#18: Cullen Naumoff (Farm Fare)

(AI-Generated)
--
Cullen Naumoff (Farm Fare) [00:00:00]:
So when we can see 1,000 acre farms convert from wheat to specialty crops, that and we we are using those specialty crops to feed our own population. Not to say we can't have exports either, you know, but the vision is to say, how can, right, how can we build food independence in United States? And we can do that through better data. We can do that through better markets, better crop insurance in a way that we are now saying to farmers, you know what? It's more lucrative for you to grow specialty crops than its commodities. So that's the big vision there.

Jeffrey Stern [00:00:37]:
Let's discover the Cleveland entrepreneurial ecosystem. We are telling the stories of its entrepreneurs, and those supporting them. Welcome to the Lay of the Land podcast, where we are exploring what people are building in Cleveland. I'm your host, Geoffrey Stern, and today we're doing a deep dive on food. We'll be talking through how it is that food actually makes its way from the earth to our plates and the nuance of the economics and supply chain behind it. Colin Neumath is the co founder of Farm Fare, a startup based here in Cleveland, Ohio, which uses technology to allow regional food hubs to grow local food market share collaboratively through family farms and regional supply chains. Hailing from the agricultural rich lands of Ohio's densest dairies, Cullen spent a decade before farm fair learning and working everywhere from New York City to West Virginia to gain a better understanding of the dynamics of local food economies Upon her return to Ohio, she saw an opportunity to grow a local food economy by starting and managing a food hub. Her engineering background, though, shed light on the obstacles to scalability that a single food hub faces, while also highlighting how collaborating strategically with like minded businesses could yield, quite literally, an entirely different scale of impact.

Jeffrey Stern [00:01:50]:
I learned so much from Colin here. I really feel like I got to nerd out on this conversation, so I hope you all enjoy it and learn as well too. So food is truly one of those universal issues. When I was thinking about what we'll talk about today, it's it's really everyone needs it. We've all become very comfortable though abstracting away this process of how food that comes from the earth becomes conveniently available to all of us. And so I'm looking forward to connecting those dots and and kind of really exploring how how food moves. So looking forward to this conversation, Colton.

Cullen Naumoff (Farm Fare) [00:02:31]:
Likewise. And, yeah, I can't agree more. Food touches all of us.

Jeffrey Stern [00:02:35]:
Yeah. Yeah. So we'll we'll get to, you know, Farm Fare, but I love if you could just working towards Farm Fare and and what Farm Fare actually is, You know, explain a little bit about your own personal background and and kind of the the impetus for for what Farm Fare is and and that kind of founding story there.

Cullen Naumoff (Farm Fare) [00:02:53]:
Sure. So I hail from, you know, as I usually say, the land of Ohio's densest dairies. So I'm from a very rural town. You know, I went to a high school where we had drive your tractor to school day, and, I'm a champion pig shower by,

Jeffrey Stern [00:03:10]:
my

Cullen Naumoff (Farm Fare) [00:03:11]:
my childhood experience as well. And I wanted to get as far away as I could from it. So, you know, I went to a very big college and I moved to New York City and I thought that, you know, ag was was long part of my past. But the more I started to think about the issues that I was really interested and concerned about, which, you know, significantly revolve around climate change and thinking about how do we, as humans, live our society in a way that values people, profit, and planet. I came to that same conclusion that you mentioned, Jeffrey. This idea of, well, everyone understands food. We are connected by food, and that seems like a really interesting lens through which that we can impact the climate in a positive way. So my journey, you know, after I, you know, I did have an engineering degree and I wanted to do something more social impact space before I felt like I was gonna, like, you know, really focus in on what where my impact might be.

Cullen Naumoff (Farm Fare) [00:04:08]:
So I did teach for America. And, you know, really uncertain to understand the impacts of the education system and both understood that I was not cut out to be a middle school teacher, which I'm so grateful that there are those folks. And also that, you know, being an educator is tremendously important, but tremendously complex and difficult. And that kinda led me, to graduate school at Columbia where, again, I thought my path would really be focused on corporate sustainability and thinking about large corporations, multinational organizations as a barge. And if you can shift the behavior of a barge, and a barge is hard to turn, but when you do, it creates a significant ripple effects that I could make a lot of positive impact there. So after Grasco, I worked for Bayer and I was, you know, one of 2 people in North America focused on sustainability and we're talking about Bayer Healthcare, Bayer Crop Science, you know, Bayer Material Science. And lo and behold, they sent me on a, special project, to West Virginia. And, you know, I grew up in Ohio, which is, you know, neighbors to West Virginia.

