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Mary Shelman – Value Added Food Labels: Marketing Hoax or a Path to a Better Food System?

Jun 25, 2020

Nowadays, grocery store items are stocked full of labels: pasture raised, cage free, non-gmo, sustainable, the list goes on. But if the health and environmental problems these labels seek to address were legitimate, why wouldn’t they be made mandatory? Are they just a marketing hoax or a path to a safer, healthier, more environmentally friendly food system? We sit down with agri-business expert Mary Shelman to deconstruct these questions and more.

Mary is an internationally recognized thought leader, author, and speaker on global agribusiness, AgTech, and food system trends. She is the former Director of Harvard Business School’s Agribusiness Program and has worked closely with startups, Fortune 500 companies, governments, and the FAO. She is the author of 70+ case studies on the world’s top agri-food businesses.

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TRANSCRIPT

Borna (ClimateAi) 0:03
This is Agriculture Adapts by ClimateAI. Every week we speak with industry leading executives, farmers and academics to get a 360 view of how the agriculture sector is innovating to stay ahead of a changing climate. I’m your host Borna Poursheikhani and I am your co-host Himanshu Gupta. We’re a team of climate scientists and agriculture entrepreneurs trying to make farming more resilient, profitable and equitable as we transition to a new age of agriculture. This podcast is our journey as we explore the hurdles and opportunities that lie ahead for the industry that feed the world. Hello, and welcome to another exciting episode of agriculture adapts with us today is Mary Shelman, an internationally recognized thought leader, author and speaker on global agribusiness, ag tech and food system trends. She is the former director of Harvard Business School’s agribusiness program and has worked closely with organizations of all sizes, from startups to fortune 500 as a consultant strategic advisor and active board member, Mary is the author of 70 plus case studies on the world’s top agrifood businesses, and has taught and given keynote presentations in 20 plus countries. She now selectively works with governments, companies, entrepreneurs and investors around the world, providing strategic advice, leadership workshops, and CEO coaching. Mary, thank you so much for joining us.

Mary Shelman 1:22
You’re welcome.

Borna (ClimateAi) 1:23
So may we usually like starting off this podcast by just giving you a chance to kind of talk to us about your journey into and your connection to the world of agriculture and my understanding that you still own a 475 acre grain farm in Kentucky despite all this moving and talking, you’re doing?

Mary Shelman 1:38
That’s right. So I’m sitting too, so I’m talking to you today from Boston. But anytime that I give a presentation any place in the world, one of the first things I say is, you might look at me you read my bio, you see, you know, Harvard Business School, you see this other piece, but what I really want to tell you is that I was born and raised in Kentucky, great history. There. In terms of growing up in a very agricultural state, my dad was a farm equipment dealer. So I liked spending time going out with him and visiting the farms were that he was either working on something or selling something. And that even though I didn’t realize at the time and didn’t intentionally set out to have a career in this space, it’s just been a great having that ground level fundamental understanding of what it’s like to be out there on the farm is really important to what I do.

Borna (ClimateAi) 2:29
And so what do you focus your efforts on? Now I know you have a few pretty big projects that you’re working on, as well as some things that are kind of ongoing. Tell us a little bit more about those

Mary Shelman 2:36
are really a range of things. It’s so I still do a little bit of teaching. I still do a little bit of case writing that teaching now has moved online. So I’m getting ready to prepare for my first remote virtual class that starts on Monday morning. With a group in in Ireland where I’ve done a lot of work over the past 10 or 12 years. I’ve also been involved in for the last up basically For two years with the project with the FAO, the Food and Agricultural Organization, the United Nations, and the most recent part of that is in Uganda, and working with the government there is they’re putting together their next five year ag strategic plan. So that’s kind of going from one piece to the other. I work with a some startups I just judged an ag tech competition a couple of weeks ago. And interestingly back in for my Kentucky roots, I’m working there with a really a stakeholder group in the Lexington Kentucky area, thinking about how to turn that area more into an ag tech hub. So I like keeping a lot of different things going on. It’s been very interesting during this new Cova time because one of the things that I often do is go out and give talks at conferences around the world. And suddenly when i or i run workshops with companies and suddenly you know, everything gets canceled, and so that after though a two or three week completely, you know, with nothing going on. on things are you know reviving now so we all learn to work in this new environment. And now

Borna (ClimateAi) 4:04
you get to do your toxin in sweatpants and no one will ever

Mary Shelman 4:09
Yeah, I do. So I was gonna say I haven’t been to the dry cleaners for a long time and I finally unpacked suitcase. I unpacked my suitcase for probably the first time in 13 years, I unpacked my suitcase.

Borna (ClimateAi) 4:21
Oh, wow. Like, can we know more about the project that you’re doing in Uganda? Like what what exactly is going on there?

