Value Chains for the Vivid Picture

In California, there are countless pathways that food takes to reach the people who eat it - and some of those pathways are healthier than others. Luckily, our state is rich with examples of sustainable value chains, where businesses and consumers are building relationships, exchanging goods, and creating profit.

The Vivid Picture project team is currently working on a value chain analysis of California's food system. This work will identify new ways of doing business that go beyond the conventional food industry.

At first glance, a sustainable value chain may look a lot like a conventional supply chain because they both illustrate the movement of product and profit from producer to consumer. In actuality, they differ quite profoundly.

Sustainable value chains differ from traditional supply chains in terms of control, transparency, distribution of profit, and the very idea of value itself.

Due to the commodity-nature of the global food system, conventional supply chains are easily controlled by large businesses that are not concerned about the health of California enterprises. The Vivid Picture project team is working with a hypothesis that members of the sustainable food industry participate in value chains in a different way. These value chains contain partnerships between all of the players in the chain - meaning that all participants' benefit and tend to have a say in the development of the chain. In fact in many cases the sustainable value chains are completely disconnected from the Commodity Price Index.

Conventional supply chains limit the concept of value to economic profitability. Sustainable value chains expand the idea of value - to include economic, ecological, and social profitability. Value chains, in other words, add values and relationships to an otherwise purely 'price driven' equation.

In this analysis, the project team will investigate how sustainable food value chains function - illuminating what types of businesses are currently working, what their best practices are, and how they interact with each other. The team is collecting a myriad of data, and will likely conduct survey of their own with a wide variety of businesses - from growers and producers to manufactures and retailers - to determine how success is being achieved and profit is being generated.

Successful value chains will then be identified and used to build sample scenarios for achieving sustainability. By extrapolating these examples across the future landscape the project can ask:

How many Straus Family Creamery-type operations would it take to provide yogurts to all supermarkets in California?
How many Durst Farms-type operations would it take to supply vegetables to all supermarkets in California?
How many Dirty Girl Produce-type farms would it take to supply all the restaurants in California?
How many Petaluma Poultry-type operations would it take to supply poultry to all food service operations in California?

These business relationships are key. The state's future sustainable food system will be built on a new social contract - a shared responsibility between eaters, who are mostly found in urban areas, and food producers, who are mostly found in rural and coastal communities. This social contract will largely be built through sustainable value chains.

This new partnership of eaters and producers will be bolstered, and in many cases led, by food processors, food distributors and food outlets, working together in ways that build relationships, retain profit, and embody the principals of sustainability. These value chain partners will share information, negotiate fair pricing and develop strategies for helping to achieve the eater and producer driven contract. The system will be full of economic incentives, opportunities to create new markets, will demand continued innovation, and will provide enormous benefits for the environment, human health and quality of life.

Through this value chain analysis the Vivid Picture is taking a "picture" of a niche industry - the current sustainable and organic food industry - and using that picture to help the niche become the norm.

The Vivid Picture's final vision will illustrate how all the state's food businesses - producers, manufactures, distributors, and retailers - can work together to create a food system for California that is both profitable and sustainable. California can lead the way in creating quality food, developing new ways of doing business, and sustaining the natural systems that support us all.

Reported by Ali Edwards, Straus Communications
October 11, 2004

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