Stuart Woolf – 325 Million lbs of Tomato Paste in 4 Months: How this CEO’s Family Farming Operation Became One of the Top Tomato Processors in the World

Borna (Climate Ai) 0:03
This is agriculture adapts by climate AI. We are a team of climate scientists and agricultural entrepreneurs on a mission to make agriculture more resilient, sustainable and profitable in the face of a changing climate. This podcast is our journey as we speak with industry leading executives, farmers and thought leaders to uncover the challenges and opportunities that lie ahead for the industry that feeds the world. I’m your host born Portia. Connie, welcome to agriculture adapts. Hello, and welcome to another exciting episode of agriculture adapts. So, lots of podcast talk about the future of food, everything ranging from new ag tech to regenerative food systems to shifting consumer trends. And we do a lot of this too. If anything, we do it more. After all, it’s our job to help these ag businesses deal with climate change and weather volatility impacting their bottom lines today, tomorrow and 20 years from now. But one thing that I feel very lucky to do on this podcast that I don’t see very often is we get to dig into the realities and the mechanics of the food system. But the folks who are quite literally turning the gears of the food system, the investors, the founders, the owners and the operators that make up the foundation of our food system. And today we’re going to do something that I’ve been wanting to do a bit more of which is go deep, go really really deep into one crop with someone who knows that crop knows that crop at scale and has an insight into what’s going on in that industry. how the industry has evolved over time how climate change technology are impacting the industry, what it means to be sustainable and what that crop needs to go through. From the time it’s bred to when it’s planted in the ground when it lands on your plate, which for today’s episode will be in the form of the key ingredient in any pasta burger or pizza or hot dog. Today I have the privilege of speaking with the president and CEO of a wolf farming and processing. A large family owned company focused on the production and processing of agricultural commodities, including one crop in particular, which, which I love and that we’ll be discussing today, tomatoes. Wolf is the parent company of Los Gatos tomatoes, one of the largest tomato processors in the world. And they’re based right here in our backyard out in Huron, California. Aside from running the tomato business while farming also has a massive almond operation, which, if I’m not mistaken is even larger than the tomato operation. Stuart has also served as the chairman of the California League of food processors, the Almond Board of California, and they use the President’s Commission of Agriculture and Natural Resources. Stewart also currently serves on the board of the California Chamber of Commerce, the Western Growers Association, and Marrone bio innovation. He is a UC Berkeley graduate Go Bears and he has recently been embarking on a key transition in his life, as he begins to drink less bourbon and concentrate more on age tequilas and Moscow’s transition that I personally am highly and supportive. Stewart, thank you for joining me here today.

Stuart Woolf 2:58
It’s an honor to be here. Thank you.

Borna (Climate Ai) 3:00
So clearly, there’s a lot for us to cover. Today, we’re going to focus on the tomato side of the business, what it is how it’s evolved since your father founded the company few decades ago, what it will become. And you know, who knows, maybe we’ll loop in some insights from your other work if we have time as well. But first, I want to start with the important stuff that all our listeners need to know the one key takeaway that they should have, if any, from this episode, bourbon, tequila mezcal, what happened? What fueled your transition?

Stuart Woolf 3:27
Well, honestly, this is kind of funny. My, my wife started drinking a little more tequila, because she read someplace that, you know, it had fewer calories or some such thing. And so we we had a little more in the house. And then I started thinking about farming in California. And you know, we simply don’t have enough water. So I’ve got this family operation. We have plenty of land, but I’ve been following ground every year. And so I was thinking about drought tolerant crops. And so I’ve got a test plot of some agave. I want to see if I can actually Oh, no a gross on my own and send you a bottle of mine Mezcal.

Borna (Climate Ai) 4:08
Yeah, that’s, that’s the main reason I have these podcasts actually, is just to see if I can get free food and drinks from people. So I would

Stuart Woolf 4:14
Well quit growing cannabis. So you’re gonna have to wait a little while.

Borna (Climate Ai) 4:23
Awesome. Well, so I think a good place for us to start here is can you walk us through the history of Wolf and Los Gatos as a company as well as your personal connection to agriculture? Yeah, yeah.

Stuart Woolf 4:34
So, my father, he actually started the business in 1974. At age 57. He took basically all of his savings. My mom and dad decided to go all in, and a lot of his friends thought, you know, this is probably a better time to be thinking about retirement. But my dad, who recently passed away at the age of 102, was quite a guy and had a real vision and basically When he bought this property and started farming, one of his missions was to kind of move away from the standard commodity crops of like cotton, melons, all that kind of stuff, and focus more on specialty crops that are kind of unique in California, where California enjoys global competitive advantage in the production and yields that were not labor intensive. Anyway, long and the short of it is tomatoes are one of those crops. And so he was growing to make converting more of his ground over to tomatoes. But there were no tomato facilities in Fresno County. At that time, we’re, we’re in the south. And so ultimately, after a number of years, actually, in about 1989, and 90, we ended up building our own facility to run our production.

Borna (Climate Ai) 5:50
Tell us a little bit about your processing tomatoes for different types of markets? Where are these process tomatoes actually ending up? What types of products are they ending up in, that consumers are then buying off? No grocery stores and restaurants?

Stuart Woolf 6:03
Well, most notably, the tomato products, a big chunk of our production goes to ketchup manufacturers. And, you know, there’s one i can’t i think it’s called Heinz. And, you know, but there’s, there’s a lot of regional remanufacturers that are producing under a number of labels. And so, you know, you’ll find our product, and a lot of thick tomato base products, you know, as it relates to almonds, actually, you know, like, you’ll find our almonds and Kind bars and there’s, our almonds are in, you know, products like silk common milk, a whole host of like NYX nut items, and you’re finding them in, you know, convenience stores and all that kind of stuff.

