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Why Small Food Companies Struggle To Survive

Why Small Food Companies Struggle To Survive

In this country, we romanticize the idea of a small food company. Often represented by the small family farm, we laud all small food artisans - farmers, bakers, coffee shops, food trucks, family restaurants - in the same way. We mythologize them as torch-bearers of how food used to be grown, harvested, and transformed to eat. We complain the industrial food system is unfairly destroying these small parts of the foodway system.

The problem with this romanticization is that it's mostly untrue. True, the rise of "big food" does create a competitive advantage for large industrial food companies. But it's not a planned, insidious plot to destroy small food entities. It is just the result of some basic principles in business. Access to capital, creating efficiency, and reaching scale bring significant advantages to companies that have achieved them. 

Think of Amazon versus brick-and-mortar retailers. If a retailer's value proposition focuses on selling the same items, Amazon will have an insurmountable advantage. It's tempting to suggest there's no solution, that retailers are doomed. But some retailers, like Tractor Supply Company, discovered was there was a way to defeat Amazon:

  1. Offer products and services that aren't available on Amazon
  2. Match Amazon's ease of buying and delivery
  3. Offer customer service that is not possible for Amazon to provide

Likewise, small food entities will have to approach their businesses differently if they are going to thrive in the foodways system of the future.

  1. Grow/make food that isn't available elsewhere. Not just in terms of unique crops or specially prepared foods, but going "beyond organic." Explaining how organic certification is cost-prohibitive for small food companies, but it's entirely possible to go beyond those standards without the seal. Then transparently show how the food offered is clean, fresh, and nutritious in a way only possible from a local grower or maker.
  2. Collaborate with other growers/makers to create cooperatives that allow the use of standardized systems and processes that are just as efficient, if not more so, than any sizeable industrial food company's. Shared infrastructure, systems, and processes reduce the capital needed, streamline workflows, and enhance efficiency and productivity.
  3. Build social capital in communities. Small food entities are part of communities in a way large national companies cannot be. Being involved in the community, building personal relationships, and being good stewards of the local environment will drive loyalty. 

The challenge? Small food companies don't have the luxury of applying some of these strategies; they must use them all to thrive. The hardest is the second because most of these founders/owners have not operated their organizations this way before. While there may have been camaraderie, there has not been cooperation and coordination. It will have to change for small food entities to become a notable and profitable force instead of unique, exceptional cases.

Who's going to lead this charge? It's not going to be some industry trade group. It's going to take some passionate food entrepreneurs in every community stepping up, pulling small growers/makers together, and leading the charge for collaboration. And when it works in one community, then start replicating it in others. I, for one, hope Dorothy's Power Foods will be one of those companies that help return the foodways system to its local roots.

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