Bigger Problems

“Supply chains” are on many a mind these days. Ford struggles to make trucks, and as announced on Monday, we’re currently struggling to get frozen beef all the way to the door for some of you. We’ve been doing our best to apply band aids, but the full solution has as-of-yet been elusive. 

And so I am reminded of Dwight Eisenhower, who famously once said

Whenever I run into a problem I can’t solve, I always make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.” 

So that’s exactly what we’re setting out to do over the next 90 days.  As I zoom out, here’s what I begin to see…

Entrepreneurs are always seeking to improve supply chains, and beef is no exception. Back in the late 19thcentury, the problem with US beef was also getting from the prairies in the core of the continent to the population centers of the eastern seaboard. The entrepreneur of note was Gustavus Swift, a butcher in Massachusetts. The standard of the day was to ship live cattle by rail car all the way to regional and local processing plants then butchers near population centers. Swift was one of them.

Gustavus Swift (Source: Library of Congress)

Swift realized that high transportation costs and other delivery losses were due to the low density of live animals in rail cars, and the loss or other degradation of those animals during the long journey. He reasoned that if he could invent a way to preserve already-butchered meat during transit, he could get much more meat into each rail car, both cutting down on costs, and reducing losses. 

In 1875, Swift set off to find ways to keep already-butchered meat cold while shipping it across the country. The first experiment was somewhat simple – taking the doors off rail cars and shipping only during winter. It didn’t work so well. 

In 1878, he hired an engineer who through thoughtful consideration in those days before mechanical refrigeration, developed a special kind of cold rail car. This rail car was designed to store ice in the top of cars, and hold meat packed in the bottom to both keep the center of gravity low and the coolth flowing downward. 

It worked pretty well, but interestingly; Swift couldn’t get other railroads to use his new invention. Turns out the incumbents made too much money selling space on the live animal cattle cars and had no interest in cutting into their own margins. 

So in 1880, Swift started his own railroad – the Swift Refrigerator Line. In innovation-speak, we call this “business model innovation” – the requirement to not only innovate the technology and equipment, but the full business process of getting a product all the way to market. This innovative business system worked very well. Within a year, competitors had copied his move, and by 1920 his own line owned and operated 7,000 of these ice-cooled rail cars. 

But it’s the rest of the story that gets more interesting to me. You see, even the business model innovation of the Swift Refrigerator Line was a “local” solution – it solved only the problem of getting a perishable product from source to market. What happened next was the growth of more concentrated feed yards closer to concentrated packing plants at the railheads to such cold-car rail lines. Starting with Swift’s first operation in Chicago, these concentrated operations popped up in the younger cities further west like Omaha, Kansas City and Forth Worth that were closer to both cattle and feed production. 

The principles of this localized supply chain efficiency kept on moving west with further innovation in efficient supply chains and technologies. The resulting mega-feedlots, now in places like western Kansas and the panhandle of Texas, represent the peak of this local solution’s efficiency. Below is a satellite photo of what this ecosystem looks like in one small corner of the Texas panhandle where you can see two large feed yards surrounded by irrigation pivots producing feed. For its own purposes – to bring more affordable meat to more people consistently – this system has worked very well.

Satellite image of 2 feed yards amidst irrigation pivots near Cactus, TX (Source: Google Earth)

So now to the point – by solving only the local problem of cold transport, we accidentally ended up with a system that had a hidden cost. We now understand that this system of producing cheaper meat led to a treadmill built of toxic chemicals and fertilizers, and the pumping of huge volumes of water neither of which are sustainable over the long term. In the above system, soil and toxins inevitably flow downstream and the birds and bees disappear from the skies. As described before, if cheap is the only goal, this is what we’ll get… right up until we can’t. 

So what’s the alternative? 

Ironically, a clue might be found by looking back at the same region at about the same time… 

In 1885, somewhere along the Canadian River in the same panhandle of Texas, thus not far from the above image, cowboy Charles Siringo captured this description in his diaries:

“To give you an idea how thick the buffaloes are around there that fall, I will say at one time when we first located our camp on the Bonetta, there was a solid string of them, from one to three miles wide, going south, which took three days and night to cross the Canadian River. And at other times I have seen them so thick on the plains that the country would look black just as far as the eye could reach.”

Although this observation was recorded at the same time the Swift Refrigerator Line was getting started in Chicago, it was long before irrigation and planted corn in the Texas panhandle. That 3-mile-wide herd was bigger than the combined feed yards you see in the satellite photo. Even at a meandering pace moving only part of the day, that herd might have been 3 miles wide and more than 30 miles long! How could there possibly be so much grass for the large ruminant animal to eat there without plows, seed, irrigation and fertilizer? The difference: the herd was moving.

It’s not lost on me, that this eye-witness observation, would have been at the time of year when the once vast herds of bison were still coming south to their winter grazing lands as I discussed a few months ago. We now understand scientifically that this moving dynamic of grazing intensely and briefly, but not returning to the same place very often, leads to more carbon in soil that grows more grass. This sun-cow-grass-soil system grows more grass because plant roots exude organic compounds to feed microbes that mine nutrients from minerals in soil and return them to the plants in order to grow, so fertilizer isn’t needed. This system also grows more grass because those carbon rich soils hold onto more water when the rain falls, so irrigation isn’t needed. Fewer seeds are needed because the old roots are still there when the plow doesn’t come through every year to rip them up.

The key processes how grazing can store carbon and grow more grass.

Now, in the short term, one can indeed grow more grass faster with fertilizer and a sprinkler, but only for a while. At a system level over the long term, the costs of a truly agroecological system designed around a moving herd are lower and the productivity is higher, but only if seen at that level – the whole system, not just its parts.

This bigger system is what we are building our business around. The trick, and thus our mission, is to build a business model that thrives together with this agroecological system.

Thus we find ourselves back at Swift’s innovation moment once again. I’ll spare you the long explanation about why today’s grocery stores are like the incumbent railroads back in Swift’s day, but that’s why we chose to build our initial distributed delivery network with partners. We’ve known that on its original limited scale, frozen beef shipped in sustainably insulated boxes was less than ideal, but it was the chosen tradeoff of getting started on the road to building a new system. For the early days, it has worked well to get truly better beef from pasture to plate. Now as supply chains started breaking down nationally, things have gotten messy (sometimes literally). We, too, have experimented with local point-solutions, but the meat has still thawed all too often. So now we pause and reflect on the bigger boundaries of the problem before we push the ‘go’ button again.  

Meanwhile, we are very pleased in the customer response so far to our BoboLinks – which, by the way, skip those cold chain issues altogether! Precisely because they don’t require refrigeration, BoboLinks provide us an opportunity to nurture much wider networks on both the supply and distribution side. We see much potential for that product line to helps us achieve our mission. And to me, how interesting it is that the same little microbes that make the whole regenerative production system work in the soil, when applied to the preservation of food, also simplify the business system above the ground!

Anyway, like Swift, we, too, are approaching 3 years in, so I guess it’s not surprising that it’s time for us to innovate again. In looking for solutions that last, we’re first adopting the Eisenhower Principle – zooming out to see and understand the outlines of the bigger problem. 

What I can see so far is that life in a healthy system is based on things on the move, and that we have to consider the business system, not just the product. Birds weren’t meant to perch in cages, grazing animals weren’t meant to stand still behind fences, and neither will we. Stay tuned in the not-too-distant future for updates on what we do next!

Russ Conser

Blue Nest Beef Co-Founder & CEO

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