Borna (Climate Ai) 6:53
Gotcha. Alright, Stuart, can you walk us through the life of a los gatos tomato, and so there’s a difference between processing tomatoes and tomato that you might find in a grocery store. But for someone who doesn’t have a single clue how tomatoes are grown, can you walk us through, you know, from the field prep, to the time it goes in the ground to when it goes to the processor to when it actually lands on my plate, what is the life of a los gatos tomato,

Stuart Woolf 7:15
Let’s start with the processing plant, we want to run our season in California, it’s longer than most regions of the world. So we can process tomatoes. In these dry climates for about 100 days, plus or minus, at our facility, the entire industry runs generally for maybe 120 days plus or minus, but what it means is you then have to do all your ground work, and you plant the crops, so those tomatoes are maturing and ripening, all during that 100 day period as well status. So tomatoes, typically, you know, it takes generally kind of 7080 90 days for to go from seed to a crop. And these varieties are all hybrid seeds. They’re all hand pollinated elsewhere in the world, a bag of seed, you know, the size of like a coffee bag right now generally sells for, you know, three to $4,000. And the craziest thing, you you look at that little bag, and that little bag should be able to produce 6080 tons of tomatoes, it’s it’s still like this crazy, magical thing. All these varieties are predetermined it. So like if you have a tomato vine at home, and you just keep picking the tomatoes, they keep coming, that variety is not predetermined at a predetermined variety, they mature all at the same time. So that allows is that you can go in and then have a mechanical harvester that drives over that, that and all the tomatoes are right. And, you know, it’s kind of an interesting deal. We, when we first got into the business, we were still competing with people that were hand picking tomatoes, you know, our harvesters, you know, we can have a driver running a mechanical harvester with electronics, that’s harvesting, you know, more than a ton of minutes. It’s, it’s anyway,

Borna (Climate Ai) 9:13
The industry is actually pretty insane. I remember, as we’ve been talking to folks in the processing tomato industry, it’s like you’re running these processing facilities at 100% capacity all the way through, or at least that’s the goal. And then you’re going through this insane operation of reverse engineering, when all these growers need to be planting their seeds, so you can try to have it perfectly lineup, but the logistics of that operation seem insane to me. Oh, how do you maintain that level of 100% capacity going all the way through? Or are there times when when you know you’re you’re not or you’re you’re you’re losing efficiency there? Oh, yeah,

Stuart Woolf 9:45
No, no, you know, this is like, you know, you hear like, well, you know, the US had a plan on the the invasion of Normandy but the time that first gun went off, you know, the plan went out the window, right. It’s the same way with tomato season to some extent You know, you plan all these things. But if you get a little hate here, or you have a little disease over there, the whole plan kind of goes to hell. So, you know, we just have a handful of people that No, they’ve got to get the seed ordered, it’s got to get to a greenhouse to get, you know, and to have transplants, you got certain timeframes, you got to be planning. It’s a really intricate schedule of events and logistics. But we have a handful of people, this is what they just wake up every morning, excited to do. I mean, it’s, it’s incredible. And, you know, again, all these plans and schedules, basically, we’re constantly tweaking them throughout the year. And then as you mentioned, you know, once we start that processing plant, it runs 24 hours a day. So we’re harvesting around the clock, we’re feeding the machine. And even that, you know, you go out in the middle of the night, and here are these harvesters, all the lights on, you know, cranking out 25 tons a load, you know, every 20 minutes or so. It’s, it’s awesome.

Borna (Climate Ai) 11:09
Yeah, no, it’s absolutely, it’s absolutely insane with what the industry is capable of doing. So you’re running 100% capacity, or at least that’s the goal. How did COVID impact that? What like, what, when when COVID hit? Was there a lot of, you know, things that you had to put in place to, to limit contact? Or was there was there actually a huge lull in the amount that you could produce? Because, you know, we didn’t have this stuff figured out? Yeah, well,

Stuart Woolf 11:31
You know, so we had already planted all the crop, right? By last March, I mean, the the seeds and the grant transplants, everything’s going so, you know, like a lot of businesses, we took a lot of precautionary steps in the facility spread out people hung plastic sheets all over the place. And, you know, unfortunately, you know, we made it through the season at all of our pack. But I can tell you, at the start of the year, it was kind of a nail biter to have that much invested out in the fields, knowing that, you know, if we had to shut down, we would, we would lose it, you know, but yeah, we through

Borna (Climate Ai) 12:09
Tomatoes are a great example to me of innovation. I mean, you mentioned that a bag of seeds will get you I think you said 60 tonnes 60 tons an acre, which is absolutely absurd. I mean, that’s not that’s not where the industry started, though, how things changed from when this business was started to now from both, you know, a technology standpoint, but also from from the actual varieties that you’re working with, have those evolved since the business was first started?