Mary Shelman 4:27
Yeah, so um, interesting program, it actually builds off the work that I’ve done in Ireland over the years and Ireland, as you probably know, small company, country, but it’s very agricultural. And about 10 years ago now my colleague and I were invited in and this was just the collapse of the Celtic Tiger. And the Irish economy had really, of course crashed and their prospects are extremely bleak costs were high unemployment was high all of the construction sector in the financial services sector in the IT sector. Basically packed up and left. And we were invited in to look and say, well, gee, how could Ireland grow its food exports, because that was one thing that was left there’s really no other industries there indigenous industries there. And we came out with a fairly simple recommendation which said, Look, they’re really small, you need to get together, needed to in order to go to mark with power. You’re, you know, the kind of the world wants what you have right now, which are things that are naturally produced, you know, you’ve got great land and water, but you should go out under a, you know, kind of a coordinated brand because you’re small, and other than that, you know, everybody’s too fragmented. And there’s an organization inside of Ireland called board B. It’s called the Irish food board. And they, they’re the ones that invited us and their semi government agency, they work together and put that project together. And it grew from basically it was really private sector supported public sector supported government, when from farm to fork, and that’s actually the roots of the projects. Now the work that I’ve been doing through FAO and Uganda is kind of that same, not that same brand that approach, but how can we get the public and private sector to work together on a strategy for the country’s agricultural sector, that then you can bring everything under one roof and get, you know, all the resources lined up? So that’s a long answer to, you know, to the the the aspects of it there. So really, my role is to take what would be help the country’s Ministry of Agriculture who would typically put together a plan that has lots of you know, acronyms, lots of initials, lots of programs, lots of things and make it more business oriented. So the private sector can say, Well, here’s our role in this. It’s more sellable. It’s more marketable, and not just to the to the private sector, but also to say other government ministries. The Ministry of Finance, of course has to fund it. So long answer to saying we’re really working on is strategy and bringing in the inclusiveness there. As opposed to something that’s just kind of coming out of a ministry that might have one set of objectives.

Borna (ClimateAi) 7:11
That’s a pretty cool niche to have found for yourself, like you’re being brought in for these governments to help solve like their big agribusiness phones. It’s pretty

Mary Shelman 7:17
Yeah, it’s very exciting, sometimes a little intimidating, but but very exciting.

Borna (ClimateAi) 7:21
So Mary, we talk a lot about change on this podcast, as well as driving progress for positive change, you know, in reality, more so than technology. consumer choice is really the most powerful tool for moving markets, you know, voting with your dollar and, and this is a topic that you’ve studied and thought deeply about. And today, Mary, we have a consumer that is changing the food paradigm, with food, as health, with food as lifestyle with values based buying. Can you tell us a little bit about the trends we’re seeing here? how widespread these movements really are, and kind of what caused this shift to begin with?

Mary Shelman 7:57
I think, you know, you picked up on To me, really the one of the key drivers of change today I typically when I talk about different trends in the world, I typically talk about four and the one I lead with is the changing consumer. And I call that consumer today, engaged and empowered. And they’re engaged because they care more, they think more carefully about the food choices they’re making. They want to know, you know, how their foods produced where it’s grown. And they’re also empowered because they have there are new digital communications, you know, ways to find information and ways to to give information that really didn’t ask before or didn’t exist before, as you think back, you know, historically, the food industry was really powered by these big food companies. And the reason why is because they had big marketing dollars. And so when they introduced a new product, they could, you know, put a lot of advertising behind it. And they could also more recently pay the slotting fees at the supermarkets would would ask for basically Through shelf space, and a smaller, you know, company that may be trying to get something new on the shelf would have to, you know, figure out how to pay that slotting fee in that was very risky or, you know, advertise to consumers, but your advertising, but you don’t have sales yet so, so they made a very high hurdle rate. And today of course, you know, that’s really gone away that that has changed tremendously because of technology. You know, another big dimension of that the changing consumer certainly I we call it the millennial effect. The idea that you know, this this, you know, particular generation is asking very different questions again, and and they have an oversized in Fluence to in terms of what they do because they’re making buying decisions for themselves or making buying decisions now as they’re starting families, but they’re also influencing a lot. They’re their parents. And one of the things that’s really on the mind of these millennials is the link between food and health. And the idea that you know, what I eat, you know, so kind of more into exercise and you know, what I eat is actually makes a difference to, you know, the way my body works to my performance. And on the other side of that they’re also making these decisions based on the values they have. So food becomes an identity. So you know, if I support by care about the environment, you know, I might buy organics or if I care about the oceans, I’ll look for something with the Marine Stewardship Council label. If I care about animal welfare, I’ll look for those types of you know, maybe cage free eggs or something. The interesting thing about it, you know, is it’s just here you know, it’s it just kind of a rich country phenomena or rich you know, consumer phenomena. But when I go out and talk about these trends around the world, you know, I was in Rwanda last July, I was in Uganda in December, I was in Singapore in November talking to more of an Asian consumer base. People they’re nodding their head, so maybe the sector smaller, but Certainly it’s it’s very present in that younger population. And again, they’re they’re making very deliberate, very careful decisions. Maybe their budget, you know, isn’t high at all. But they’re still asking these questions. And, you know, and thinking being much more thoughtful, I think then then the generations in the past.

Borna (ClimateAi) 11:18
Yeah. And that’s something that struck me is very interesting when we were when we were last talking, because my understanding was like, or at least the question I had was, how much is this just something that, you know, Millennials in like San Francisco, LA and New York are doing as opposed to, you know, national in the US as well as international across the world and, and that conversation we had was actually shed a very interesting light that I wasn’t aware of before. The other interesting piece of that is that the internet and smartphones has enabled a level of information that has not existed in the past. And so that has led to a certain level of awareness with these kinds of issues, which I think has enabled a lot. But how much of that is misguided, like with this access to information, and you know, anyone being able To put this information out there, there’s a lot that people are buying into that might not actually be helping anything or it’s like, where do we draw the line here? And how do we decipher what’s true from what’s not?