Cullen Naumoff (Farm Fare) [00:05:14]:
West Virginia typically gets a pretty bad rap. You know, I think a lot of poke people think about it as the armpit of America. But, you know, they they are kind of pitched me this, like, yeah, Cullen transform this, like, chemical chemical and it was just an amazing state that I did not understand until I lived there. And I thought, you know, the cultures between West Virginia and New York City are not so dissimilar if people would just have a conversation. And so that was tremendously valuable. And more importantly, I really got to participate in some on the ground projects. And I really realized that, you know, I love being a practitioner. Like, I don't necessarily love, like, sitting up and high in the sky and dreaming big strategies, but never getting to implement them.

Cullen Naumoff (Farm Fare) [00:06:09]:
Basically, I left Bayer and I started to become an economic developer. And and, you know, West Virginia, you can imagine we're talking about economic transition work. So how do we move away from extractive industries and into more regenerative focus, foci? And that really that helped us settle on, you know, ag, the intersection of ag and health and, you know, renewable energy as some really significant opportunities for West Virginia. And so lo and behold, I found my way back to ag, And that really began the journey of unraveling the significant nuances of the food supply chain. And so after that work where we were doing a farmer training program, I started and managed a food hub, which is essentially a food based warehouse as who is Farm Fair's current customers. So, you know, again, this is their cutest path, but interestingly, how it it kept kind of like building on one another in a way that came full circle. And and what I'll say too is that, you know, when I was an engineering student at Ohio State, my engine I have several engineering professors who said, like, hey, Colin. You're not like a traditional engineer.

Cullen Naumoff (Farm Fare) [00:07:21]:
But I am, like, so happy background. So that was a very interesting full circle experience too.

Jeffrey Stern [00:07:34]:
That's an awesome story coming full circle. You know, if you go to farmfair.com right now, the first thing you see is this hero image shot with the words, economies of collaboration. So maybe with that as a starting point, what is Farm Fare?

Cullen Naumoff (Farm Fare) [00:07:50]:
Yeah. That's a great starting point. So Farm Fare is a tech enabled platform that supports small and medium sized farmers, better access institutional markets. Like, what the hell does that mean? So so we, support small family farmers. So you can imagine this to be anywhere from, like, 5 you're growing on 5 to 50 acres. 88% of the farms in the United States fit in to that category. And yet, you know, they leverage only 4% of the total sales. So that's a very, like, well, something's wrong with that picture.

Cullen Naumoff (Farm Fare) [00:08:28]:
And part of that is all of these kind of supply chain nuances, that Farm Fare addresses. And we really are leveraging this huge, you know, market opportunity, 13,500,000,000 on the institutional side. So we're talking about taking product from small farmers and selling it into hospitals, public schools, prisons and jails, colleges and universities. And historically, these markets haven't been able to access this product because, you know, they don't wanna source from, like, 20 to 50 different farmers in order to fulfill their need. And frankly, the prices and the volume just aren't relevant to those large volume buyers. And those that that is the problem set that Farm Fare addresses. And we do that, what I call through an evolution in the supply chain. And so, part of this has to do with my own experience in managing a food hub.

Cullen Naumoff (Farm Fare) [00:09:16]:
So just to put a little more context on what is a food hub? Lots of definitions here. So we can think about and again, most I think everyone can relate to. In the last 20 years, we've seen this explosion of farmers markets. And so, you know, any everywhere from New York City to Cleveland, Ohio, we've seen more and more farmers markets, and they have dramatically improved the lives of farmers. Right? They give farmers another market outlook. They give them an opportunity to establish a relationship with a consumer. But there's a lot of rough things about being a market farmer. And what that means is, like, some if it rains, you're not gonna get them any sales.

Cullen Naumoff (Farm Fare) [00:09:58]:
Or a new vendor, a new farmer could come to the market, and they're selling the same exact product that you are. And so now, again, that reliable revenue stream that you thought you had disappears. And so they're not, you know, a reliable source of revenue, especially I'll say, as the saturation of farmers markets has increased over the last 20 years. And in response to that saturation, food system players have said, we think there's another way we can support farmers with market access, and that's through a food hub. So a food hub, you can literally think of as just a warehouse. And so it's a small food warehouse that supports 20 to 50 farmers, aggregates that supply so it, you know, sums all of the supply from all the farms, those 20 to 50 farms it's working with, and then presents a single sales funnel for those farmers. So now the hub can go to Cleveland State and say, hey. I have the ability to provide you product from 50 farms.

Cullen Naumoff (Farm Fare) [00:11:03]:
You get one invoice and 1 p you know, one invoice and one truck from me. How can we make this transaction happen? So food hubs have significantly improved again, that access to wholesale customers. And again, wholesale thinking about restaurants, groceries, institutions. And so I was running one of those food hubs in Oberlin, Ohio, and we were focused on, wholesale markets. And I have a very distinct memory of driving down 71 South, and I'm driving in our truck. You know, I'm driving all the produce. I am literally like the delivery woman. I'm the saleswoman.

