Episode 116: Philip Behn, Imperfect Foods
Today's guest is Philip Behn, CEO of Imperfect Foods.
Imperfect Foods is an online grocer on a mission to eliminate food waste and build a better food system for everyone. They do this by sourcing “imperfect” and surplus produce and shelf-stable goods directly from farmers, growers, and food purveyors, and delivering them directly to customers through a subscription that's often 20% - 30% less than traditional grocery store prices. Phillip has over 19 years experience as a retail executive, including ten building and running online grocery businesses for Walmart in the U.S., Mexico and China. I didn't know much coming in about food waste or how big of a problem it is for the climate fight.
It turns out that it's a really big deal: 30% of food produced globally is wasted every year. In the U.S., that's more than 40%! Project Drawdown lists reducing food waste as the number three action item (out of 80) to the tune of more than 70 gigatons of carbon reduction. And that's not including any number of other food-related solutions on the list.
There are also studies that indicate as much as 11% of greenhouse gas emissions could be eliminated, if food waste were brought to zero. We have a great discussion in this episode, and I'm excited for you to hear it.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
In today's episode, we cover:
What is Imperfect Foods and its mission
Imperfect Foods’ achievements in terms of customers-served and food waste recovered
The company’s origin story
Philip’s journey in food and how he joined Imperfect Foods
What he learned during his stints at McKinsey and Walmart
Imperfect Foods’ value proposition
The landscape of the food waste problem
How the resources spent on food waste has compounding effects
The artificial standards of produce “beauty” that lead to some food waste
How Imperfect Foods’ mission is aligned with addressing climate change
Why there’s controversy with Imperfect Foods’ business
Imperfect Foods’ current and future portfolio of offerings
The specific overlap between food waste and climate change
The role of government in addressing climate change
Philip’s perspective on carbon offsets
Links to topics discussed in this episode:
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Hello everyone. This is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help.
Today's guest is Phillip Behn, CEO of Imperfect Foods. Imperfect Foods is an online grocer on a mission to eliminate food waste and build a better food system for everyone. They do this by sourcing imperfect and surplus produce and shelf-stable goods directly from farmers, growers, and food purveyors, and delivering them directly to customer doors through a subscription that's often 20 to 30% less than traditional grocery store prices. Phillip has over 19 years experience as a retail executive, including ten building and running online grocery businesses for Walmart in the U.S., Mexico and China. I didn't know much coming in about food waste or how big of a problem it is for the climate fight.
It turns out that it's a really big deal: 30% of food produced globally is wasted every year, in the U.S., that's more than 40%. Project Drawdown lists reducing food waste as the number three action item out of 80 to the tune of more than 70 gigatons of carbon reduction. And that's not including any number of other food-related solutions on the list.
There are also studies that indicate as much as 11% of greenhouse gas emissions could be eliminated, if food waste were brought to zero. We have a great discussion in this episode, and I'm excited for you to hear it. Phillip Behn, welcome to the show.
Philip Behn: Thanks for having me.
Jason Jacobs: Well, thank you so much for making the time.
I am excited about this one. Not only because you guys are an important growing successful company in its own right, but also you're tackling the problem of food waste, which is an area that, anecdotally I've heard is an important area for climate change and for the world in other ways and not one that we've really tackled to date here on the podcast.
Philip Behn: It is, and I'm so glad that we're going to talk about it.
Jason Jacobs: Me too. So I mean, what we typically do with guests is just kind of take it from the top. So what is Imperfect Foods?
Philip Behn: Imperfect Foods is a grocery delivery business. We started in 2015 with a mission to eliminate food waste and build a better food system for the planet.
And the way we do that is we source imperfect fruits and veggies from over 140 farmers, in the California Central Valley and other places in the U.S., and then we move that produce directly to our customers' doors. And since 2015, we have added grocery, protein, snacks, and other categories to our mix. We have evolved from just a produce company to a end-to-end full-end grocer.
Jason Jacobs: And you just started in 2015, but it seems like you guys have accomplished a lot in a short time. Just, I mean, give us a sense of what kind of scale you guys are at today.