Mary Shelman 12:09
Right. I mean, that is, you know, there, there’s, you know, the fact that people are asking more questions, and there’s more information available. You know, there’s certainly very good things about that, you know, it’s asking tough questions of the food system. But yet there’s some some negatives about it as well, right? Because there is misinformation. There’s a lot of, you know, sometimes we say that, you know, the voices, the organized voices are very loud, and the traditional voices are much quieter, right? Because they’re just going about the same old thing. And it’s always easier to get publicity around negative stories. I think that it is about positive stories. So, you know, we see, you know, the fact that, you know, to me, it’s like when we start moving away from the ability to make science based decisions, so Again, you’re making decisions based on your heart and what you think is good information. But maybe actually, if you looked at a more complex or the took the more complex view around it, then what you think is the right decision actually has an has a much different outcome than the way you see it. You might think about organics like that. Right. Wow. And you know, I’m choosing to buy organics, because it’s better for the environment. But yet, if you look in, in some cases, the you know, the yield of organics is lower than the yield of conventional crops. So from a sustainability standpoint, is that really true? Now you need more land, potentially more water to produce something that you were buying before? And you could say, Oh, yeah, well, today I can find, you know, I can just look at what’s available. But today, organics is still a small percent of what’s grown. If you expanded that production out today, it’s grown on the best land, right? But if you start expanding it on marginal land, then that’s when you start to see really those differences in yield. So you have an environmental effect, but you will also Have a price effect then right? Because those are more expensive products. And I think there’s this guilt factor, if you are in a household that is, you know, watching your pennies very carefully, but you’re also you want to be, you know, I want to do the right thing, especially for my children, I want to do the right thing. And now I feel bad, that I’m not buying the organic, free range, cage free happy hen eggs, and I buying the you know, the ones from Star market that are, you know, a half or, you know, quarter of the price. So, you know, there are implications that way, as well that are on the, you know, the negative side, and especially when you start flipping an entire system, because of, you know, it’s like, wow, the marketing is here, I could get the premium here. So let’s make that commitment. And now what happens to the real, you know, kind of the efficiency that that you’re pushing out? Yeah, and

Borna (ClimateAi) 14:54
that’s a trade off. It’s really interesting is that a lot of people don’t realize that sustainability and organic Ideally, they go hand in hand, but oftentimes, or sometimes at least they don’t. And so you know, if you have an organic field, you might be sending a tractor through three times more often to apply something because you’re not using as strong as a pesticide. And, obviously, there’s, there’s other arguments that people will make about, you know, well, maybe we’re sequestering more carbon. It’s a very complex system, but there is a dynamic that is not fully understood, can organic, like so people who are full fledged proponents of organic and they say, you know, we, the whole world needs to be organic, what are they missing? Like? There’s a big yield gap that that we won’t be able to hit right. And there’s certain countries that have problems with drought. We talked about climate change with the drought with flood with pests and disease that they’re not suited to be able to deal with. So, I mean, is organic, even remotely feasible to be done at scale? And if so, what would it take and what are the main limitations there? It’s

Mary Shelman 15:50
really, really difficult right? Because again, you look at word organics are grown now as grown were the environment suitable for organics, but You know, once you start, you know, moving that out, you know if you try to do so so where I’m from in Kentucky, we have hot, humid summers. And that means if you put you know tomatoes out and don’t spray them, they’re gonna all rot you know, fruit trees rot, you know, historically is happening. It’s just like this idea about well, things that are natural are good. You know, one of the just to move back to Africa for a minute big challenge and say Rwanda is so there’s a company that is trying to develop a supply chain for farmers to grow more corn or maize. And it’s like, wow, you know, we actually can’t buy from them here because they don’t have good harvest conditions. They don’t have good genetics anyway. But basically, when they harvest it, they don’t have drying conditions and it sits out on the side of the road and it gets aflatoxin in it. And Apple toxin is completely natural. But guess what, it won’t kill you. Yeah. So just because something’s natural,

Borna (ClimateAi) 16:52
heavy metals and food as well like that. Yeah, totally. I totally agree.

Mary Shelman 16:55
I think we have to be really smart. Right? You know, you go back to again, Technology Historically, the American bias towards technology is that it is good. The European bias towards technology is that well, we have reservations about this and maybe it’s not as good. So I came out of the spent time in the rice industry, I worked with a company, we did classical breeding to come up with better ricey. And without that ability to do classical breeding, you know, it’s, you know, crops fail. And one of the things we can do today, especially if we see in the world, you know, we have more of these adverse weather events, you know, you’re gonna have more crop failures, because without having bred in the, you know, whether it’s disease resistant or drought resistance or heat tolerance or you know, salt tolerance or you know, some type of, you know, internal pest resistance, you know, we have to use more more inputs, you lose more, more crop and that basically puts a food system really, you know, and people you know, much more at risk if we can have a food supply that we can count on. Just as we’re finding out right now, right, you know, with this COVID environment that you know, our systems actually, you know, it’s worked pretty well. But there are areas of fragility in it. And you know, now you start, you know, seeing different countries saying, Hey, wait a minute, we might not be able to get access to something. So we better like increase our buying right now. And we’d I was reading today, like Egypt has just bought a ton more wheat, because it’s like, wow, we can’t aren’t we can’t afford to let our population run out because that’s when governments get overthrown.