Cullen Naumoff (Farm Fare) [00:11:38]:
I am the, you know, staging woman in the warehouse. Like, Cisco, the big broad line distributor is, like, whizzing by me in their 53 foot semi trailer. And I thought, like, man, this is never gonna work. Right? What I was doing in that scenario was that I was replicating the existing food supply chain, meaning a hub and spoke model, but I was doing it without any of the benefits of economies of scale. So I was working with small farms and short supply chains. The financial picture of that just isn't reasonable. It just doesn't work. And so this is that was when my thinking really started to turn to what is a distributed node based supply chain look like, and how can we leverage technology to drive collaboration to achieve new types of efficiencies.

Cullen Naumoff (Farm Fare) [00:12:31]:
And so what FarmBear does is we say, hey, food hubs. You are all essentially locating yourself in a rural region with some access to a major urban market. And instead of inadvertently competing with one another and or not knowing one another exists, why don't you actually strategically collaborate? And so Farm Fare also values the local relationships that food hubs build with both the farmers and, like, you know, their their wholesale customers. And so we provide a platform that allows them to maintain that autonomy from the front end to, again, maintain those relationships and maintain all of their branding. But on the back end, we are enabling the strategic collaboration that we call economies of collaboration. And that collaboration takes 4 forms. So the first form is is that they are enabled to collaborate on inventory. So now if we go to Cleveland Clinic or University Hospitals, which we do, and we say, hey, you're not hospitals, which we do, and we say, hey.

Cullen Naumoff (Farm Fare) [00:13:36]:
You're not only buying from a food hub's worth of farms. You're actually buying from a region's worth of farms, which allows me to ensure I can provide you consistent volume. I'm gonna get to pricing here in just a second. The second form of collaboration we enable is an outbound broker logistics logistics network. And so these small food hubs are small businesses. They have 3 to 5 people per warehouse. And, you know, they're asking them and you heard me say, like, you're wearing all of the hats, plus you're trying to optimize a logistics organization. That's not gonna happen.

Cullen Naumoff (Farm Fare) [00:14:15]:
So we leverage existing capacity on the road and match it to, like, local food freight that needs moved, and we're the dispatchers of that. So similar to how food hubs aggregate farms, Farm Fare aggregates trucks. The third piece of the puzzle is we actually hire a salesperson to sell on behalf of all of the food hubs in the network. So in Cleveland, we have a salesperson focused on 5 selling for 5 FoodHubs, and that person is really focused on converting institutional accounts, which are often the hardest and most nuanced type of account to convert, which, again, food hubs just don't have the capacity to manage because, again, they're small organizations. And the 4th and most transformative collaboration that we empower is frankly data. Happy to, like, say we backed ourselves into this. We didn't think of this on the outside, but it's been super exciting to see when food hubs transact on the same platform, they generate really transformational demand and supply side data. And why we care about that? Well, first of all, isn't it horrific that if we would go to the USDA, farmers in any region of the country who are selling specialty crops, So specialty crop is anything that we consume versus a commodity crop, which is typically going to kind of animal feed or other type of energy production.

Cullen Naumoff (Farm Fare) [00:15:40]:
Farmers would have had have no access to price specific data from the USDA. And so when they're trying to market set their prices, they're literally, if they're in Ohio, they're grabbing price lists from Maine. They're looking at commodity markets, which certainly undervalues their product. So when food hubs are transacting the same platform, they actually generate demand and and supply side data, which helps them understand what is demand, what is the willingness to pay, and what are your fellow farmers growing. And so now what we what happens is when, at the beginning of the year, food hubs can strategically regionally production plan together. So farmers can say, now I know what to plant. So what I plant actually sells. And does that probably seems like supremely elementary, but it's it's that elementary that's that's not happening today.

Cullen Naumoff (Farm Fare) [00:16:39]:
And that's why, you know, family farms on only 4% of the total ag sales in the US despite being the majority of the farms.

Jeffrey Stern [00:16:48]:
Got it. That is a comprehensive overview of the the four tenants of the economies of collaboration there. No. But it's super interesting. I mean, it's very clear what the value proposition is for really all the all these parties involved and thinking about it in contrast to the more traditional economies of scale that that a a larger, you know, player would would have in this space. I am curious from Farm Fare's business perspective how you take something that is is really hyperlocal and focused intentionally so And from how you think about expansion and and growing and and getting Farm Fare as a technology platform to empower more of these farmers beyond, you know, local regions? How do you take something that is very local and and think about scaling it?

Cullen Naumoff (Farm Fare) [00:17:31]:
Yeah. So the food hub industry, who are our consumers, is a young industry. It's it's really been growing in the last 10 years. And, you know, I think their their growth is just over 400%. But again, these are small organizations. And so what this means though, is that they're all facing the same challenges. So if, there's a saying, if you've seen 1 Foodhub, you've seen 1 Foodhub. But what all of the Foodhub will tell you is that they recognize that the only way to make their operations truly impactful for their farmers in terms of growing sales that they have to network.