Stuart Woolf 12:33
Well, I can, I’ll tell you, I found my dad’s original budget back in 1974. And he was budgeting 22 ton to the acre. And today, we budget about 58 to 60 tonne in our budgets and think about it, you know, we’re on the same land, same management group, same everything. And I remember asking him like 22 tonnes, like, why 22 tonnes, you know, and he said, Well, I needed to get financing at the bank, so I bumped it. I mean, he really thought it was going to be closer to 20. And that’s like, just terrible. And, but back then, even then, he started early on back in about 74, playing with drip irrigation and tomatoes, just a couple of fields. But largely the tomato fields then were direct seeded, we weren’t using transplants, seed was a lot cheaper. It was open pollinated, they weren’t hybrid seed. And when you furrow irrigated, you know, you had ditches that you were allowing water to run down the furrows and the head end and the tail end of the fields, water would accumulate. And you would end up with all these plant diseases like Phytophthora and everything so the edges of the fields would die and burn up. And then there was so much moisture out there in those fields, that you had to deal with a lot of mold and rot and everything, and then throw a early tomato harvester into the equation. Like I when I was in high school, I spent my summers out there, and I would be one of 22 people standing on a machine. That was like a gigantic like Junebug, you know, this kind of wobbling around like a huge beetle with all these people on it, sorting just moldy, broken tomatoes, and it is just jaw pain all over you. It was absolutely the worst thing in the world. So today, you know, we have hybrid seed that is vastly more productive are all under very drip, which, you know, we put the drip in, you know, certainly there’s a little water savings but it really allowed us to just put you know better manage our fertilizer and what have you and just feed the root zone. And then these harvesters today you know all in you know you’re approaching half a million dollar for a harvester but today with the electronics we have on it, you know under a gun Add conditions, you basically just have a driver who’s cruising through the field and the electronics do all the sorting, you know, it is so efficient. But you think about it, if you have a machine that costs $500,000, you’ve got to run, you know, the economic, she had to run at least 60,000 tons of tomatoes through that machine annually. And which means you’ve got enough have enough acres in front of you to run it, and you want to rotate tomatoes. So, you know, you really need to have a farm that’s about five or 6000 acres size are really an investment of a tomato harvester. So it really led to more consolidation in the industry. And anyway, so there’s the industry now is it used to be much more fragmented, and it’s much more consolidated.

Borna (Climate Ai) 15:52
Interesting, what what impacts did that have on the labor force? And this might be kind of an abstract question, but you said there’s gonna be like, 1020 people going through the fields? Did that labor force shift to growing other crops? Did they shift to other jobs within the same community? Or did they, you know, there’s a big outflows of out of agriculture in general was it, you know, where those folks just leaving agriculture?

Stuart Woolf 16:15
Well, a lot of that labor was seasonal, right, it was just for the harvest. So I would assume that they were absorbed and other seasonal activities, you know, but it when we first started, you know, a lot of people would talk about California’s labor costs being this disadvantage in the tomato industry, you know, because it was, relatively speaking, fairly labor intensive. And then as all of that equipment and the electronics improved, you know, that became less of a factor for California. Now, one thing I would note about the the industry that I think center seen at our facility will run annually, about a million tonnes will produce over 3.5 million pounds of paste. And if you make a penny a pound, on tomato paste, that’s a pretty good year, and we sell it right now the market, we’re probably selling it in the neighborhood of like 40 cents a pound or whatever. But the longer that, my point is, you think about, you have to have large farms, you manage all these logistics, there’s all kinds of risks tied into the crop, a tomato processing plant, running a million tons, you know, is an extremely expensive investment. And yet, the margins are razor thin.

Borna (Climate Ai) 17:34
And it’s crazy to me that, you know, anytime you’re doing any sort of processing on a crop, the consumer or the customer, whoever’s buying that product, they’re expecting one thing, they’re expecting it to be the same every time. And what blows my mind is that, you know, you’re growing these things in different fields, different soils, different climate conditions. And yet, it’s supposed to end up the same every year, is California’s climate, just so predictable that that’s the case? Or is there you know, once once these things enter the processing facility, do you need to do some work on it to make sure that it’s, it’s not tasting different year to year, but to make sure that you have the right blend of, you know, different types of flavors.

Stuart Woolf 18:11
So we use different varieties and what have you. But it is one thing that’s kind of unique to California and the Central Valley, in that, generally speaking, everybody complains in the valley about air quality, this, that and the other thing, but you know, when you think about we’re in the, the perfect latitudes for a lot of the specialty crops we grow in California, and then the valley with the Sierra Nevada is in the coastal range, you know, we develop this high pressure deal during the summer. And so we have very stable temperatures and weather, it gets crazy hot here and everything. But it’s not like other regions where suddenly you know, you have these summer rains or monsoons or what have you. The weather in California is vastly more stable than other regions because of that, because of the Arab basin. And then we just have like ideal soils and the right latitudes to have a competitive advantage.

Borna (Climate Ai) 19:06
Would someone be able to tell like if there’s like a tomato, Somalia, like would they be able to tell the difference between a tomato grown in one location versus another?

Stuart Woolf 19:12
Oh, yeah, well, I can tell of course, but now you can. Like I go to Indiana, I visit these guys that are growing tomatoes there and they insist that Indiana tomatoes are better. And I can’t figure out why they think.

Borna (Climate Ai) 19:29
How many pounds of tomatoes do you estimate you consume per year? Stuart,

Stuart Woolf 19:33
Me personally, you personally? Well, I think the national average per capita consumption is probably 60 or 70 pounds in the US so I don’t know maybe a couple tons.