Borna (ClimateAi) 18:31
I want to talk about the COVID situation because when we’re talking about supply and demand shocks, it’s it’s almost we have we have to go in that direction. But I want to get your perspective on like, You’re totally right, you know, organic food is not by any means. The end all be all you know, there’s copper fungicides that are terrible for you. Organic doesn’t mean that you’re not getting natural things that can kill you in the food. But then it begs the question of like, which source of your food is good is there like other platforms you can go to because, as of right now, it seems pretty difficult. What advice do you give for people who want to know

Mary Shelman 19:02
what the safest food supply in the world here in the United States? I mean, for USDA, you know, what’s out there behind it? You know, you think about the, you know, the idea about everybody, I think a lot of people still have certain fears or certain concerns over, you know, genetically modified seeds and the playing, but you think about it, you know, now for the, you know, those were first introduced in 1996, you know, so, you know, we’re like 20 years on from this, and, you know, there’s never been not going to single health this incident around this technology, not one. And but you think about all the people that have either, you know, maybe not died from starvation, but again, you know, populations that have been stunted because they don’t have the right calories and micronutrients in the first you know, first, yeah, first thousand days. You know, those are, those are big consequences. And, you know, that’s one of the concerns for me, as you know, you kind of get this rich world approach of life. Wow, we can afford to take technology out of the system totally. But, you know, the US being the leader in technology, if we pulled back on that, you know, the implications for the rest of the world are tremendous. And just because, you know, we started talking in the beginning, is this a, you know, kind of the millennial, you know, we care more Is this a, you know, rich country luxury or is it’s a global phenomenon, everybody cares, you know, what they’re eating, everybody deserves access to, you know, you know, safe, affordable, nutritious food. The big challenge, though, around it, this is what we’re seeing now, which might lead into the COVID impact more is that we need a system though, that gives us that say, you know, affordable, nutritious, you know, accessible food, but to do that we need the farmers to stay in business. Yeah, totally. And that’s perhaps the big breakdown in our system today. Is that is it’s the middle of the supply chain, that is, you know, falling apart with these distribution problems. So you know, foods available, it can’t get it to where it needs to go, you know, Animals are available, but the processing plants are shut down, you can’t get it on through the system. But you know, so much of that falls back on the farmer, right? You know, the farmer is always, you know, so fragmented out there, you know, no direct connection with the consumer, being able to respond to those demands, you know, big companies that said, in a way and doing important actions because they move, you know, product very efficiently from A to B, but it seems to me that breakdown, and that’s a historical challenge is to get the market signals and the market compensation back down to the farm level. So that’s why I like some of these programs that try to, you know, to take those all back, maybe they’re sustainable supply chain initiatives, maybe they’re, you know, kind of a country branding program like, you know, orange and green and Ireland, maybe they’re a in Kentucky, there’s a program called Kentucky crowd, you know, so it’s kind of more local oriented, but again, about, you know, so how can we make sure the farmer stays in business and doesn’t bear all the risks?

Borna (ClimateAi) 22:00
Yeah, totally. And you know, those that’s a big part of sustainability that oftentimes doesn’t get talked about as much as financial sustainability and financial resilience of the farmer themselves. Because right now, they’re not, they’re getting the short end of the stick and a lot of this stuff, and they’re, you know, if you’re selling a sustainable box of Cheerios, whatever it may be, they’re getting one cent on the dollar, as opposed to the brand that’s claiming a lot of that value. So yeah, I totally agree. And I want to dig into something we talked about COVID a little bit, but I want to talk about the efficacy of labels as opposed to baseline. So you’ve done a fair bit of work with global gap. Am I pronouncing that correctly? I don’t know how to spell Madame global gap. Yeah, my understanding and please correct me if I’m wrong, is that global gap was like people were getting together. They put together the standard, but it wasn’t it wasn’t labeled in any way. It was kind of like this is this is the baseline that we’re going to agree to, and we’re not going to make it extra or we’re not going to make it special. Whereas here, you know, you have non GMO as a label, you have organic as a label, you have gluten free as a label. What are the benefits? And trade offs of these two systems and, you know, our labels giving us a pathway to get to, you know, a point where where this stuff is, is moving in a direction where people are hoping or is it? Or are we actually setting ourselves back by

Mary Shelman 23:12
price or labels? Just a marketing ops? Exactly, yeah. And so many times, so what is, you know,

Borna (ClimateAi) 23:17
a gluten free milk? Like, what

Mary Shelman 23:19
does that actually mean? Or is it just a way to do some skimming in the marketplace? And say, there’s a group of consumers out there like yourself saying, Well, yeah, I’m not gonna really think about this, I’m just gonna buy this, you know, here’s a signal on the package. So it must be better because it’s on here. So global gap is a, it was an organization put together a number of years back, it came out of Europe and European retailers and gap, the gap at the N stands for good agricultural practices. And basically the idea was, is that look, you know, as retailers and manufacturers as well, we care about what’s happening on the farm. And those farms might not just be here in our backyard. They’re all around them. The world. But the challenges is that we can have our audit team go out and check farms and this other manufacturer can have their audit team and then suddenly at the farm gate, you have like 27 people lined up and they all have different audit standards. And so the idea behind global gap is that let’s get together as retailers and you know, food companies and the farmers and talk about what what are sensible here, right, and then it becomes pretty competitive. So one global gap audit is the same as another there’s equivalence between countries and they started in you know, one product category and rolled out to other started in one category rolled out to others. That basically means at that farm gate, you don’t have like 27 different people coming in call asking for something slightly different and all asking for a different set of records and think about the cost of that. So so that’s what global gap is about. And over time they’ve added you know, standards for for aquaculture and for fishing and you know, fruits and beds. etc, etc, and again, all over the world. So it becomes like a common language, but it’s very pre competitive

