen who suffered and went out of business. Once they did, the 4 big packers had near monopoly powers. Though they still had to compete with each other, Cronon observes.
The meat packing industry is still dominated by 4 big packers today. And over decades, a similar process of consolidation has been repeated on the farm, with mid-sized farms disappearing into much larger ones. But that’s not necessarily because the big farms are more efficient.
Last year’s Farm to Fork conference included a presentation by Ken Meter of the Crossroads Resource Center. Meter has done extensive study of the Minnesota food industry, including a survey of research on economies of size.
He concludes most of it shows that economies of size are not the main driver of consolidation among farms and other rural firms, and he’s found little proof that size translates into efficiency per unit of production, though it may translate into bigger cumulative profits. As a group, though, it’s not clear most farms are actually profitable.
Meter found that Minnesota farmers spend more per year producing crops than they earn selling them. Over 10 years, he calculated productions costs exceeded cash receipts by an average of $465 million per year. He found Minnesota farmers depend on up to $1 billion in federal subsidies, and other kinds of “farm related income" to pay the bills.
Something similar is true in Illinois. The 2007 agricultural census shows Illinois farmers produced crops and livestock with a “market value” of $13.3 billion (comparable to the $13.2 billion market value of Minnesota product), and spent $9 billion in production expenses (vs $10.3 billion in Minnesota) – appearing to generate a $4.3 billion surplus. But that “market value” includes produce placed in the Commodity Credit Corporation loan program, a federal program for supporting prices for agricultural goods. Cash receipts from actual sales were $8.6 billion, or $400 million short of expenses.
Meter argues continued farm expansion has been fueled by federal incentives, the availability of capital, and the scale of infrastructure and other food business, not by actual efficiencies of production. Larger farms seemed better in the decades after World War II, when a global population surge sparked fears that global food production would fall short. Internationally, the Green Revolution applied first world farm technologies, like synthetic fertilizers and pesticides, to ramp up third world production. Domestically, the US encouraged its farmers to expand for export to global markets. As meat packers had found before them, expansion was expensive. Loans taken out to fuel expansion in the 70s fueled the farm debt crisis of the 80s.
Looking at the imbalance between production costs and cash receipts of US farms today, Meter suggests the main beneficiaries of the US farm subsidy system are producers of inputs, like seeds and equipment, and the finance industry. He says nationally, farmers have spent $600 billion more paying interest to lenders than they have received in subsidies.
Even where consolidation has appeared to increase profits, it’s not clear that it has reduced the retail price of food, so much as it has redirected where food dollars go. The USDA dissects consumer food spending into portions captured by industry. In 1950, about 40 cents of each consumer food dollar paid the farmer who harvested the food. Today, the farmer’s portion is roughly 16 cents, if the measure includes food consumed away from home. Though it is closer to 24 cents for food consumed at home.
Meter says research has consistently shown that consolidation of power in the manufacturing and distribution sectors actually appears to increase the retail price of food. It’s an observation confirmed by USDA food dollar data. Adjusting for inflation, the USDA shows that dollars earned by farmers have remained relatively steady since 1950 even as their portion of the food bill shrank – fluctuating between $150 and $200 billion a year. It’s the marketing bill that multiplied, from roughly $250 billion in 1950 (in inflation adjusted dollars) to about $600 billion in 2004.
Back in 1976, Russell Parker, a former FTC official, came to some of the conclusions as farm expansion was taking off. He concluded that expansion did very little to create new efficiencies, he believed expansion was fueled mainly by the availability of capital, and he pointed out further that higher food prices were helping to feed a new surge in inflation – he found over half the increase in the US consumer price index in 1973 traced back to the higher price of food.
The food economy as it operates now may be the most efficient means for extracting profits for those firms who best consolidate their buying power. And that could be good news for the future of local, sustainably produced foods. It suggests there in room in the food bill to rearrange where the profits go.
Today, small producers charge a premium and a limited market of conscientious consumers are willing pay it. But adjustments in the marketing dollar may also make room to sustain small producers even as the local food economy is brought to scale, and prices for artisanally-produced product come down.
And as Illinois reorganizes its economy toward local food production, what place is better poised to participate than Bridgeport, with its central location, and its legacy of industrial food? That legacy includes disused plants that might be remade as the infrastructure for new production. But it also includes the traditional food businesses that are still prospering here.
In a study of the “artisanal economy” emerging in the business sector, Intuit-IFTF describes the context as a “barbell economy” in which a few very large firms are balanced by a proliferation of small upstarts at the opposite end of the scale. Intuit calls them artisanal because they use skilled labor to assemble complete products.
The mid sized firms have been squeezed out by the larger ones. But the firms at the extremes of the scale have a symbiotic relationship. The large firms outsource tasks, and especially innovation, to the smaller, nimbler ones. Maybe something similar could evolve between new and old food businesses in Bridgeport.
Schulze and Burch Biscuit Company's 35th Street Plant
Schulze and Burch Biscuit Company has been innovating since they were founded in 1923. They had a hand in inventing the modern saltine cracker, the toaster pastry, the granola bar, and the dual textured cookie (chewy inside, crispy outside). They are sometimes approached by small food producers asking to hire out the mixing equipment and ovens at their 35th Street plant, because USDA approved bakery space is expensive to build and rentable space is in short supply.
Griffiths Laboratories opened shop as food chemists in 1919. Today they’re a 3rd generation, family owned enterprise employing 2500 people around the globe. They produce taste and texture components for food processors and restaurants; they produce savory flavorings under the brand name Innova at their 38th Street plant, which is surrounded by tanks and the aroma of meat.
One investor at last year’s Farm to Fork Conference raised innovations in ingredients -- extracts of healthful berries for superfoods, for instance -- as a potential growth segment for artisanal food producers, as local meat and produce becomes more common and prices, and profits, potentially drop.
Two former meat packing plants in the Bridgeport vicinity have already been repurposed for a new era of food. Last year, Barkaat Foods reopened Chicago’s last slaughterhouse to process halal meat for the Muslim market. Though there is wider demand for small slaughter-services.
Panelists at the Farm to Fork Expo report the demand for sustainably raised meat is strong and growing, but their growth is slowed by a bottleneck on the processing end. Big slaughterhouses do kills of 2,500 animals a day, it’s not worth their while to get the plant running and wash it all down again to accommodate kills of a couple hundred animals.
Meanwhile, the former Peer Foods building in the stockyards is being reinvented as The Plant. Developer John Edel gets the most press for his plans to build an actual “vertical farm” in an indoor, multi-story environment. But he is subdividing the rest of the building as a small business incubator – much like the Chicago Sustainable Manufacturing Center he redeveloped on 37th Street -- except it will focus on food and beverage producers. When it’s finished, it will help incubate a new food industry in the footprint of the old one.
The Peer Foods building in its first youth as a meat packing plant.