Borna (Climate Ai) 19:48
One thing I want to I want to dig into a little bit more is like the specific varieties How have the varieties that you grow change because I don’t think the one thing that people don’t realize is that you know, varieties change or lot over time, and when you have decades that you’re talking about, there’s things like pick ability, there’s things like transportability, there’s yield. And for tomatoes, there’s things like Brix content, or sugar content, there’s all these components that you’re breeding for color, pH, viscosity, some of which are more genetic, and others, which are more, you know, environmentally driven, but how have the actual varieties that you guys are growing changed from when the industry started,

Stuart Woolf 20:22
You know, I think probably the greatest changes with the hybrid seed and what have you, has been, really, a number of these varieties are disease resistant to common tomato diseases, that if you’re planting them frequently, you can develop. And so there’s all kinds of wilt and, you know, bacterial infection, anyway, the seeds have been bred to kind of take that on. But really probably one of the greatest attributes, that seems so simple, but it’s really made a difference has been the thickness of the skin. So you know, tomatoes, once we harvest them, and it’s, you know, in the middle of the day, and California during tomato season, you know, it could be over 100 degrees, and these tomatoes, you know, are being packed in these trucks, you know, the, the internal temperature there, you know, can break anything down, right, and then they drive along, you know, highway five and 99 bouncing all the way to the processing plant. So, you know, historically you would go look at these loads, and it would just be mush, you know, they just break down and everything. And now, because the, the tomatoes have thick skin and thick walls, you know, they’re really meaty, you know, Roma types, they make it to the processing plant in much better shape than they did in the past. And, and the better that shape is, you know, like, if that tomato arrives at the plant, and it’s not broken, or squashed, or whatever, you’re going to produce more pounds of tomato paste out of that than fruit that is broken in a lot of the serum. And the minute you break the skin on a tomato, if you think let me back up tomato paste is like making jam or jelly, you’re taking the sugars from the tomatoes, and the pectin and the fruit, you’re deactivating the enzymes that break down a tomato. And anyway, you end up with basically like tomato jam, right? That’s tomato paste. Well, you know, if you break up that fruit and everything, prior to it being exposed to heat and going through a cooking process, you just generate less tomato jam, it like breaks down the pectins, they you know, you just end up with kind of a sloppy mess. So today, not only are we more productive in the fields, but the varieties allow us to be vastly more productive in these tomato processing facilities.

Borna (Climate Ai) 22:50
That makes sense. When you’re breeding for certain traits in a crop, you’re prioritizing those traits. And what I’m interested to hear your view on is like when did they have to sacrifice other things in order to get things like these thicker skins, like when we think about, you know, flavor or nutrition, or these things that get compromised in the quest for higher yield, and in the quest for making these crops able to withstand the scale that they now need to be able to hold with the consolidation that we’ve seen in the industry?

Stuart Woolf 23:19
Well, I don’t think so. I can tell you, my wife and I annually go out and pick our own tomatoes out in our fields and do our own canning and what have you. It’s, it involves a lot of drinking of wine and tequila and what have you, but I can tell you the product is really great. But I would also say that, you know, there are different varieties of tomatoes for specific uses of tomato products. So you’re going to use a group of varieties that are better suited for like ketchup manufacturing, you know, if that’s your end buyer, we sell a lot to the kind of ketchup trade, you’re going to use different varieties if you’re doing whole peeled stewed tomatoes. So it depends what the end uses as to what varieties you will likely use. So guys making tomato pays for soup or for Bloody Mary mix or whatever are using different varieties than we’re using to make really thick Aido sauce and ketchup

Borna (Climate Ai) 24:21
Interesting and what and what is the conversation like with the breeders because I imagine the breeders are trying to produce varieties that you will want in the processing tomato industry that your end customers want. You know, is that like an annual meeting where you’re getting together with these breeders and you’re like, these are the top three traits or is it really just kind of, you know, it’s been pretty consistent over the last 1020 years and they know what they need to continue breeding towards.

Stuart Woolf 24:42
Now they do have that’s a great question. They do have annual gatherings where field men from the various processing plants. We’ll get together with breeders and talk about you know the attributes that we’re looking for. And you know what a perfect world we end up with a tomato That’s disease resistant, that is tolerance, high heat out in the fields, you know, so you want tomatoes that are grower friendly. You don’t want to be a processor asking to grow or to grow a variety that doesn’t yield well or isn’t disease resistant, you know, the grower will say, I’m not going to grow it. And so, you know, hang on to your question, yes, they get together and figure out what these attributes are. Yeah. But the breeding process, you know, it’s this is like, like a pharmaceutical company, right? Like, you’ve got to invest in all this r&d. And there’s, there’s a long tail to actually doing all the replicated trials and growing the crop out and seeing if you’re building whatever attributes you want, it doesn’t happen overnight. And it’s a very expensive endeavor. So we perpetually make progress. But it it takes a while.

Borna (Climate Ai) 25:56
Yeah. You mentioned the the growers that you’re actually contracting with, you know, they have a say in this as well, and what they’re going to grow and who they’re going to grow for, are these growers growing multiple different types of varieties for multiple different companies, or do you kind of have exclusivity on on a lot of the growers,

Stuart Woolf 26:11
No, we processors go out and talk to growers. And, and honestly, you know, most growers, you know, generally have a couple of processors that they’re sending crop to, you know, if you just plant for one processor, and let’s say they have some kind of a plant problem, like they have to shut down, for some reason, you know, you could be stuck holding the bag with that crop. And you definitely want to have a couple relationships in the industry. So maybe you can send them to somebody else. Right, got it.