Borna (ClimateAi) 25:05
is this mostly for developing countries to be like on par with whatever standards that

Mary Shelman 25:08
know their global gap standards here in the US as well. I mean, it’s about good agricultural practices, that you know, that that manufacturer, the retailer, when they buy this, it has been produced using generally accepted good, global, you know, good agricultural practices at the farm. And some of that covers how animals are raised, but it doesn’t go on to pack again, it’s, as you say, it’s pretty competitive. You know, one of the things and this thing kind of, you know, labels, you know, certifications versus what you might talk about are these other kinds of programs to me or programs of continuous improvement. I think it’s a really important distinction. Because to me, and this is something I think in the world we see actually a move away from that, you know, sustainability really start has has come into its own is for me, it’s become you know, quite fundamental and how it’s how consumers think about things you know how, you know, food companies retailers, think about about things. And it started out a lot about checklist. So the idea is, is well, gee, I want this to be sustainable. So I’m going to come up with a list of things. And you mister Miss producer, if you check all these boxes, that means you’re sustainable. Well, the challenge with that is that it’s static. And, you know, you really think about sustainability. To me, the best definition of it is means that we get better over time. It’s not that we just are able to check the box because there’s no one definition of sustainable right. What is sustainable agriculture? What is sustainable food? What is the sustainable food system? What is a sustainable diet? You don’t get one answer to that because it It depends on you know, what you what sustainability

Borna (ClimateAi) 26:44
tells me in different areas. Yeah,

Mary Shelman 26:46
is the different answer for sustainability in California, certainly different answer for Rwanda or for China or for you know, for Uruguay or Brazil. So what I see a lot of these labels that you’re kind of out sourcing the idea that you can’t talk to the farmer at the farmers market. So you’ve got some third party certifier coming in and you’re willing to pay for that, because you really would have liked to talk to the farmer, but now you’re saying somebody else to talk to the farmer. But that becomes sometimes a marketing ploy. And you know, how much do farmers really get that the programs that I really like are the ones that are based on continuous improvement. It says, Let’s go out as a program, let’s find a baseline, let’s measure baseline as an engineer, I was taught, you know that unless you measure something, you can’t control it. So let’s find the baseline and now every year we’re going to work to get better over time, and to me that’s moving to a sustainable system, rather than saying, Oh, yeah, check the box.

Borna (ClimateAi) 27:41
Yeah, but now, do labels have to be checklists? Why can’t labels be on the same sliding scale? Because, you

Mary Shelman 27:46
know, think about what a label is, by definition, right? It’s a, you know, it’s a it says, you know, I’ve done these these things. And if you had one, if you had two producers, and they’re both saying, you know, well gee, I’m gonna put you know, both of these products go in and under the same label. But you know, producer x is only able to do 30% of as much as producer y can do. Somebody pills that back and says, Oh, look, you know, this this, you know, producer x Even though 30% all they could do, you know, is a. So your your labels now good.

Borna (ClimateAi) 28:19
Yeah. And I definitely agree that I think the baselines are the right way to go just for scalability. And it’s, you know, it’s just if we, if the science is telling us that something is true, that should just be the mesh should be what we do across the board. You shouldn’t be getting a premium for that. It’s like if this is healthier, we should do it. If not, let’s not do it. But when I think of something like better cotton initiative, like they are on a sliding scale, they’re like, Okay, this is where we’re at right now, in order for you to keep the label you have to continue to improve. And that bar is set at different places for different for different countries, basically. And so I feel like there there is potential for there to be labels that operate on that same system.

Mary Shelman 28:53
Well, well with you though, I’m absolutely all for getting a premium. Actually. I think the premiums are very important, but Premium needs to go to the farmer right? The premium doesn’t need to go to the third party certifier to keep themselves in business.

Borna (ClimateAi) 29:08
How can people get a sense of like, which if we talked about voting with your dollar, if people want to get a sense of which companies are sharing a lot of value with growers? Is there a way to do that today or with growers or farmers or ranchers?

Mary Shelman 29:19
Ah, you know, I, I think you have to do some investigation on that. So that’s where the

Borna (ClimateAi) 29:25
journalists come in.

Mary Shelman 29:26
That’s where the journalist comes in.

To know to ask the question, right, you can’t just assume because it has a mark on there, that this mark means something. So it’s like, you know, you got to dig in a little bit. Just like when you know, somebody calls up a charity calls up and ask you for money. You can’t assume that charity is legit, because we know you know, some charity is like, you know, 95% go to the charity and 5% go to pay the administration and other ones you know, like, 99% go to pay the staff and you’re like, 1% actually goes out. So same is true for these labels.

Borna (ClimateAi) 30:03
I’m wondering, is there anything that’s stopping us from having a carbon label? And like, you know, obviously, if there were to be one, it would be on a similar sliding scale where it’s like, this is where we’re at today want to improve? Right? Right. So that, you know, if you start off, you’re not just like, totally

Mary Shelman 30:18
You know, I think carbon is so complex. And that’s the real challenge, right? Think about? What is it you’re actually measuring?

Borna (ClimateAi) 30:26
The physical quantification is the most difficult part.