Cullen Naumoff (Farm Fare) [00:18:12]:
They have to collaborate with one another. So this has been a growing conversation and has accelerated in the wake of COVID. So when we saw the industrial supply chains break down, food hubs across the country, you know, were growing rapidly so much that, you know, they were hiring 50 people at a time. So can you imagine going from that 3 to 5 person organization to now this 50 person organization? And so in order to meet all of that demand, what were they forced to do? Network and collaborate. And they didn't have a tool to do that. And so, you know, they're kind of, you know, using all these bastardized solutions from, like, slacking one another to using Excel spreadsheets, which totally works. It's just a lot of effort. So when you say, like, how do we, you know, how do you see Farm Fare growing? Well, you know, we know food hubs across the country, and we are working with food hubs across the country need to network themselves and need a tool to do that.

Cullen Naumoff (Farm Fare) [00:19:11]:
So, you know, in our dream in our dream, right, we see all of these hyper small regions, right, networking themselves. And when I say a small region, it could be as large as statewide. Or it could be, like, for example, the 16 counties in Northeast Ohio. But we wanna prioritize the kind of clearing of the market in terms of supply in that region. But let's say, you know, I'm in Northeast Ohio and it is let's say it's winter and I wanna have citrus. Does it not, like, do we see foresee a way that, you know, multiple networks along the East Coast move oranges grown on regenerative family farms, and they're sold in Ohio in those winter months because, again, Ohio doesn't have oranges and we're still procuring from farms the same values. Sure. Sure.

Cullen Naumoff (Farm Fare) [00:20:03]:
Yeah. We see that as a reality. So I think that's kind of how how the growth would look at a farm fair in terms of regional to a more scalable

Jeffrey Stern [00:20:12]:
solution. Got it. And what's the current state of Farmfair? Where where are you guys today? How how many farmers are part of the network, food hubs? How how does it look?

Cullen Naumoff (Farm Fare) [00:20:21]:
Yes. So right now, we have food hubs in in Northeast Ohio using the platform, And these are Cleveland Central Kitchen and Overland Food Hub. And we have a pilot network using the software in the Pacific Northwest, so in Washington and Montana. And we're working on establishing a network in Colorado. So those are kind of our 3 working elements right now. And, you know, we're constantly working on, you know, improving the software. And I think the thing about Farm Fare is that we are hyper focused on root problems in the food system. And if you might ask us, like, what's different about Farmfare versus another farm to table type of software? I think that addressing of the root problems and our really thorough understanding of the supply chain is really where we shine.

Cullen Naumoff (Farm Fare) [00:21:11]:
So we're not your average Shopify solution. Like, oh, well, why aren't we just connecting the farm to the buyer? Like, that technology let's just throw technology at the problem. It's just not the reality in local local and regional food systems. And the supply chain is really complex. And we again, like, the fact that we broke the industrial food supply chain during COVID, I I hope highlights that it's not just a simple solution to solve

Jeffrey Stern [00:21:36]:
this challenge. Right. It seems like there's almost a lack of urgency. Like, I it's clear that you understand this problem and recognize the the severity and and impact of it. But, you know, from the consumer's perspective, putting aside the the food hubs and the farmers, what has been the reception to the work that you're doing, and and how are how are people, you know, kinda responding to that? You know, because obviously, the farm to table movement is proliferating to some degree, but, you know, there there's maybe a a connotation of it as as something more of a luxury, right, like something that's tied to Michelin Star Gastronomic experiences instead of, you know, just like the food that we eat every day.

Cullen Naumoff (Farm Fare) [00:22:18]:
Yeah. Part of my long monologue should give you some insight into kind of how easy is it to understand, like, our work at Farm Fare. Fair. Like like, not easy. Right? Because, again, we are interesting very, like, complex specific issues. So the first thing that comes to mind is talking to investors. So, you know, again, we're not just educating on our product. We're educating on the supply chain.

Cullen Naumoff (Farm Fare) [00:22:44]:
And some people who wanna geek out about that, like, that's exciting and that's cool. But also, if you if you don't really wanna, like, dig in to, like, understand the issue, you know, we've we've been in conversations where, you know, it's it's it's we're being compared to a simple, you know, CPG product. Right? Like, why can't isn't it just that you just sell the product and that's how you make money? From an investor perspective, that's been a challenge. And I I would again say that COVID has been some lemonade for us in that respect that, you know, when the industrial food supply chain is on the front of the New York Times, people start paying attention in a whole new way. And so after that happened, you know, I think investors were, like, much more interested in having that understanding our solution better. You know, again, we're not a Pierce last play. Right? We have these 2 wrap around services, which is also a different approach. So long long way of saying is that when you talk to FoodHUBs, they get really excited about the solution.

Cullen Naumoff (Farm Fare) [00:23:40]:
When you talk to investors, it's a whole different kind of education process.

Jeffrey Stern [00:23:45]:
Right. And who who does Farmfare actually sell to? How does Farmfare make money?