Borna (Climate Ai) 26:43
So let’s dig into sort of the operational piece a little bit more, you know, what makes what makes us seasonal makes the tomato season go well, versus making it go poorly. And, you know, when we consider things like climate, or, you know, pests and disease, market swing as consumer trends, what are the main drivers of how the crop ends up, you know, a positive crop and how the business ends up, you know, coming up on top after the end of the year,

Stuart Woolf 27:09
Yeah, so there’s kind of a lag between issues that happen out in the field and the crop actually getting to the plant and having an impact in the marketplace. Okay, and most of this crop, I should say, really, kind of the vast majority of this crop is already pre sold before you even get to bring the tomato to the plant. So like in our own facilities, the vast, vast majority of our business is contracted out years in advance. So we already know kind of what varieties are going to need and who it’s going to. So the worst things that can happen during the season, really, you know, like when the when tomatoes are just beginning to bloom. And you know, you know, let’s say we’re in kind of early summer, May, June, and you get these hot spells that are so hot, though the little yellow flowers on the plants that they get stressed, and they’ll just drop the flower. And those flowers are what you want to have turned into the tomatoes. So you can grow a beautiful plant loaded with these yellow flowers. And after a week of 100 plus days, you go out there and you’ve lost, like all of the Top Crop, you know, how common is that? You know it. And so I always tell our guys, you know, it gets hot every year. So but it just depends the intensity in the stage of the plant and when it was, you know, irrigated and so we’re perpetually the guys are out there trying to figure out, you know, how do I keep that plant as healthy as possible and irrigate it in a timely manner and everything. The other thing that is just can be a total nightmare is like if you have a summer storm that comes in, you know, and rains drops a quarter of an inch on the crop here in California, you know, once that bet gets wet, and you have this big tomato, plant and Vine, and when there’s moisture that gets in the middle of that thing. I mean, those tomatoes, once it starts warming up, they start growing beards. I mean, there’s mold everywhere, right? So, you know, people just don’t like mold details. I wish they did. But one thing I should say in California we in the US, we have very tight standards on mold. Now I know this sounds like Well, of course you do. But the rest of the world. The standards are far different. You know, like everybody talks about how great Italian tomatoes are and everything. I think their mole tolerance is like 80 and ours is half of that. And I’m like course better at this got more mold in it. That’s the secret, though. It’s a crazy thing. So but having that tough mold standard means we don’t get a lot of foreign imports, because it’s a little tougher to meet our standards here in the US. And, okay, mold sounds terrible, but mold. Once you heat it to a certain temperature, you kill it, it’s deactivated. And unless you have crazy amounts, you know, it really doesn’t do anything to the flavor profile or anything. And but we have these standards. And I don’t know, I’ve come to the belief that we put the standards in place because other people couldn’t hit them.

Borna (Climate Ai) 30:30
Does that mean that you guys are growing different varieties, or you have to manage the crop differently to be able to keep the mold? At a US standard level?

Stuart Woolf 30:39
This was one of the competitive advantages of California, you know, we don’t have rains, it’s not that common. And, you know, you’d have to go out and treat the crops with fungicides and everything. You know, what’s crazy, I, when I go to the Midwest and visit, guys, you know, let’s go back to Indiana, and guys are growing tomatoes there. I mean, they talk about like, oh, it rains every week, during the summer. Well, what do you do, you know, and we spray, it’s like, no big deal back there. And I hear given our temperatures and the size of our fine and all that. It’s a different challenge for us. It’s just kind of crazy.

Borna (Climate Ai) 31:20
Yeah. And let’s talk about that piece. I mean, we’re not getting much water in California by any means. Um, before we started recording here, you told me about the surface water allocation that you guys were getting, can you tell us a little bit more about kind of the water situation that you guys are having to deal with in California? Well, it’s,

Stuart Woolf 31:34
it’s our limiting factor. And I have to say, it always has been, but it’s gone from kind of bad to worse. So it’s kind of crazy years ago, my dad was really kind of hip on, look at, let’s look at our return per acre foot. So we’d run our budgets, and then we would look to see how much we’re earning for the amount of water that we applied. And we did this early early on. And I think that that has been beneficial for us, you know, and choosing what crops to grow when, where and all this. So today, you know, right now, with our surface supplies, we’ve become kind of junior rights holders to the environment and what have you. So we’re getting less and less surface water, which has resulted in people pumping more. And now the state has come along and said we’ve got to regulate and limit humping to a sustainable level. So we’re going to be losing our ability to irrigate our crops to the extent that we did in the past. So I know our operation, you know, my focus today is is more about, you know, what am I going to do with lands when I’m going to have to fallow long term? versus my dad, who was thinking, what am I going to do with the lands that we can irrigate?

Borna (Climate Ai) 32:48
Yeah, so you’re saying you’re gonna need to follow much more land? Yeah. Permanently? Or does that mean, you’re reducing the skilled operation? What does that mean for the business?

Stuart Woolf 32:57
Well, so okay, you know, let’s just say, hypothetically, I have, I’ve got to follow a third of our land, just, you know, I mean, on average, you know, some years is going to be wet, we’ll be able to farm or some years less. So what it means for us is that we want to have, we don’t want to plant more permanent crops than we have enough ability to irrigate, right? I mean, that’s hard demand. Yep. And then I believe row crops annually will become a little bit more of a kind of flex acreage that some years, we’re going to be planning more, some a little bit less. So just some of the things that we’re looking at, you know, like in our long term plans, we’ve brought some industrial solar installations in and we’re considering that kind of our new crop in our mix, and so require any water, and we’re generating rent off of that. And so we’re going to commit a certain amount of our acreage to that I think I mentioned earlier, I’m interested in looking at kind of drought tolerant plants like agave, we actually, with some neighbors created a water bank where we can actually start banking water from wet years and use and the drier ones. I’ll be on the call today, talking about kind of heirloom, dry farm grains, look at we’re not gonna make any money on that, but I’ve got to, I got to do something with the land, and I don’t want to just leave it fallow and have it become a host environment for every insect on the west side. You know, it’s you gotta manage the land still.

