Cienega Musings: Efficiency vs. Resilience

by Esther Park

One of the assumptions our portfolio is based upon is that decentralized, local, and regional food systems are more resilient than our industrialized, international food system. I didn’t quite think I would see that theory tested out in the way that it has this year. COVID has put a harsh spotlight on the fragility of our food system in a way we couldn’t have imagined.  We saw firsthand its brittleness when grocery store shelves went empty while food was being dumped or left rotting in the fields; when restaurants closed, effectively decimating markets for items like potatoes and lamb since people typically eat lamb and French fries when they eat out, and usually don’t prepare them at home; and when meat packing plants were crippled by a susceptible workforce. 

Our current food system is built for and designed by pure economic interests that put profit above any other outcome.  In order for a system to squeeze out the most profit, it must become hyper-efficient. That is primarily what you see today – elimination of the small players and infrastructures, and for those that survive, it is likely a matter of time before it gets rolled up into a larger conglomerate operation. As operations become larger, they can split off into specialized functions, so you can have distributors that only service restaurants and you can have meat processors that only process pigs. Any redundancies or “stray” activities are eliminated and profits are maximized. But this system is not resilient.

While the mainstream system faltered, we also saw market attention and demand shift toward local producers. When I couldn’t find eggs at the grocery store for days, my thinking went something like this: chickens lay eggs every day – there should be plenty of eggs somewhere – I need to get closer to where the chickens are so I can get my eggs. Clearly, I wasn’t the only one thinking in that vein. In the days following grocery store stockouts, farm businesses, farmers markets, and online versions of both were quickly inundated. And people were able to get their meat, their eggs, their kale (just kidding, I don’t think kale was ever out of stock). 

These smaller scale farm and food businesses were more resilient and much better suited to address the needs of a pandemic-afflicted population.  Their businesses were diversified enough that they could push product meant for restaurants through their grocery and direct to consumer channels. While it’s a good story, there’s another underlying story that limits the extent of this resilience. What most people didn’t see is that while these businesses, and the infrastructure they depend on, were scrambling keep up, they were being stymied at times by our historic disinvestment in the systems we look to to be more resilient. Local meat producers were now finding that wait times with their processer were longer than ever, direct delivery companies amassed waiting lists into the hundreds and thousands, and Indigenous tribal communities went hungry as last mile logistics disappeared overnight.

We can’t just wake up one day and turn to our local and regional food producers and expect them to deliver at the scale and pace of the industrialized system. Their own operations depend on the supply chain infrastructure we have in place, which has suffered from decades of disinvestment.  The problem is that investors want two incompatible things: we want the infrastructure to stay nimble and resilient, and we want them to generate financial returns that can only be achieved by huge scale and hyper-efficiency. Something has to give and we just need to decide which one we want more.

Esther Park is CEO of Cienega Capital, an investment company utilizing an integrated capital approach to systemic change in the areas of soil health, regenerative agriculture, and local food systems. She has 20 years of experience in mission-based financial services ranging from microfinance to risk capital investments. Read more >