Cullen Naumoff (Farm Fare) [00:23:49]:
Yeah. So we charge a transaction fee to the food hubs. It might be helpful to just understand how, like, the value of the break or the dollar breaks down across the supply chain and our model. So a farmer and a food hub negotiate the essentially the cost to the food hub. And then the food hub marks that price up 25 to 30%. So in an average transaction, the farmer gets 75¢ on every dollar. And comparatively, in the industrial food system, you know, they're getting somewhere between 15.25¢. Farm Fare takes a transaction fee, which really comes out of that markup that the hub places on that product.

Cullen Naumoff (Farm Fare) [00:24:32]:
So we're not taking any value from the farmer. It's just coming out of that hub markup chunk.

Jeffrey Stern [00:24:38]:
Got it. That makes sense. One of the things I was curious to get your perspective on, in addition to the the slew of issues that we've already kind of addressed here, is there's kinda 2 other large macro food issues that I've been aware of. And one is that, you know, as we think about population size and into the future that we're going to need to produce, you know, on an order of magnitude more food. And then simultaneously, we have this problem that the way we produce, process, and distribute food is is wasteful. Right? There's a huge percentage of food that is is wasted every year. What I wanted to get your perspective on was how local can can help us address these problems.

Cullen Naumoff (Farm Fare) [00:25:20]:
Well, one of the key I mean, I know you didn't ask me about, like, why is this happening? But I think one of this most significant reason, this is a this kind of lack of connection between supply and demand is happening is because of lack of information. Farmers, again, they're largely guessing every year what to grow. So I've been on farms where there is, you know, pallets upon pallets of beautiful green peppers, but they have nowhere to go. Mhmm. I've been on farms where the cantaloupe is rotting so much that it is like the stench in the area is disgusting. Because, again, there's no market. This isn't because, like, farmers are dumb. This is because there, again, is just that lack of market information for any specialty crop growers.

Cullen Naumoff (Farm Fare) [00:26:11]:
And so I think when people talk about, like, well, there's no way we could ever feed the world if we, like, if we did this regeneratively or, you know, like, why do we have so much food waste? Well, if we provide farmers with actual market information so they grow what is being demanded, we can solve this problem much more strategically than, like, putting pesticides and fertilizers to, like, improve our yield. And so just like, you know, at Big Agribusiness has information technology for their demand and supply, we need to offer that to the specialty crop growers in a really strict, like, robust way. And the other thing I'll mention that plays into your question, Jeffrey, is around policy. If we're going to subsidize, and by subsidize, I mean, ensure, you know, commodity crops so much that we are growing commodities at surpluses, why aren't we doing that for specialty crops? There is none of like, no subsidies. I mean, there's one insurance product for specialty crop farmers. So our priorities and policy in terms of how we're supporting American agriculture, I think, is also significantly impacting the way, we're calculating will we have enough food to feed all these people.

Jeffrey Stern [00:27:30]:
Yeah. Can you expand upon crop insurance and and what that is and really how the data that you're able to collect feeds into that?

Cullen Naumoff (Farm Fare) [00:27:40]:
Okay. When we talk about crop insurance, I think the first thing I wanna say is crop insurance is a very different segment of insure of the insurance industry than, let's say, like, car insurance or auto insurance. And you're probably like, yeah. Duh. That's obvious. But, no. The federal government is basically the backer of crop insurance, which is much different than, like, a private sector crop or car insurance policy. And so, you know, what crop insurance says is it says and there's a variety of types of crop insurance products, but it basically guarantees the farmer, you know, x percent of their revenue if any, you know, impact to their yield occurs.

Cullen Naumoff (Farm Fare) [00:28:21]:
And, again, that looks diverse and different across many different crops in many different regions. So if you would go to the RMA, so the risk management agency of the USDA, you would see all of the commodity crop insurance products available for commodity crops. Right now, there's one crop insurance product, whole farm revenue protection for specialty crop growers. And so instead of having a hyper specific, we have a crop insurance for Durham wheat grown in Western Montana. We have one crop insurance policy for all of specialty crops. And so, you know, frankly, like, of, you know, that program or I'm sorry. That product is utilized of the total growers that are eligible. It's utilized by, like, 1% of them.

Cullen Naumoff (Farm Fare) [00:29:08]:
Nobody uses it. Even though they would be getting some type of revenue guarantee. But what this does is it disincentivizes any type of farm for getting especially converting from any type of commodity production to specialty crop. So now I'm like, dude, I got a revenue guarantee. Why am I gonna grow something that doesn't have it? Not to mention the the, like, horrific amount of paperwork that's associated with Whole Farm Revenue Protection in addition to, like, the lack of data. So underwriters are like, sorry, we have to value this at a commodity national market price as opposed to, like, you know, it what I pay for an heirloom tomato at a regional level is much different when I pay from, like, an heirloom tomato that I'm shipping in from, you know, Southern California. So there's a lot of issues that play into this crop insurance piece. But most specifically, if you talk to anyone who's, like, interested, again, on geeking out on crop insurance at a broker level, they'll tell you, well, we need better data.