Philip Behn: I'd say because of our mission, our biggest and most proud accomplishment is we've saved 120 million pounds of food that would have gone to landfill.
If we wouldn't have been able to recover it and ship it safely to our customer's homes. So that's an amazing achievement that everybody feels super proud for. We also serve over 300,000 customers in over 35 cities in the U.S. ,which gives you a sense of the scale that our business has picked up as we grow the movement.
And last but not least, we have a very direct commitment to affordability. And that means that we actually offer discounted boxes of food, perfectly good food to over 100,000 customers that are on snap benefits as well. So we try to really do the right thing, not just for the planet, but also for society, especially now in times of need.
Jason Jacobs: And I know you weren't around for the origin story, but to the extent that you dug into that as part of your diligence process to join the company, how did Imperfect Foods come about?
Philip Behn: So it's a super interesting story. So Ben Chesler and Ben Simon are two co founders, started this as a sequel to the Food Recovery Network.
The Food Recovery Network is a nonprofit, which is now active across most campuses, college campuses, and on the east coast. And what they do is they divert excess food production from college cafeterias into local food banks. It's a phenomenal service to the food world because as you know and your listeners will know restaurants and catering companies generate a ton of waste.
Because sometimes it's difficult to match supply and demand. And the food recovery network found a way to effectively move that access production to people really needed it coming out of that. And Ben moved to California and they started speaking to farmers and they discovered that there was tons of food that was being thrown away or left on harvest because it did not meet with the stringent beauty standards that the grocery industry had imposed on farmers. And this is like literally an apple that is too small or a carrot that is too twisted. There's nothing wrong with that character or nothing wrong with that apple.
Except for the fact that the big grocers can't pick it up because they can't move it through their supply chain to their stores. So they saw that as a real opportunity and they created a perfect produce at the time to go directly to these farmers, buy up all that-- well, not all that because we were a small company at the time, but as much as they could-- and ship it to customers initially on the west coast and now all over the country.
Jason Jacobs: What about your own journey? I have lots more questions about Imperfect Foods, but I mean, I saw that you looks like you started your career at McKinsey back in the day and had quite a journey at Walmart, but talk a bit about, I guess, your kind of origin story, and also what made you make the decision to transition to this opportunity for a domain standpoint, but also a startup and also this startup specifically.
Philip Behn: I actually grew up in Chile and South America. And my mom was, and still is, an environmental activist in addition to being a teacher. So I grew up spending a lot of time on a farm. It was one of Chile's first sort of farms that operated with organic and sustainable methods. We had apples and apple orchards.
We had blueberries. We had vineyards as well. And I always kind of grew up looking at what nature produces and the fact that crops are variable depending on the year, depending on the rain, depending on a gazillion factors, you get apples that are different from year to year and you come to appreciate that.
And when I then started my career, as you pointed out and with McKinsey, I did a lot work for large retailers. Initially when I was an analyst with McKinsey. And I couldn't help to notice a massive disconnect between what you see in a typical grocery store. And what I know was coming out of real apple trees in an orchard.
So that's something that I kind of parked for a while. And for 10 years, I did big company consulting. Then I moved to Walmart and basically led large e-commerce businesses. So I really learned what it takes to serve customers in a scalable way. But eventually I always knew that I wanted to go back to food and I wanted to go back to the production of food, or at least get closer to that, which is what I was able to do with Imperfect Foods.
So it was an amazing opportunity for me to kind of close the loop and go back to my roots. Get reconnected with food production and with farms.
Jason Jacobs: And what about the transition from, I mean, a company with the scale of Walmart to a much smaller high growth company, like Imperfect Foods, how has that been and what are some of the biggest differences or surprises been?