Mary Shelman 30:28
Yeah. So what is that footprint

Borna (ClimateAi) 30:30
so much that goes into, you know,

Mary Shelman 30:32
so much of it? And it depends on where you’re farming right? Is it right to say, well, gee, so I’m in an area where it’s really easy to have, you know, organic soils and to sequester things back or I’m in an environment that you know, is actually the soils are really old and whatever I put on just goes right out, but it doesn’t mean that those soils are any more or less productive. So I think it’s What’s so difficult to me is trying to figure out the unknown. What’s the right incentives to get the farmer to take the action that that’s better off that everybody is better off? And then how do we look at that as it moves through the chain. And so you’ve got to turn it off and say, well, let’s talk about greenhouse gases instead of carbon for a minute, maybe, you know, both of them the same thing, just a different way to look at it. And again, I’m going to pop back in Ireland, because I have the, I think it’s always easier to talk about somebody else than it is here. Plus, they have really good data. And it turns out that the Irish dairy industry because it’s grass based, and its water, has the second lowest footprint to produce milk in the entire world. So they’re only behind New Zealand. So second lowest, you know, greenhouse gas footprint. But yet inside the country, when they measure greenhouse gas emissions, the dairy industry is a huge component of their greenhouse gas emissions. So there can be pressure inside the country. To cut that, so how can you cut it almost the only way you can cut it is actually by reducing the number of cows because their cows are already the second most efficient, their systems the second most efficient in the world. And, you know, so in from a global perspective, we as a world should want them to be producing more milk. But yet, internally, if you just look at it through that lens, you know, from the country lens, it’s like, wait a minute, we need to cut our greenhouse gas emissions, let’s get rid of dairy cows. And this is something I know Ray Goldberg was a on your podcast, one of your podcasts here, and he’s just an amazing, amazing person. And I’ve had the privilege in my, in my education and then in my work career to work with Ray. He was my teacher, he was my, my, you know, my professor and then my, you know, my employer, my mentor at Harvard for a while and one of the things he’s always said is like, you know, the challenge in the world is there’s no glory. Secretary of Agriculture. So everybody is out making these independent decisions where we need to be looking at it from where does it make the most sense globally, and then divvying it up after we make that,

Borna (ClimateAi) 33:15
which is even harder in the era when Like, right now there’s there’s so many trade wars happening, like it makes you think like, would it would it even be feasible because if you’re relying so much on the countries that are most efficient at producing one thing, although it’s ideal, a trade war starts and you’re, you’re kind of in a in a tough situation. But I mean, the same thing goes for for the carbon situation, a global carbon market is the only way to truly create any sort of change. Otherwise, you know, we put the pressure on and in the US, maybe it just gets outsourced somewhere else. There’s a lot of leakage issues. And so I’m with you on that one, for sure. And of course, like for the case of Ireland, they would it would be interesting to see like, where they’re shipping to and what the emissions are associated with the shipping and see, I would imagine if they’re the second most efficient, they’re probably doing pretty well and it might be more worth it for them to They’ll be shipping it

Mary Shelman 34:00
goes out in the form of dairy powder so it’s actually it’s not like shipping water around the world. So big dairy take the water out, you know, you ship it to to China which is their, you know, one of their biggest markets for it where which is short of water. So basically you’re moving water around and you’re moving it into a market that cares about food safety, you know, they care about their environment so bad so you know, they just trust their own products because of that. So, you know, from an efficiency standpoint, you know, I think that’s a fair one about while Jean you know, we’re producing it you know, say flowers in Kenya but then we’re putting them in airplanes to fly to Europe you know, is that good or bad right or when we’re flying fresh, you know, producing fresh you know, snow peas in Kenya and putting them in an airplane but yet if that airplanes flying at you know, should they be held accountable for that, you know, air miles or not, if the airplanes already flying today, those airplanes aren’t flying, so that poor you know, whether it’s a flower producer, you know, fruit and vege produce And Kenya is suffering for the fact that, you know, they’ve, you know, been lost out of the system.

Borna (ClimateAi) 35:05
Yeah, totally. And a lot of these developments that we’re talking about in terms of consumer buying habits, as well as labels. I’m curious how they end up affecting the farmers?

Mary Shelman 35:17
Well, it certainly could have benefits. I mean, you know, that’s what we all push for, we talked about all the time is how do you get out of the commodity trap? For a farmer, you know, how do you get more power in the system? You know, the challenge there is, you know, what are your options and a lot of it depends on your location. So if you’re a Kentucky farmer, you have more options, say than if you’re a corn producer in Nebraska, why do you have more options in Kentucky? It’s because you’re close to you know, all the population on the eastern seaboard within a day’s drive. You’re in the middle of, you know, Iowa or Nebraska, in the middle of kind of nowhere, right. So whatever you have, you need to process it into something else that it can then get moved along. So you know, the I think You know, that squeeze that gets pushed back because of the, you know, the power of the middle, the fragmentation on the farm side, I think hopefully some of the technologies that we’re seeing today maybe can change some of that. I think the data now that’s collected so you know, my new soapbox if I have one, you know, everybody says, Oh, yeah, farmers data is valuable. Give it to us. Yeah. And to me, it’s like no farmers data is valuable pay the board, right, it’s actually valuable. That should be a revenue stream. And it should be so a farmer should be selling you know, their crop you know, whether it’s, it could be soy beans, could be corn, it could be you know, you know, some kind of, you know, maybe it’s fruits or veggies and it’s like well, but the product itself you’ve got the physical commodity and the data that goes with it is that product moves through then it’s going into something and whoever is selling it, you know, whether it’s a it’s known with yogurt or you know, General Mills was cereals or McDonald’s hamburgers, they made sustainability commitment, and they report on those commitments, and 70% of the impact products actually happened on the farm. So for them to be able to report they need that data that’s valuable to them, therefore pay for it, you know, you know that data is valuable, rather than, hey, just give it to us.

