Food Value Chains: Creating Health & Wealth for All

Ithaca, April 17, 2013Shanna Ratner

Yellow Wood Associates

What is a Food System?

● The whole array of activities involved in producing and distributing food*

● Can be local, regional, national, international.

● One component of the agricultural economy

*Statz, John, Strategic Pathways and Interactions to Cutting Hunger in Half in Africa, 2000. http://aec.msu.edu/fs2/africanhunger/strategicpaths.pdf

Potential Benefits of a Fully-Realized Food System● Healthy fresh and processed products● Access to healthy food for all● Healthy natural environment● Improved health outcomes● Ecosystem services and cost avoidance● Fiscal health through open space ● Employment opportunities● Entrepreneurial opportunities

How are benefits realized?

Through relationships between and among players who act out of self-interest to achieve shared benefits.●Suppliers●Producers●Processors●Buyers●Consumers●Supporters

Roles in a Food System

● Transactional players provide inputs, produce food, process and distribute food in

response to market demand.

● Support system players create the rules for transactional players and contribute to

(or limit) their capacity to respond to market demand.

Generic Wealth Creation Value Chain

Which roles do You play in the food system?

● Health and public health providers● Government representatives● Farmers● Educators● Food or food-related business● Researchers● Volunteers● CONSUMERS!!!And more…

Two Key Components of a Wealth Creation Approach to Food Systems

● WealthWorks Value Chains

● Broad Definitions of Wealth

Where are we working on the ground?

WealthWorks Value chain grants in:Central AppalachiaEnergy efficient housing construction, energy efficiency retrofits, renewables, food, forestry

Alabama Black Belt and Mid-SouthRenewable energy, social impact investment, forestry, food, Community Based Tourism (CBT)

Lower Rio Grande Valley region in TexasGreen housing/neighborhoods

What do we mean by a “WealthWorks Value Chain?”

a business model based on shared economic, social, and environmental values, in which buyers, processors, producers and others work together

to create value in response to market demand while building community wealth.

Traditional Supply Chain

Chain starts with producer supply

Measured by net income produced

Everyone is in it for him/herself

Power determines who gets paid how much for their role

Participants try to pass on costs to others within or outside of chain

Tries to influence policy to create advantage and maximize short-term income

WealthWorks Value Chain

Chain starts with consumer demand

Measured by wealth created/ retained

Everyone is in it together

Intentionally balances mutual benefit of all in chain

All known costs are considered and addressed

Tries to influence policy to level the playing field and maximize long-term and widely shared wealth

WealthWorks Value Chains vs. Supply Chains

Results

Supply Chain

Value Chain

Individual Capital

Social Capital

Intellectual Capital

Natural Capital

Built Capital

Political Capital

Financial Capital

The Wealth Creation Approach

Based on a diagram created by Justin Maxson of MACED

Seven Forms of Community Wealth

Intellectual capital is the stock of knowledge, innovation, and creativity or imagination in a region.

Social capital is the stock of trust, relationships, and networks that support civil society.

Individual Capital is the stock of skills and physical and mental healthiness of people in a region.

Seven Forms of Community Wealth (cont.)

Natural capital is the stock of unimpaired environmental assets (e.g. air, water, land, flora, fauna, etc.) in a region.

Built capital is the stock of fully functioning constructed infrastructure.

Seven Forms of Community Wealth

Financial capital is the stock of unencumbered monetary assets invested in other forms of capital or financial instruments.

Political capital is the stock of power and goodwill held by individuals, groups, and/or organizations that can be held, spent or shared to achieve desired ends.

A wealth creation approach intentionally creates seven forms of wealth without undermining any one to build another.

“Income” or earnings from investments in wealth take many formsIndividual capital: psychic and physical energy for productive engagement and capacity to use and apply existing knowledge and internalize new knowledge to increase productivity.Social capital: improved health outcomes, educational outcomes, and reduced transaction costs, among othersIntellectual capital: inventions, new discoveries, new knowledge, and new ways of seeing. Natural Capital: a sustainable supply of raw materials and environmental services.

Most projects focus on income (a flow)instead of on building wealth (a stock).

INCOME

EXPENSE

WEALTH

The difference between wealth and income

Type of Wealth Impacts

Individual How will your plan or intervention impact the stock of skills and physical and mental healthiness of people in a region?

Social How will your plan or intervention impact the stock of trust, relationships, and networks that support civil society?

Intellectual How will your plan or intervention impact the stock of knowledge, innovation and creativity?

Natural How will your plan or intervention impact the stock of unimpaired environmental assets in a region

Built How will your plan or intervention impact the stock of fully functioning constructed infrastructure?

Political How will your plan or intervention impact the stock of power and goodwill held by individuals, groups, and/or organizations?

Financial How will your plan or intervention impact the stock of unencumbered monetary assets at the individual and community level?

A wealth matrix for planning and evaluation

Wealth and Sustainable Livelihoods

We need enough of every form of wealth so that we can:●Benefit directly from a portion of the “income” it produces (improve quality of life), and ●REINVEST the remainder of the “income” to sustain and grow the stocks of wealth over time.

Wealth and Sustainable Livelihoods

All wealth depreciates over time.

Only by continually re-investing in all the forms of wealth are we able to:●increase the quality of life for present generations and ●the sustainability of livelihoods for us and future generations.

Selected Gaps in Your Regional Food System

● Many discrete efforts that are not coordinated as a system tied to market demand at scale

● Lack of information and mechanisms for sharing information among discrete efforts

● Weak ties to specific types of support for financing, research, market expansion, new product development, policy changes, etc.

Challenge: How Can We Address the Gaps while Building Wealth?Table Exercise #1: Who is at your Table?

Table Exercise #2: Building Multiple Forms of Wealth through Food Systems

Table Exercise #1

Table Exercise #1: Who is at your Table?You will have 5-10 minutes to engage in this exercise at your table. Get as far as you can. This exercise asks you to:1.Introduce yourself and explain the role(s) you play in the food system.2.As a group, choose a food system gap to discuss3.Discuss the type(s) of wealth you/your organizations create and the benefits to you or your organization of closing the food system gap you have selected.

Table Exercise #2Table Exercise #2: Building Multiple Forms of Wealth through Food Systems You will have 15-20 minutes to engage in this exercise at your table. Get as far as you can. This exercise builds on Table Exercise #1 - continue to focus on the same gap in the system that you identified in Table Exercise #1.In this exercise you will:1.Brainstorm interventions to close the gap you have identified2.Choose an intervention to focus on3.Plan how you can carry out that intervention in a way that creates multiple forms of wealth, and4.Report to the group about your plan.

Contact Information

Shanna Ratner

Yellow Wood Associates802-524-6141, shanna@yellowwood.org

Wealth Creation and Rural Livelihoods National Community of Practicehttp://www.ruralwealth.org