Philip Behn: So Walmart is a company that really understands scale, and it's a company that also understands the importance of serving customers well, and having a very clear value proposition that they deliver consistently across the country and actually across the world. So it was a great learning opportunity for me to kind of really learn about operations at scale sourcing at scale, defining clear value propositions that prepared me for a journey in companies of really any size. So Imperfect Foods is much, much smaller than Walmart, but we're growing very quickly and we have the motivation to become a very large company because everything that we do resolve in a better planet; the more we grow, the more food we divert from landfill and other sort of wasteful destinations for food that are not desirable. So I feel that it's a really good combination knowing how big companies work and think, and then being able to work for a much smaller company where you get all the benefits of small, like scale and being nimble and not being attached to large sort of bureaucracies and slow decision making processes.
Jason Jacobs: I've heard again and again, that food waste is a big problem, as you stated. I mean, it's a problem in terms of people that don't have enough food and it's not evenly distributed. And it's a problem from a climate standpoint since it's wasteful. But if I were to just double click on food waste as a problem and put aside Imperfect Foods for a minute, what does that landscape look like in terms of the scope of that waste and then where it's coming from like the portfolio of food waste if you zoom in, how does that break down?
Philip Behn: If you kind of start from the big picture, so every year, if you add all the food that goes on unharvested in farms, because of a product, doesn't meet the standards of a grocery store, for example, plus all the food that gets overproduced again, back to the example of the food recovery network, cafeterias, restaurants, and so forth.
Plus all the food that we all waste in our households because it runs over the expiration date and it ends up being sent to landfill. If you add it all up, that is the equivalent of almost one and a half percent of GDP. So it's over $220 billion a year. It's an enormous problem. And if you then double click into that and say, I look at the farms what's going on in farms, which is the part that we directly tackle as a company that is the equivalent of $20 billion pounds of food, 10 million tons of food that are left on harvested or are discarded in a farm. And to give you some additional context, those 20 billion pounds basically mean or represent about a fifth of all fresh water, that we use in the U.S. on a yearly basis, goes into irrigating food that is never consumed, that goes into landfill or is left unharvested. And a similar percentage about 20% of all fertilizer.
So it's not just the fact that the food gets thrown away and that's a huge problem in its own right, but it's the resources that go into growing that food that never sees the light of day that make this problem really, really enormous.
Jason Jacobs: And so the food that goes to waste because it doesn't meet the government standards and is "imperfect." Where is that food coming from typically?
Philip Behn: First of all, it's not even the government standards. This is the interesting thing that the food is perfectly edible and it meets every single standard that we have on the FDA-side, and many other agencies that regulate food. The standards that it doesn't meet is almost like artificially defined standards of beauty: size, color, shape. Those are standards that really no one has defined other than the retailers themselves. And there's some reasons for it. There's some optical reasons like people want their, or these companies want their shelves to look nice and they want all their apples to have a similar shade of green or red and similar shapes and sizes.
So that's one angle of it. But perhaps the more important one and the one that is not as well understood is the fact that the supply chains that big retail companies have built over 50 years or so require a very, very high degree of standardization and harmonization. So a small apple or a twisted carrot does not travel well through that supply chain. It gets rejected at various points. It doesn't fit various scanning devices. It doesn't go into the right packaging and therefore it cannot go through. So those are really the things that cause this waste at the farmers end; that's what's going on in a farm.
And therefore you have farmers who are basically given the choice: you have to decide if you want to harvest these carrots that are twisted or you leave them in the ground, which they could do and then they save themselves some labor. Or if they don't have a choice, they harvest everything and then they have to sort it before they sell it to the large retailers or wholesale companies and everything that remains that these companies don't want to buy from them goes to landfill or to food processing companies or companies like Imperfect Foods, where they're divided up.
Jason Jacobs: Do these standards vary widely from grocer to grocer?
Philip Behn: Not anymore, they used to, but I think what you have seen and, it's not just in the U.S., it's everywhere around the world. You can go almost into any grocery store in Bangkok, New York City, or Frankfurt and fruit and veggies look pretty much the same. It's become a highly sort of commoditized and standardized product, even though if you go back to nature, that is not the way that nature works. There's much more variability in real life than what you get to see in a grocery store.
Jason Jacobs: It reminds me almost of like the way that we define beauty of humans in magazines or in Hollywood. And how, what percentage of Hollywood has plastic surgery, for example, or airbrushed photos?