Borna (Climate Ai) 34:33
Yeah. And I mean, you know, when you when you talk about resilience, I think the the mindset that you guys are taking towards this problem is like, at its core, what you do it to be a resilient business, particularly in the ag space, which is, you know, you’re not tied to any one specific methodology or one specific crop, you’re, you know, you’re able to branch out to do different things, which I think is a very dynamic way to have a business that’s going to last for for a long time. You mentioned kind of the solar being one of the crops that you’re getting in the mix. Was that purely a financial decision? Or was that kind of like a morally driven thing that you wanted to do? You know, be more climate neutral or reduce your your carbon impact?

Stuart Woolf 35:09
Well, no, I mean, what cut to the chase, I wanted the money. Well, you know, part of being sustainable, right, you

Borna (Climate Ai) 35:18
it’s important to say, though, because I think a lot of people don’t realize that, you know, solar, in a lot of cases, in most cases, is not just like something that you’re doing because you want to feel good. It’s actually a good financial decision for a lot of these industrial facilities, commercial industrial facilities, as well as residential?

Stuart Woolf 35:33
Well, you know, honestly, I think that’s a great question, you know, when my father was still alive, and I told him, you know, what we’re looking at this deal, we’re going to cover up, you know, a couple 1000 acres with solar panels. I mean, it was crushing to him, as it is to basically our family that, you know, we, the land we have is probably some of the most productive, diverse farmland anywhere in the world. And it’s a unique body of ground, because it’s all class one soil. Very, very productive ground, hey, we keep improving it. And so to go and tell, you know, a guy that’s close to 100 years old, we’re going to cover it up with solar panels. And my pitch to him. My dad, ultimately, and and I share that I this is like, the last thing I want to do. But I just told him Look at, it’s probably going to take the state every bit of 2530 years to maybe come up with a solution, whether it’s more tunnels and whatever the solution is, and so we’re just buying time, we’re not selling the ground, we’re gonna lease it, we’re gonna still own it. And hopefully, down the road, we’re in a better spot, and we can keep farming our ground. But, you know, it’s kind of a precautionary step almost. So, you know, in green energy, energy, you know, you know, we have a number of our own solar projects that we’re using for our wells and everything. One thing about solar, you know, you, once you pay it, you’ve kind of locked into the price of power, you know, your costs. While pg&e continues, you know, well, all service providers are increasing the rate of electricity. So it’s not a bad hedge. And, but I’d rather have the water to farm.

Borna (Climate Ai) 37:16
Yeah, so that is the main driver, it’s the water. Yeah, that’s really interesting. I mean, kinda in the same vein as like this sustainability component, we’re talking about the solar panels. I know, one topic that we, that you and I have discussed in the past has been all the buzz around regenerative agriculture, and the pressures that are coming from kind of the consumer side to be more regenerative, which is, you know, it’s not not a very clearly defined term at this point. But there’s basic principles, what’s your take on regenerative? And what kind of, you know, influence from consumers and from your customers? Are you starting to see,

Stuart Woolf 37:49
So some of our customers are really focused on this, and a lot of our customers, and, you know, we’re, we’re selling basically, to larger CPGs that are, you know, we’re providing ingredients to, and they want to have more transparency in the food chain. And so, you know, we look at this, you know, ESG, and all this kind of stuff, if we’re doing the right things already, why not just get independent third parties to report on what we’re doing, and actually measure on and set targets and goals and, and so I think it makes us a more attractive supplier, and those food chains. So we’re going down that road. In fact, we actually, I think we’re one of the only farming operations of kind of scale that is a certified B Corp, which means we are actually reporting to our board, you know, some of our environmental impacts and setting goals and it’s part of our reporting structure, and it’s built into our DNA. So we’re actually considering stepping up our game on that, I’m not so sure that you know, a lot of the that we can really dramatically improve soil health by putting a lot of organic material in the ground, just because we’re in a dry hot, arid region. And we’ve been doing that with our crop residue and waste, you know, forever. And yet, our soils don’t have a lot of organic material. So, what we’re going to try to do is we’re going to take we’re contemplating taking, you know, 1000s of tons of like almond shell and mixing it with manure and composting and, and stepping up our game on that and partnering with some of our friends that we sell our goods to, to really take up regenerative ag a notch. But, you know, I’d also like to add, you know, the thing about regenerative AG. I wonder, you know, is it been oversold or? I don’t know, but if we really are successful at capturing and retaining and managing more Carbon, by improving our soils and putting more carbon and fiber into the ground, there’s got to be a method to track that. And we should be able to to enjoy carbon credits and should be able to sell carbon credits. You know, I think a lot of people think about that and talk about it, but there’s no policy or system in place to really track it. And think, think about my situation, where I’ve got a tomato processing plant burning natural gas to run the boilers to cook the tomatoes, I’ve got to go buy credits, you know, there shouldn’t be a systematic way that I could actually change my farming practices to generate my own credits. And be in contrast that your own Yeah, but there’s no structure for that in place now.

Borna (Climate Ai) 40:47
Yeah. And are you paying you have to you have to buy offsets for your, for your processing facilities right now? I do is that because of like the carbon tax in California?