Cullen Naumoff (Farm Fare) [00:30:11]:
And again, the data they want is not, you know, what's the microorganisms on the soil that the farm is growing on. They literally want supply and demand side market data. You know, that is the data that our platform generates so that we could help create, research, and develop a more hyper specific crop insurance product to specialty crop growers in different regions of the country.

Jeffrey Stern [00:30:33]:
Got it. So I wanna come back to something that you've brought up actually earlier in the conversation, this idea of profit, people, and planet. Right? The the triple bottom line, if you will, of economically, socially, ecologically positive businesses. I I personally have been drawn to, you know, businesses that fall under this conscious capitalism umbrella. And a few of the guests that we've had on before, Mansfield Frazier over at Chateau Hough, who's growing wine and selling wine, and Joe DeLoss over at Hot Chicken Takeover. I think these these kinds of businesses are are just inspiring. The perspective that businesses have taken profit maximization at the expense of all else for the shareholder is really kind of an antiquated way of thinking about, about businesses. And I I know there's part and parcel to to what you're doing at Farmfair is this idea of the triple bottom line.

Jeffrey Stern [00:31:25]:
But I wanted to ask you specifically about this concept of of steward ownership and and what, you know, that that means to to you as a company and and how you think about the implications beyond profit for growing your business.

Cullen Naumoff (Farm Fare) [00:31:39]:
Well, I really appreciate the question. It's definitely something we're very passionate about at Farm Fare. And, you know, part of our journey to steward ownership was really influenced by trying to identify aligned capital for investment purposes. And I think one reason that we knew we needed to basically send a signal to investors. Which for a lot of reasons, you know, I I would make a wager that doesn't really make sense for any ag company, because Ag just is not a venture ventureable model. But again, what we needed was some way to say to investors and to protect our own values. And that's why we found steward ownership. And so what steward ownership does is it basically allows you to put your values in the legal DNA of your business.

Cullen Naumoff (Farm Fare) [00:32:41]:
And so it goes like a step beyond becoming like a b corp. And we're saying that at Farm Fare, we are owned by a trust. We are not owned by, you know, owners or founders. Even, like, founder shares are in the trust, and that trust is managed by a steward board. And so any strategic decisions that are made about our company, they're made by the steward board and that's made up of, farmers, food hubs, racial justice stakeholders, environmental justice stakeholders, you know, agronomists. And the business management team reports to that steward board. So ultimately, the stewards are responsible for making decisions that grow and protect our values. About supporting, you know, farmer family farmers in the United States that are practicing, you know, regenerative practices and that are investing in their own communities.

Cullen Naumoff (Farm Fare) [00:33:39]:
And the other piece of this puzzle that's really important to us is that, you know, we firmly believe,

Jeffrey Stern [00:33:46]:
and

Cullen Naumoff (Farm Fare) [00:33:46]:
I'm sure it's proved an economic theory that, you know, ownership drives wealth. And if we look at the history of lack of ownership or current ownership in the United States, we see a very white, you know, a very male picture. And so the other piece of this puzzle is, like, we can we can never wrap our heads around this idea of, well, the very people generating that really valuable data, like the farmers and the food hubs, are they really gonna do that in service of providing a significant return to a handful of investors, and they're not going to experience any of that value. And so through our steward ownership model, we have a very specific, essentially, a waterfall of profit sharing. So, we, you know, support the farmers and the food hubs by also, you know, doing some type of profit share with them in order to, again, say, you know, signal a thank you, but also value their ownership. And we really feel like that's part of, you know, like, if we wanna use some venture vocabulary, like, that's part of the stickiness of our product too. Right? Like, we want food hubs and farmers to be part of the fabric of our company. And by offering them, you know, value in terms of profit sharing, we think that's a really important piece of this puzzle.

Jeffrey Stern [00:35:08]:
Yeah. I think the expansion from the idea of the shareholder to the stakeholder just it it resonates a lot. Forgive, like, a a brief rant, but, you know, when I studied economics, the narrow assumption that it it typically takes to simplify the world and abstract away the reality and nuance from their models that use data, it was just very frustrating to me because if you walked away from, you know, an undergraduate economic degree having not thought critically about what you'd been taught, you would believe that the market is efficient, that there weren't these, you know, supply side problems that any government infringement on the free market is necessarily detrimental that, like, we're all rational, profit maximizing males, that the earth is an inexhaustible resource, that energy is irrelevant, society, the care economy, and and women don't even exist. And so it's it just it never made sense to me. I was like, how is this the traditional economic thought? And so, yeah, I was excited to to learn more about these alternative models and approaches to governance and structure of businesses because I just think they they likely better reflect the reality that that we live in.