Philip Behn: It's exactly the same logic. So we have been sort of through a combination of media experiences, education, we have all come to believe, that there are certain standards of beauty that apply to a certain category from humans, all the way to vegetables and carrots. And in reality, the beauty of life is diversity that people are different and veggies are different and fruits are different.
Jason Jacobs: And what is the overlap in the Venn diagram between the farmers that you're purchasing your imperfect produce from, and the farmers that are supplying the grocery stores directly?
Philip Behn: Oh, it's almost a complete overlap. I have yet to meet a farmer who just specializes in ugly produce all of our farmers aim to produce a healthy quota of what's called number one items.
So items that are perfect and that big retail companies buy. Why? Well, because that's how they get the best price. That's what society rewards the most. And therefore all the food that we buy is from the same farmers. It's just food that they are unable to sell to the big retailers.
Jason Jacobs: And what's the pitch to that farmer from Imperfect Foods?
Philip Behn: We have really great relationships with farmers. And again, this is something that Ben and Ben started in the early days of our company, which is go direct and understand their issues. And what you will find when you speak to most of our farmers is they are very frustrated about this, because they know that this is good food that is going to waste.
And no one likes that. They put effort into it, money, fertilizer, water resources, time only to get to a point where 15 to 20% of everything that they have produced that year goes un-eaten. So our pitch to them is let's put an end to that and let's make sure that a hundred percent of what you grow as long as it's good quality, we will take the ugly bits that no one else will buy from you.
And that's the pitch to them. And we pay them fairly, not as much as you would pay for a number one item, but more than what many others would pay the farmer to basically just process that food waste and then we take it directly to customers. And just knowing that the fruits of your labor are being made available to hundreds of thousands of customers around the country makes farmers really happy.
Jason Jacobs: And then what is the pitch or the value proposition to me or other consumers?
Philip Behn: To consumers, our value preposition is threefold. Firstly, it's affordable. So we pass on the discount. We buy things for less and we sell them for less. So on average, you get a 15 to 20% discount on your veggies and your fruits with Imperfect Foods and that's anywhere in the country and against anybody.
Secondly, we are committed to our mission. So as a customer, you know that if you buy our fruits and veggies and many of our grocery items, you're doing something for the planet because you're using something that would have gone to waste. And thirdly, we offer safety and reliability in our deliveries.
Safety is important, especially now with COVID-19 that you basically get your box and no one else has touched it. And it's your fruits and veggies, and they're safe. And reliability is equally important now with COVID-19 because you know that there's one day a week where your imperfect box arrives and we have our own drivers that ship that out to you and deliberate predictably at your doorstep.
Jason Jacobs: And then from an impact standpoint, I mean, I can surmise and I already kind of rattled off a couple of examples, but what is the value proposition of reducing this food waste and to whom? So, in other words, who benefits when this occurs, we already talked about the benefits of the customer and to the farmer, but what about from a more structural standpoint, reducing this waste?
Why does that matter?
Philip Behn: Because of that enormous consumption of resources that agriculture takes. So agriculture doesn't make a distinction between food that gets eaten or food that goes to waste. It's the same resources that it takes in. And in terms of fresh water, fertilizer, labor, what we are doing is we are minimizing the loss of that resource, not just the actual food that goes to waste, but everything that went into it so that we don't create additional carbon footprint to the planet that is unnecessary. So if you think about it, the ideal situation for the planet is that the yield of things that are grown to things that are eaten is a hundred percent. So you don't grow anything that doesn't result in something being eaten. And at the moment that yield is closer to 80% in some countries is actually under 40% because you have a ton of supply chain issues where food gets spoiled like India, for example, It's a very low yield.
And that is really, really wasteful because of the food and because of the resources that go into it. So if you could get from 40% yield to 100% yield, you would need less arable land, less water, less fertilizer, less labor to feed the population versus what you're doing now. And that this a goal that is one of the UN development goals, but it's also a goal that we have in mind when we recover food from going to waste.
