Why Is It So Hard To Set Up An Ethical Food Business?

Here are a whole host of new companies looking to make waves in the ethical food space right now. And if the figures are to be believed, they’re having some considerable success. Ethical food movements, like veganism, has grown to encompass 2.5 percent of the population. That’s up from a little under 1 percent in 2009. In other words, we’ve seen a growth rate of 150 percent over the last seven years. But despite this growing market, the ethical food business has faced some considerable challenges. Setting up a business that is truly ethical is harder than many expected in the current ecosystem. And these challenges threaten to destroy these carefully crafted brands. Many companies are delivering on their promise to serve food that is free from animal products. But that’s only one small part of the supply chain. Businesses who actually want to be ethical have to cast their net a lot wider. And they need to face up to an incumbent industry that doesn’t want to change its ways.

Ethical Plant Sourcing Is Tough

Ethical food businesses care a lot about animal welfare, but it’s not their only concern. They also want to make sure that they source plant food with a minimum of impact too. What would be the point of shirking animal food, but then buying plant foods that destroy the lives of people? That’s precisely what happened back in 2013 when the quinoa craze was taking off. Comercial Sorghum 

Western demand for quinoa rocketed.  And that send prices in places like Peru and Venezuela rocketing. Many local people didn’t have the money to afford the higher prices of their staple crop. And so they, in turn, suffered food poverty and had to import other food from overseas.

This is just one of many issues involved in sourcing plant foods. Another related issue is the difficulty in sourcing produce locally. About 95 percent of all produce that enters the US goes through big distribution centers. These centers then distribute food all over the rest of the country, usually in articulated trucks. There are a couple of significant problems with this. The first is that a lot of the food isn’t grown locally. Many ethical companies, concerned about CO2 or the local economy, don’t like this. The other problem is that much of the food isn’t organic. And that’s a big concern for businesses who want to protect the health of their patrons and the environment. When food is grown in the US, at least people know what stuff is and is not allowed to be put on it. But in other countries, conventional farming rules don’t apply. There’s no knowing what might be getting sprayed on crops abroad. There’s also the worry that food grown outside the US might be cultivated without ethical labor practices. An ethical food startup could hardly call itself ethical if its food were produced by farmers on a starvation wage. Neither could it be called moral if that food was grown by kids who should have otherwise been in school. The USDA doesn’t regulate labor practices in other countries. So it’s up to businesses to do the regulating themselves.

Organic Food Is Not Widely Available

Most people who show up to ethical food businesses expect the food to be organic. But as Mark Bittman points out, it’s just not available in the quantities people need. This is as much a problem with farming as it is the environmental community. The organic movement came to a head about 25 years ago. At that time it was agreed that there should be some sort of minimum standard to define food as organic. This then got codified into law, as is so often the case. And that meant that organic gained a strict, legal definition. The problem with this is how high the standards have been set. Organic food isn’t just a little bit more expensive than conventional; it’s much more costly. 

About 40 percent for most foods. And because it has a legal definition, there is no halfway house. It’s either organic, or it’s conventional. Given that the price is high, demand is low. And that means the bulk-buying organic produce is difficult. There simply isn’t the supply of some goods to make it work for restaurant chains. Often when restaurants advertise "organic," they’re advertising that some of their ingredients are organic. Rarely is it the case that an entire meal is organic.

Incumbent Firms Don’t Like Disruption

The fact that incumbent firms don’t like getting disrupted goes without saying. And that’s probably why we haven’t seen sweeping changes in the food industry, despite health concerns. We still have the same industrial model that was being used back in the mid-twentieth century. Companies make food with a long shelf life and plenty of nasty ingredients. They’re not so bothered about promoting new, fresh and innovative products. They just want to lower costs. And so the arrival of food startups with ethical messages has come as something of a shock to their systems. Companies like Hampton Creek have been trying to infiltrate established markets. But they have been thwarted, as this information article about Hampton Creek demonstrates.

The problem right now is that the deck is stacked against those who want to get healthy food out into the marketplace. The US government subsidizes all of the foods that make us sick and not those that make us healthy and vibrant. The majority of subsidies go to growing corn. Fresh whole corn on the cob is good for you, of course. But that’s not how Americans eat the stuff. We eat it in the form of sugary drinks and candy. And subsidized corn gets fed to livestock, making meat cheaper than it would otherwise be. So what’s the solution for ethical food startups? The first is to source as much as possible domestically. Domestic food comes with higher ethical standards and lower CO2. The next is to work on building suppliers who can deliver quality organic ingredients. And finally, startups need to put pressure on officials to end the practice of subsidizing food that's not good for us.