Stuart Woolf 40:55
Yeah, that came out of AP 32, or they created a carbon market. And you know, what I find of interest, you know, one of the things we can do, actually, instead of just buying the credits, we can engage in activities that are, are beneficial to, you know, climate change. And like one of the things we can invest in is like urban forests. What, what that means you can if you go plant trees on a park, in an urban setting, you can get some credit. Okay, so I asked friends of mine and the environmental community at the time and Environmental Defense and others that were supporting a B 32. I said, Well, I’m glad to hear that planting a tree will, you know, sequester carbon, because, you know, we planted, you know, like millions of trees. But I was told, yeah, well, those trees don’t count. Because, you know, you’re actually planting them for a financial part of your business or whatever. And so an almond tree, even though sequester is anything, you don’t get credit for that? That, to me, that whole concept is like, kind of wacky.

Borna (Climate Ai) 42:07
So ideal situation for you is, have a third party come in and assess what is the actual net carbon emissions of our operation? And are we already negative given all of the almond trees and the practices and the recycling of the shells and whatnot? Well,

Stuart Woolf 42:23
you know what, that would be great. But you know, that isn’t going to happen. So but if I, but I think I’ll tell you, so I was thinking about, Well, why don’t we? Why don’t we incorporate, say 20,000 tonnes of shell like the shell that comes out of our almond processing plant, which is about seven miles away? What if we took that and incorporated all of it, you know, 20,000 tons of biomass, it’s the equivalent of about 225,000, ground up mature almond trees. You know, to me, that’s kind of a significant thing. And should be able to get, you know, a couple carbon credits for doing that, I would think so. But there’s no way to actually measure it and account for it.

Borna (Climate Ai) 43:07
Well, maybe if this podcast reaches the right ears, you’ll get some, some emails here in the coming weeks to get you set up. Hopefully, we’ll say

Stuart Woolf 43:14
Honestly, I hope Biden’s listening to this. And news.

Borna (Climate Ai) 43:18
So do I so so I mean, you know, Los Gatos and Wolf, both have been around for for quite some time. And in order to do that, you need to be able to, to change with the times, what is your view on ag tech and ag tech adoption? And, you know, can you give us some examples of times where you adopted ag tech, and it went really well, and times when, you know, it was just snake oil, or just, you know, totally flopped when you were, when you were promised something that they didn’t deliver on.

Stuart Woolf 43:53
The greatest thing about ag tech is you’ve got all these bright minds that have technology available to them that’s always progressing and everything. And so I love the idea that, you know, there’s this huge community of smart people that look at these growers and realize those guys aren’t that smart they need, they need solutions from us.

Borna (Climate Ai) 44:16
They need solutions and the people who don’t understand the agriculture component at all.

Stuart Woolf 44:21
So I think there’s promising ag technology out there and everything. But I gotta say, you know, I don’t if you look at the impact that I described earlier from just like berry drip and better varieties, that effectively helped us triple yields. I don’t see anything on the horizon that’s going to have any impact near that. But when you start thinking about well, what about just incremental impacts on water use or reducing your materials or, you know, improving yield just a smidgen? They can still have very good paybacks. The challenge the real challenge is trying to figure out, you know, like, if you’re a grower right now, it’s like drinking from a firehose, and how do you sort out? What technologies what have you to choose from? So I typically grab all of my farm managers and just said, Listen, you know, when you guys sit back and you think about, you know, technologies that will move the needle the most, what are they, and given our water concerns, you would think they would all gravitate towards water sensors, and, you know, whatever. And they’ll, they’ll acknowledge that, but they’re, like, you know, with drip irrigation in the water scheduling, we’re already operating at a very high level of efficiency, we think, you know, generally, we’re going to be able to move the needle more in like, things that will reduce labor, may be better data that actually converts to information that we can do something better integration of different technology. So I’ll give me an example. Like, these guys showed up that were making drones for the military, and they, they had a drone that we could use this the coolest thing in, it was it was like this giant stealth drone. And

Borna (Climate Ai) 46:08
That’s the most important thing of any ag tech is it has to be very cool. Oh,

Stuart Woolf 46:12
It was gonna be, you know, we, we set the thing up there, everybody circles that, you know, and it takes off this thing, you could actually coordinate it with, like our ranch map, and you would basically tell it, like go to this field, and it would, you know, at about 300 feet, do a scan of the field and everything. And we could use that information to figure out where as stress in the field. Anyway, it really cool. In fact, we brought it to a board meeting, and the whole board was like, Oh, that’s awesome. I don’t even know what I did. But anyway, you know, and then like, nine months into it, the company that made it said, you know, what, we’re gonna get at AG thing, we’re kind of done. So there’s like, no more support for it. And we actually, you know, it was like, the, the shiny thing that caught our attention, and then poof, it’s gone. So, you know, we have things like that happens.

Borna (Climate Ai) 47:05
Yeah. And I mean, that’s, that’s pretty common. I mean, a common a common concern that, that I think a lot of ag tech startups will hear from their customers is, well, how can we trust that you’re going to be around in a few years, like, if we’re gonna, if we’re going to set up our systems around, you know, your technology and integrate it into what we’re doing, the more they’re going to integrate with your work, the more they want to have a sense of well, are you going to be around so we don’t put the effort in, and then have this thing just just vanish into thin air?

Stuart Woolf 47:31
One area that we’re, you know, I’m kind of personally kind of jazzed about it. I mentioned before I was on the Marone. Board. And they produce biologically derived organic materials, foreign materials. And so, you know, I just told our guys, we were going to try to wean ourselves off. Slowly, but surely, or just reducing the amount of synthetic, you know, fertilizers and pesticides, what have you that we’re using on the ranch. And so we’re beginning to incorporate some of these materials into our, you know, farming practices. What’s kind of funny about that segment, you know, most tech and innovation, you know, you’re looking for a pretty good ROI, like, it’s actually going to be better than whatever you’re doing now, with the biological space, I just, I’m looking for something that’s just close to the synthetic materials, because my goal is just to reduce them. I’m not looking for something necessarily, that’s more efficacious. I mean, I hope it gets there.