Borna (ClimateAi) 37:19
So you’ve written a number of cases on genetically modified crops, what is the role in genetically modified crops in combat and climate change, specifically, like you obviously work with a ton of governments, you did a lot of case studies. What is the role in combating climate change from both a mitigation and an adaptation standpoint?

Mary Shelman 37:35
Well, I think, you know, of course, it’s easier to start from adaptation, right? Because it’s an easier way to get in some of the resilience that we need into these crops, you know, whether it’s drought tolerance, or E tolerance or ability to survive, you know, freezes. It’s just a faster path to that now, you know, when we think about so these new technologies out today around gene editing, you know, the question becomes is, you know, are you counting that In your genetically modified side, are we counting that into a more conventional breeding with that we’re just, you know, we could do it better because we have these better tools. Can

Borna (ClimateAi) 38:09
you explain to people with the differences

Mary Shelman 38:11
before when we had genetic modification, you’re basically transferring a gene and probably between the same species. So from rice to rice, or corn, the corn but sometimes from one species to another species. So earliest example that everybody always talks about was the flavor saver tomato, which was tolerant to cold so you could store at a colder temperatures, but the gene that went in there was from the arctic char, which was a fish, and that just made people really kind of creepy. The idea that now my tomato has a fish gene inside it that keeps it from freezing. Whereas typically say if you had a and by the way, there’s no rice in the United States. It’s genetically modified. But if you looked at a crop like corn or like soybeans where they are, you know, you’re trying to find something say you could find some In a wild species and move it in. So basically it means that you’re moving a gene. And the other side, the other technology, the newer technology, some people call it CRISPR. Some people call it like snips, single nucleotide something or another, and you’re basically going in and you’re very able to fine tune and actually take the, the the genome itself and actually edit inside the genome without having to move a gene. And so you’re not it’s not a trans gene, but it is an edited gene. So it’s, and there’s products out there’s ton of medicines that are out there that have, you know, been developed through this mechanism. So the question goes back to climate change, you know, how do they help? Certainly, they help on the resilient side? tremendously, I think, you know, the other side is, you know, so how do you help climate change? But most important thing is you’re able to produce more for less using last right? And to be able to, you know, to increase yields. Potentially to find new ways to increase biodiversity anytime we can take the amount of acres needed to produce a certain crop means that we can do something else with the acres that we release. And just as an example so on my farm in Kentucky, we grow genetically modified soybeans and corn so it’s a soybean corn rotation. And that farm has been in notable conservation tillage since that’s my dad bought it in the in like 1970s Kentucky happens to be the state in the United States the first place that that no till was worked on in the 1960s send, you know, history of conservation efforts and so why do we use GMC it’s it’s because that the tractor only has to go once through the field instead of you know, pulling a heavy plow through it cuts down on erosion, it means that you leave the top so you’re not disturbing the top soil there. And all of the organic matter can stay in the soil and it can break down rather than you No having to be taken off, it means that we don’t have to plant you know, kind of fence row to fence row. So we can take land out that might be, you know, considered more fragile, more likely to erode because we can get the same return on the farm by farming fewer acres on that piece of it. So it’s just like so, you know, to me, there’s so many environmental benefits to do it, you know, we know there’s no adverse health effects, and I still have great butterflies and those areas that we were able to leave now. And along the creek beds along some of the hillside You know, there’s kind of wildlife habitat so we can use that to increase the biodiversity containing the, you know, the the cropping land to one area and still being able to make a certain you know, the yield that we need the return that we need to make sense for myself as a landowner and I just lent their land and the farmer that farms the land so we just kind of split it while at the same time were able to do this other things that are also positive. So you know, I think the the spillover effects of it have to be counted into that, which is why it’s so complicated

Borna (ClimateAi) 42:04
and super interesting because I think when talking about labels, you know, like regenerative people oftentimes pin that against GM seeds as well. But in this case, it’s like you’re you’re almost enabling more regenerative practices by using the GM seeds, which I think would is gonna give a lot of the listeners cognitive dissonance here. Well, let them let them sit on it and send us some questions.

Mary Shelman 42:25
That would be fantastic.

Borna (ClimateAi) 42:26
What are the general counter arguments that get brought up against JMC that you think are reasonable

Mary Shelman 42:32
part of it is is it you know, it forces consolidation in the, you know, on the input supply side, you know, the technology owners, you know, charge farmers to buy seed every year, rather than farmer saving seed, but you have to buy corn seed every year and the way that hyper corn seed every year, it’s a way to project things. It’s just like, you know, somebody that recording artists that record the song, and, you know, used to be in the old days, it’s like they didn’t want you to copy the song and pass it along. Back in that old model, because it’s like, Hey, wait a minute, that’s my intellectual property. Right? And it’s the same thing. It’s the intellectual property here. It takes, you know, hundreds of millions of dollars to develop a new GM crop.

Borna (ClimateAi) 43:11
If you have proprietary seeds, though, and you have the level of consolidation that we’re seeing, does it become a danger to only be able to buy those more expensive seeds if like, even if you don’t want to? Or is it still so available on the market that you can you can go ahead and buy.