Cullen Naumoff (Farm Fare) [00:36:18]:
No. I can't agree more with you, Jeffrey. And, you know, I say often that, you know, similar to what you're just saying, like, anyone who thinks we live in a free market economy is just, like, missing so much of, like, what are these, like, you know, other actors that are doing, I e the government to influence, you know, how our how our economics are playing out. I'm just talking about milk prices. I don't even go to milk prices. But yeah. And I I I wanna give a shout out to you know, I like to say I'm married to a lawyer, but, like, I love our farm fair lawyer, because, you know, it also takes and I will not have said this 4 years ago that, like, in order to make this vision come to reality, like, we also need, you know, creative lawyers. We need people who are willing to think the out the box.

Cullen Naumoff (Farm Fare) [00:37:06]:
And the our lawyer, you know, he went to his trust in Wells attorneys, and he said, you know, like and this is a this was actually for another company in Portland, but this is what our structure is modeled after. He said, you know, I wanna, like, make a, like, a irrevocable trust in perpetuity, the owner of a company. And previously, that had only been used on people who had passed away, but they wanted their pets to have an ongoing source of income. And so, like, what how about that creativity? You know, from the legal community to say, like, how can we create a food business that is owned by a trust that protects the values in that DNA. And so finding partners who think like that, like, just give me incredible inspiration and hope for, like, building a better economy. So I think that's another piece of this puzzle as, like, it takes a village to think outside of these bones that, as you were saying, we've been coached to believe are real. But, frankly, you know, we we we all live in this world, and they're not. You know?

Jeffrey Stern [00:38:11]:
Right. Right. I wanna dive a little bit deeper on the the governance front. There's this concept of of sociocracy that I think lies at the heart of of what you're doing there. What what is that?

Cullen Naumoff (Farm Fare) [00:38:23]:
What is sociocracy besides a cool name? So sociocracy is a dynamic dynamic governance model. And a little bit of the reason we needed to think about a different way of governance is because we're bringing together independent businesses that retain their independence. And so and yet they need to work strategically together on some important business decisions. So there's no obvious hierarchy there, and we didn't want a hierarchy. Right? And and Farm Fare isn't leading those conversations because it's so important for those networks to be making the decision. But in our initial beta testing, we discovered human dynamics, shockingly. So when there's no, you know, formal structure, obviously, the loudest voices are the loudest. And if you're not willing or don't feel comfortable in bringing something up, you know, there a lot of frustration builds.

Cullen Naumoff (Farm Fare) [00:39:19]:
And so when you have a collaborative model, you need it to function in a way that, you know, people feel open and willing to bring up concepts. And so we frankly looked for a different type of self managed governance structure that did not focus on hierarchy. And not surprisingly, this was developed, you know, in the sixties, early seventies in the Netherlands. Essentially, the model is that it uses consent instead of majority voting. And so our food hub networks use sociocracy as the way by which they make decisions. And essentially what it does is it just provides a structure for everyone. Basically, a structure for everyone to, set the agenda together, for everyone to comment on the agenda, and for everyone to make, decisions. And I'm happy to say that, does this create, you know, kind of for longer conversations and longer meetings? Because, again, you're going through this step by step process.

Cullen Naumoff (Farm Fare) [00:40:24]:
Absolutely. But does everyone feel heard? And does everyone feel good about the compromised decision that has to be made versus feeling like they were just, you know, stamped out in terms of volume of voice. So so the answer is yes. And I think, you know, sociocracy was one of those transformative things that really helped create better communication and trust amongst the network players. And, again, when you're talking about a decentralized supply chain with independent businesses, trust is critical.

Jeffrey Stern [00:41:01]:
Yeah. Absolutely. Practically, is consensus always achievable? Like, in practice, are there are there drawbacks to to that model?

Cullen Naumoff (Farm Fare) [00:41:09]:
So, you know, and some of the other, like, large companies like Zappos has also tried this, you know, kind of the, like, flat nonhierarchical decision making. So in our situation, you know, the networks are small. Right? So we don't have these, like, huge organizations that are trying to make decisions in a decentralized way. And so in our situation, it has worked really well. And, you know, how consensus is achieved is essentially you keep going around, they're called circles, and making amendments. And so our some of those meetings and decisions get long because you kind of have to keep going around and asking everyone, would you agree to this amendment? Like, you go around the circle. Oh, no? Okay. Someone else has a proposal for an amendment.

Cullen Naumoff (Farm Fare) [00:41:53]:
You go around again. But, you know, again, how our networks function is we meet in person once a month, and those are the meetings where sociocracy is really important to make those key business decisions. And then we go and we have a beer afterwards. And so, you know, again, it's kind of that balance of saying, like, let's do this kind of, like, sometimes we can feel you know, there's, like, tension there because, again, you're making business decisions, but you're doing it fairly. And then, you know, let's go socialize together. Let's also view one another as humans and, like, you know, allow ourselves to also, like, be emotive and things of that nature, which we think is part of, like, building a strong business and building a strong community.

