By Claire Kinlaw | December 16th, 2016
One of the benefits of running a national ag forum is you get to meet a host of innovative people from every segment of the food supply chain.
Larta’s GAIN (Global Ag Innovation Network) event in October 2016 in Los Angeles at urban indoor ag company, Local Roots, focused on a panel of urban ag experts, including Local Roots CEO, Eric Ellestad, which discussed the benefits and challenges of indoor farming.
Attending that event was Erik Oberholtzer, CEO of restaurant chain, Tender Greens. His company is a customer of Local Roots, which consistently supplies his restaurants fresh greens to his menu in any season.
I had a chance to talk to Erik Oberholtzer to discuss how indoor farming is enabling a disruption in the “slow food” restaurant ingredients supply chain.
Erik brought me up to date with his company, saying that Tender Greens is looking at expanding in the New York market. In a bold strategic move, they intend to elevate their relationship with Local Roots from customer to partner, and include them in their expansion plans.
Building a new food supply chain
His idea is to build a new kind of supply chain. His model brings “the farm to the customer.” Embracing indoor ag technology gives him license to grow a hyperlocal food production supply that is predictable and capable of large-scale operations, without giving up taste, freshness and quality. In a sense, he is further “democratizing” the consumption of affordable, healthy, flavorful, locally-grown produce instead of the current dominant channel, fast food outlets.
The simultaneous scaling of production in close proximity to consumption disrupts the supply chain in two important ways:
It creates the ability to standardize the supply chain of a delicate produce that does not travel well and does not grow year-round in all climates. Because indoor farming is a controlled process depending upon precision technology, the greens that Local Roots grows for Tender Greens in widely different geographies will be essentially identical – creating a high standard and directly affecting the restaurant’s brand.
It takes some of the risk out of expanding into new markets. Tender Greens shares the risk that is inherent in the scaling up process with its supplier, Local Roots. Tender Greens commits to purchasing known quantities, providing certainty to Local Roots to enable them to establish indoor farms in new geographies.
Erik admitted to starting out as a self-professed “true believer” in good old-fashioned dirt, water and sunshine farming. But the recent, multi-year California drought changed his mind – out of necessity. In search of a consistent quality product he turned to other options, namely, aquaponics.
Today, Tender Greens buys produce from both indoor aquaponics farms and outdoor soil farms. He has a new appreciation for the problems wrought by climate change. It demands new solutions, and, as someone with a considerable amount of business acumen, he is willing to embrace food production challenges in new ways.
Parity of philosophies matters among partners
Tender Greens and Local Roots share a similar point of view – that of entrepreneurs who solve problems with innovations in technology and business models, and who disrupt the old supply chains as they provide products and experiences that satisfy changing demands by the consumer.
Erik credits another factor in his appreciation of a successful business relationship with indoor farmers. He says that indoor farmers operate their farms as rational businesses, while outdoor local small farmers can be as temperamental as chefs (he is a chef, himself) adding additional drama to supplier/customer relationships – most likely a by-product of working with an unpredictable climate.
The cooperative business relationship between consumer and supplier has contributed to the growth of two new food movements, indoor farming and “slow food”. Ultimately, the beneficiary is the consumer, who can experience the same affordable restaurant experience of fresh, local, healthy, affordable food in locations with different climates and growing seasons because indoor agriculture separates location from climate.
“So, is indoor ag the future?” I ask him.
“It’s a part of our future, for sure,” he replies. “But I wouldn’t rule out traditional farms. There is room in the culinary world for both indoor hydroponic farms and outdoor soil farms.”