What's broken in food, what's broken in finance

nbj: Tell us about Slow Money.
Woody Tasch: Slow Money is a network of investors and food entrepreneurs—everyone from farmers and processors to distributors, restaurateurs and natural & organic brands. We’re coming together around a shared vision for rebuilding local food systems. We use the network to get money into small food enterprises around the country.

nbj: Is there a tie to the Slow Food movement?
WT: When I discovered Slow Food in 2000, it was an a-ha moment for sure. It’s beautiful in a way—grassroots citizen engagement, connecting consumers to farmers, awakening people to all of the different reasons why it’s important to know where your food comes from. No matter how you look at it—if we want to see the food system transformed or if we just want a better safety net—either way, we’re going to need more small, decentralized, organic food enterprises to provide a counter-balance to the consolidation and industrialization of the food system. That’s going to require capital. It’s not going to happen with consumer purchasing alone.

I’m convinced that at least a few million folks now feel like something is radically broken in society, and that something is tied to consumerism and the idea of endless growth. If you think generationally about the world we want to leave, then you’ve got to do something different with your money. Otherwise you just let your money circulate through this consumption machine where there’s no such thing as too fast or too big or too abstract. I can’t think of anything better to do than invest in a small food business near where you live. It’s immediate and positive.

nbj: I hear you talk a lot about soil fertility.
WT: Yes, for sure. When you try to think of fundamentals that might crack the code of what’s broken, I go there. One of the smartest things I’ve ever heard about this comes from Eliot Coleman, an iconic name in farming and one of our board members. He says, ‘Feed the soil, not the plant.’ If you just pay attention to the plant, you have a very linear—even industrial—approach to farming. The soil becomes a place to stick some chemicals to yield more plants. If you go to Eliot’s farm, you immediately see the difference. It’s obvious. The produce that he grows organically is healthy and beautiful because he’s spent 40 years building that soil. Eliot basically considers himself a soil farmer more than a vegetable farmer. When you start to think about the soil of the economy, we need lots of small, decentralized, fertile interactions at the local level if we are going to promote health. If we continue to pursue consolidation and move towards monoculture, both economically and agriculturally, we become more prone to volatility and collapse.

nbj: What is success for you?
WT: We use the term ‘nurture capital,’ as opposed to venture capital, to describe our radically different view of what success will look like. We are agnostic about how much money we make. How could that be? Well, you just have to talk to the thousands of people who are doing this, people who realize there are things more important than how much money we make from these investments. We know there needs to be a new generation of small- and mid-sized organic farmers in this country. We know that our local foods systems need to be rebuilt. We want processing and distribution to be more robust at the local level. We know that the capital we put in is not going to yield the same returns as it could in the fast money economy, period. The fast money economy is all about efficiency of capital flows. Of course money is going to move faster there and returns are going to be higher. We need to suspend those goals and put our money to work with a different set of goals and beliefs.

nbj: What are the challenges here?
WT: When you move from one model to another, there’s lots of ambiguity and confusion. The model you grow up with is clearly defined. All the structures are in place, all the incentives are there, all the professions and silos are already built. With Slow Money, is it philanthropy? Is it investing? Is it debt, is it equity? Is it high risk, low return? Is it sloppy investing? Is it the future of investing? These are all discussions you have once you start moving in this direction. We don’t claim to have all the answers. We do have a bunch of questions that we think are addressing the concerns of our constituency.

nbj: Are we ready for this move as a society?
WT: What is clear to me—and this is the only thing that is completely clear to me—is that there is a hunger for a nuanced, real discussion about what is broken in the economy, what is broken in our politics, what is broken in our communities. When you do that at the national level, it stays stuck in the realm of sound bites and special interests, but when you do that at the local level it becomes much more nuanced. Is investing in small farms conservative or liberal? You cannot answer that question. It’s both. When you get down to a real relationship at a local level, there’s too much going on to get stuck in ideology.

Wendell Berry has said this much more eloquently, but it has to do with entering into a relationship with a piece of land, with your neighbors and with a place. These are the relationships that make life meaningful and contribute to health. If we spend all of our time thinking and investing in lesser relationships, we shouldn’t be surprised by the poor health of our land, communities and bodies. You have different discussions when you reprioritize these things. What happens if you start really thinking about soil eroding at half a percent to 1% a year, which is the consensus estimate by Worldwatch, Lester Brown and all of the respected global watchdogs? They say things like, ‘Peak soil could be the quiet crisis of the 21st century.’

nbj: I’m hearing about peak phosphorus too.
WT: Phosphorus is a real threat too, absolutely. Jeremy Grantham, one of the world’s leading money managers, is talking about phosphorus, fertilizer limitations and the need for new modes of agriculture. He is one of the few people at a very high level of finance talking about the food crisis in a different way. I think Grantham said something like, ‘Thomas Malthus was right, he just had the arithmetic wrong.’

Here’s a question—‘What if GMOs are the derivatives of the food system?’ Derivatives were developed by some brilliant technicians who played a trick on the traditional risk/return factors. They squeezed additional yield out with less risk—more yield, less risk. That sounds kind of like a free lunch, doesn’t it? We could make the parallel to GMOs as cheating Mother Nature a little bit. We are squeezing more yield out of the same piece of land. The technicians will say the health impact is totally safe for humans, but consider the production risks. Consider tens of millions of acres planted in just a few crop varieties. It’s an interesting exercise to draw these connections between what’s broken in food and what’s broken in finance.

nbj: Is there some larger theory of social change that explains all this dysfunction to you?
WT: When people ask about my theory of social change, I say I don’t have one. It’s too abstract. I don’t know how we get from here to there. It’s too scary. Nobody invented our economic system. No group sat down and said, ‘Let’s form the first limited liability corporation and watch that lead to Wall Street and derivatives. Is everybody in?’ People just made decisions that they thought were the right decisions at the time. Four hundred years ago, the limited liability corporation made sense to limit risks to capital so that people could fund the exploration of the new world. The world was big, capital was small. The idea of resource limitations and pollution and soil erosion were totally inconceivable. A system that minimized risk and promoted more efficient capital flows so there could be more exploration, extraction and manufacturing made total sense in 1600. You could argue it still made total sense in 1900—it just doesn’t make total sense in 2000.

Again, I come down to doing some things that I think make sense and build from there. I guess you can say the theory is that small is beautiful. E.F. Schumacher raised the question of scale as sort of the fundamental issue that is tied to violence and degradation and health. He got us worrying about things that are too big. Wendell Berry made the agrarian argument. He basically says that the industrial world depends on the agrarian world. We depend on natural systems, we depend on farming, we depend on soil fertility, we depend on healthy relationships between species to live, but when you make believe that everything is industrial and you forget the agrarian roots, eventually things are going to collapse, both socially and environmentally.

nbj: Tell me about the latest initiative, the Soil Trust.
WT: The idea is very simple. When I talk to an audience of 500 people, maybe 50 of them, maybe 100 think of themselves as investors. They think about money, they have some sophistication and they will respond to Slow Money. The other 400 people in the room are like, wait a minute, we want this to happen too. We don’t have the resources to write a check for $5,000 or $50,000 into some deal, but we want to be involved. The Soil Trust is that vehicle. We have just begun, but here’s how it works—we solicit tax-deductible donations of $50, aggregate them and invest the money alongside Slow Money investors around the country. The returns will stay in the trust, creating a permanent fund to make a dent in the local food movement. This is a way for lots of people with a little money to contribute and feel like they are investing in the future of food.