Jeffrey Stern [00:42:36]:
Got it. So the dream of the hyperlocal hubs to clear food supply, profit serving purpose, I definitely am following along there. I am curious when you think when you project a little bit into the future, you know, 10 years out, what is the vision for the impact at scale that that you hope to achieve?

Cullen Naumoff (Farm Fare) [00:42:58]:
Yeah. So the dream here is providing an incentive. So building such a strong market case and building support services like crop insurance that commodity growers are incentivized to convert to specialty crop growing. So when we can see acres, you know, we can see 1,000 acre farms convert from wheat to specialty crops. That and and we we are using those specialty crops to feed our own population. Not to say we can't have exports either, you know, but the vision is to say, how can, right, how can we build food independence in United States? And we can do that through better data. We can do that through better markets, better crop insurance in a way that we are now saying to farmers, you know what? It's more lucrative for you to grow specialty crops than its commodities. So that's the big vision there.

Cullen Naumoff (Farm Fare) [00:43:59]:
I also wanna, like, mention that, you know, at Farm Fare, we're not saying that, you know, we're never, like, if I'm in Ohio, I'm never gonna have a lemon or lime again or I'm never gonna drink coffee. Right? But there's a big swing between how we do business now. The saying, like, I'm only gonna eat turnips in February. That's the only vegetable. You know? So can we find a balance? You know, that's kind of our whole piece of this puzzle is like, let's just find a balance. And so I'm not saying that every farm in America is never gonna go a crow a commodity again, but we can certainly see a better balance in the land committed to specialty crop versus commodity.

Jeffrey Stern [00:44:37]:
Yeah. I'll tie it back to to Cleveland locally. And when, you know, we think about food, you know, one of the questions I've been asking everyone coming on is for their favorite hidden gems in Cleveland. But I feel like I have to ask you a specific food question about your favorite local eateries.

Cullen Naumoff (Farm Fare) [00:44:54]:
You know, we are headquartered in Cleveland, but as I've mentioned to you, Jeffrey, I have been living in New York City, and I still say, man, Cleveland Bagels, they can just, like, compete against any New York City bagel. So Cleveland Bagel is a big fan favorite of mine. The plum, I, like, love the plum. I'm I was pretty bummed to see them put put pause for post COVID at this time. Yeah. But, yeah, I think Brett Sawyer does great things. And then, you know, I I would be remiss not to mention some of my favorite Ohio City haunts like Mitchell's. I think Mitchell's does great, ice cream.

Jeffrey Stern [00:45:35]:
The best.

Cullen Naumoff (Farm Fare) [00:45:35]:
And, we you know, certainly Great Lakes can't be the Great Lakes beer either. So those are super original, But that's that's what I got right now.

Jeffrey Stern [00:45:46]:
Great answers, though.

Cullen Naumoff (Farm Fare) [00:45:47]:
Okay.

Jeffrey Stern [00:45:49]:
Well, I I really appreciate you coming on today and and sharing the the background on Farmfare and and really the the entirety of this macro and very micro problem at the same time. It's really interesting. It certainly does impact all of us, and I think it would behoove us to to just be aware, you know, about the reality of of where our food come from and and how we can, better support local and, individual farmers.

Cullen Naumoff (Farm Fare) [00:46:17]:
Yeah. No, Jeffrey. And you're so kind for allowing me to come and, like, spell my, like, you know, passions here. So I appreciate the platform. And, you know, I think I think that's, like, the first step for everyone is that if you're at a restaurant, if you're at your, you know, at the hospital, like, the very first step, and I appreciate everyone who is willing to ask those questions.

Jeffrey Stern [00:46:47]:
Yeah. If people have any other questions that they wanna follow-up with you about anything that that we talked about here or related, where is the best place for them to find you?

Cullen Naumoff (Farm Fare) [00:46:55]:
Yeah. Well, shoot me an email. It's on our website farmfairfarmfare.io. My email is cnewoff@farmfair.io, io, but it's way easier just to go check it out on the website and shoot me an email. I'm definitely responsive there.

Jeffrey Stern [00:47:11]:
That's all for this week. Thanks for listening. We'd love to hear your thoughts on today's show, so shoot us an email at lay of the land at upside dot f m, or find us on Twitter at podlayoftheland, at thetagan, or at sternjefe, j e f e. We'll be back here next week at the same same time to map more of the land. If you or someone you know would make a good guess for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Takin Horton and Jeffrey Stern developed the Lay of the Land podcast in collaboration with The Up Company, LLC.

Jeffrey Stern [00:47:48]:
At the time of this recording, we do not own equity or other financial interests in the companies which appear on the show unless otherwise indicated. All opinions expressed by podcast participants are solely their own and do not reflect the opinions of Founders Get Funds and its affiliates, or actual and its affiliates, or any entity which employs us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening, and we'll talk to you next week.