Borna (Climate Ai) 48:33
Ya know, it’s interesting. And that’s and that’s one of the segments that you know, that we found actually a lot of traction with a climate AI is because when you start to work with more biologicals, when you start to work with things like organic, you just you inherently have less tools in the tool belt. So knowing when certain climate parameters when things will happen, and being able to plan in advance of that ends up being a much more useful situation for you. So we have a lot of very large, organic, non GMO operations that are saying, Look, we need to manage this thing much more closely. We need the data to be able to say how we can start planning this stuff in advance so we can, so we can avoid some of the biggest impacts without needing to wait till it’s too late. And then just have a last ditch effort to kind of solve the problem. So surely, you’ve been extremely generous with your time. Is there anything that you would like to discuss that we haven’t touched on yet?

Stuart Woolf 49:23
Oh, there’s tons of stuff. But I would just say in closing, and I’ve had the opportunity to speak to a handful of business school classes and all this kind of stuff. In fact, I know one of your speakers, Ray Goldberg, who’s a great guy, amazing. Yeah, yeah. Got back to Harvard a couple of times to to talk about, you know, kind of strategy and everything. I think in California for most growers. It’s a pretty daunting future. You know, when you think about we’re going to be losing water, you know, the state, you know, we’re going to our labor costs are higher, we’re regulated here more than in any place on the globe. And so I think those that actually take a step back and think about long term strategic plans, and what are the attributes of success when you look at all these trends and the challenges and everything, you know, what crops should you be growing? Where? What are the other sources of income for an operation that maybe doesn’t have sufficient resources? What I’m always struck by is how little strategic planning is actually done. And for us, you know, our entire kind of DNA is like, you know, where do we want to be, like, 10 years from now? And how do we get there? And where should we be spending the next dollar? You know, and then you sprinkle in things like, what’s the innovation and technology we should be investing in? To me it, it’s a really fun kind of puzzle to try to figure out, and I’ve got a lot, I’m around a lot of people that just, they’re quick to just point out the dire situation without thinking through like, Okay, well, what do you do about it? And, you know, starting about 10 years ago, we just started running budgets with like, zero water allocations, you know, just like, what would we do the Tristan, and we’re doing it. So I’ll end on this note, I remember telling our board one time, you know, it’s like, we’re in a lifeboat. Okay. And we got to figure out how to be how to survive in the lifeboat. And what are the attributes of survival? I actually had a picture of a lifeboat. Okay. And anyway, after I was done with all of that, one of my board members said, Well, you know, the thing about being the last guy in the lifeboat that’s probably the worst death, you know, you watch all your friends die, and then you starve. So we may be heading there. I don’t know, though.

Borna (Climate Ai) 51:56
Yeah, I think it’s an important thing to know. I mean, it’s, it’s also hard for people to, to hear about problems all the time without hearing about solutions. Like you know, on one side, you have the businesses that need to adapt. And it’s, you know, part of our job at climate is to help companies adapt, help our businesses adapt and help, you know, energy, water companies adapt to these types of changes. But you really do need to be thinking ahead. And from the consumer perspective, it’s hard to hear about negatives all the time. And one thing that is definitely a challenge is, is how do we talk about solutions more? How do we make this thing seem positive. And there’s something that I have to balance in the newsletter each week, when we release it is, you know, there’s, there’s tons of reports coming out interesting information. That’s, that’s highly valuable and insightful. But, you know, when you’re dealing with the consumer, you need to keep in mind that you can’t just even if all the information is valuable, it’s almost our job as the business to distill that down, and then to also provide the angles for the solutions. Otherwise, people can just turn a blind eye to it. You know, no one wants to just hear negative information all the time. They want to know, where’s the light at the end of the tunnel? Are we getting there? How are we going to get there? And so I agree with you, it’s very important to be able to communicate these types of things. So before we wrap up here, Stuart, how can people support your business should they just eat more tomatoes go out and buy Los Gatos products.

Stuart Woolf 53:11
I’m reminded of a friend of mine, we sat in a we were out having lunch and and he asked the waitress for a bottle of ketchup. Because I was sitting there and you knew that we tomatoes. He ordered a bottle of ketchup. And he stuck a straw in it. And he pretended like he was just drinking the ketchup. And I thought that is genius. If everybody would do that once a day, that would be a great what was he selling you? A bunch of BS. Anyway, I thought it was so funny. But no, I you know, I think eat well eat healthy eat. Well, you know, we eat more plant based proteins.

Borna (Climate Ai) 53:54
Well, thank you so much for joining me. I learned a ton today. I you know, my hope is that anyone that listens to this episode will come out of it a processing tomato expert. And I think you did an amazing job of kind of explaining that and helping us dig in here. So I appreciate your time.

Stuart Woolf 54:08
I enjoyed it. Thank you very much.

Borna (Climate Ai) 54:12
All right, everyone. Thanks for listening. If you liked the episode, please rate us and give us a review on Apple Stitcher, Spotify or Google Play. And if you really liked the episode, or if you just want to help push forward the climate resilience movement. Share the episode with friends and family. If you have any feedback or you’d like to add your own two cents on the topic discussed today, feel free to shoot me an email at media@climate.ai. I do respond to all emails. At its core. This podcast is a way for us to learn and to share our learnings as we go. So we’re always open to building on these conversations and hearing more perspectives. Thanks for your support. See you next time.