Mary Shelman 43:25
There’s lots of other seeds you can buy. But what you’re going to give up is, you know, some yield and some resistance. And so yeah, so those seeds are cheaper and a farmer can do it. So they both for their that what their dollar is just like we were talking about, you know, consumers voting with their dollars farmers vote with their dollars or tons of other options. Nobody forces them to buy this every year. Some of the interesting things I think about, you know, CRISPR, this new technology, we’re talking about gene editing technology, it actually goes back and it can democratize farming again, because one of the reasons those seeds are so expensive, those chances are so expensive, is because it costs so much to get them through the right taury process, it’s the years and the data that it takes. And governments impose that through their regulatory system, those seeds would be much less expensive. If governments would say, gee, you know, these are fine, right? You know, we’re not going to you don’t have to go through this, you know, huge, long regulatory thing. So if CRISPR ends up being easier to get through the regulatory through the approval system, the cost of those seeds will go down.

Borna (ClimateAi) 44:23
I want to squeeze in one more question. Feel free to answer this, however you see fit. You have been involved in this in the agriculture industry for a while and you’ve been involved in many different capacities. How is climate change affecting supply and demand dynamics? And what do we think is going to change in the future and what needs to change to be able to deal with it?

Mary Shelman 44:42
Oh, so I can you know, in terms of affecting supply, I think that’s easier to talk about supply and demand dynamics as supply you know, it’s like so we’re seeing areas that you know, historically might have been good, you know, areas to produce and that are for some reason Are you know, now not Good, and maybe they’re too hot, maybe they’re too dry, maybe they’re too wet. We do see like growing seasons, if you think about the US growing seasons in Canada have expanded. So a lot of land now is being developed there where they ever, you know, farmers say to me now man spring comes, you know, two or three weeks earlier than it used to So, so maybe get some of that, I think from the dynamic supply and demand dynamic side of it, the tricky thing is, is if we do get more weather events, variable weather events that have more impact on production, so production goes up and down more, that’s where you start getting more price swings and more volatility in the system.

Borna (ClimateAi) 45:36
And that’s a big part where we’re trying to help tackle a lot of these issues is, you know, how can we give people insights into better managing something that’s no longer abiding by historical heuristics or rules anymore? You know, if you go to the USDA website, it says, throw that counter out the window, you know, we can’t be relying on that.

Mary Shelman 45:53
Yeah, no, I know. So that’s it. So how do we get you know things that are allow us to you know, not make decisions like in the rearview mirror, right, so, you know, things that, you know, allow us to be more forward looking. It’s tricky though it, you know, at the farm level, because it’s, it’s given the fact that, you know, farmers have one really one crop a year and maybe 40 crops across their lifetime, it’s really hard to get them to say you should take a risk on this. So what they do is they don’t bet the whole farm, right, you know, so they’ll they’ll make, they’ll try something on some piece of it totally bad, or they’ll watch and see what their neighbors try. And it’s just I think that’s why in the, you know, the agricultural technology space, it just takes longer that, you know, there’s investors out there that expect very rapid change. And it’s a, you know, for my experience in the industry, and you just think logically right, it’s

Borna (ClimateAi) 46:44
just 40 shots to improve at each time you want to you want to do one thing to try to get better than what your parents were doing. And it’s, you don’t want to risk on something. That’s snake oil.

Mary Shelman 46:52
Yeah, well, it’s the risk, right? It’s the risk that and there’s been a lot of snake oil out there. And today, there’s so much technology, you know, knocking on the door. You know, if you’re a farmer, if you’re a producer, how do you sort through that? Because everybody’s got a different story. And so

Borna (ClimateAi) 47:07
everyone’s got a tool that’s gonna change your life. Yeah, yeah, totally agree completely. This has been this has been amazing episode, I’ve learned a ton. Is there? Is there any way people can support your work or what you’re doing? Do you want to just invite you to come speak at their

Mary Shelman 47:22
conferences? Yeah, their conferences, we should have conferences again, that’s it, or we can do it online. You know, happy to so one of the things that I often do is I talk about again, I talk to typically talk about for global trends, but it’s up to a very high level audience. I could talk about it to big farm group as well. And I think, you know, talking to farmers is one of my favorite things to do because I don’t think they hear it think enough about what’s happening in the world. And their products are so important and but also when you think about if you’re a company, whether you’re an ag tech company, or whether you’re a you know, a corporate of some kind and it’s like wow, gee, where’s the world going? You know, maybe we were we spend a lot of time thinking about you. What we’re doing today, but just like the scenario we’re in right now, that’s, you know, cobit 19, and how much it’s changed things, you know, kind of thinking about, you know, wow. Well, you’d have to spend time thinking about that future world, not just about what we’re doing today and being more efficient. And that’s really, you know, the message. I think we’ve all had the wake up call over these past two months or three months that, you know, we’ve got to spend more time thinking about how to build more resilience into the system.

Borna (ClimateAi) 48:27
Yeah. And, you know, I really enjoyed this conversation and breaking down stereotypes and stigmas requires kind of conversations like this. I appreciate you bearing with me gone through some of these. I learned a ton Mary. Thank you.

Mary Shelman 48:39
You’re welcome. My pleasure.

Borna (ClimateAi) 48:42
Hey, everybody, thanks for listening. If you have any feedback, or you’d like to add your own two cents on the topic discussed today, or if you’ve just got your own ideas about someone that we should discuss in the future, please feel free to shoot me an email at podcast@climate.ai at its core, this podcast is just a way for us to learn and we want to share our learnings as we go. So we’re always open to building on these conversations and hearing new perspectives. Thanks for your support and see you next time.

Guest:

Mary Shelman

Former Director of the Agribusiness Program at Harvard Business School

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