Jason Jacobs: In terms of the social mission that infuses the company. Because I mean, obviously there's the, is it a good place for me to work and do I have development opportunities? And do I like the people I work with and are we playing to win and I'm a compensated fairly and all that, but in terms of the actual mission, can you talk a bit about that?
Why does Imperfect Foods exist?
Philip Behn: Our mission is to eliminate food waste and build a better food system and eliminating food waste. We talked about a ton already, so it's about kind of making sure that nothing goes to waste, but it's more than that because you think about waste think about all the plastic that goes into packaging products like poultry or beef. Think about the carbon footprint that goes into delivering items on demand to customers. A lot of us have been kind of stuck at home with COVID and a lot of people have been using on demand delivery services that basically sent shoppers out to a grocery store and the shopper will buy for you and then send it to your home.
That is not very efficient, that shopper's basically doing one trip just to serve you and the carbon miles that that generates are part of waste. So in our definition of waste, we don't restrict ourselves to what's happening in the farm. We look at manufacturing waste, we look at excessive carbon footprint.
We look at packaging waste and all of those things are the things really people feel passionate about. That's why people come to work every day because we just see it everywhere. And we are a company that is actively doing something about it.
Jason Jacobs: And how do you feel, I guess, not just about your capabilities today, but just the industry in general, in terms of visibility into those numbers and ability to track and monitor that carbon footprint from end to end?
Philip Behn: There are organizations like "We Fed", rethinking food, who do an amazing job at staying on top of the high level numbers and breaking them down and kind of figuring out how much of this waste is happening in a household. Versus in cafeterias versus at farms. So I would encourage your readers to go and check them out. WeFed.com has some phenomenal statistics about the food system in general. We track the recovery of food waste very obsessively I would say, Imperfect Foods. And not only that, but we actually provide a report to our customers.
So if you're an Imperfect Foods customer, every month, you get a scorecard and say, hey, you have helped us save so many pounds of food from going to waste and people love that. They share that they tweet about it. They post it on Pinterest and Instagram. And we love that too. So we celebrate the accomplishments that our customers make by being part of this movement.
Jason Jacobs: When I hear you talk about it, it seems really straightforward and just that it's a win and a win and a win and make so much sense. And everybody should do it. I was surprised when I was doing some prep for this interview, that Imperfect Foods and food waste in this regard is actually a controversial topic. Why do you think that is?
And what are some of the areas where people take issue with the model?
Philip Behn: There's probably some clarification needed about how much food is being wasted and how much is being recovered. So I think sometimes people tend to believe that our growth is coming at the expense of other potential uses of good food. And that is actually not the case. So every year, as I mentioned before, about 20 billion pounds of food end up not being eaten. And this is food produced in farms. That's just that part of food waste. If you think about our company, which has grown significantly, and we're serving hundreds of thousands of customers every week, we have recovered in this history of our life about 120 million pounds of food. So 120 million over five years versus 20 billion in one year alone this year. It's just a fraction that is almost embarrassingly small. We want to grow and we need to grow to make this movement bigger, but we cannot be the only company that will do something about food waste.
We need everybody else to chip in. We need food banks to be looking at Imperfect Foods on a much bigger scale. We need food processing companies to be buying some of this imperfect food. And eventually, yes, we need large retail chains to start buying ugly produce and veggies. That's the only way that we will reduce this problem to zero.
So every time I kind of read about some of the concerns. My simple answer is we need "both and" we need everyone to chip in. We need food banks. We need food processors. We need Imperfect Foods and we need our competitors. There is enough food going to waste for all of us to do something about this problem.
Jason Jacobs: And so for the people that say, for example, that food waste is a problem, yes. But that the imperfect produce is a manufactured problem because that would get distributed anyway; it's just to other places, if these guys weren't around, what do you say to them?
Philip Behn: I wish that was true, but unfortunately, the numbers are the numbers. It's 20 billion pounds, and that literally stays in the ground or it goes to landfill.
So there's no funny arithmetic going on. It's a 20 billion pound per year problem. And we need to do more about it. And one of the things that might help sort of illustrate what the problem is is the ugly produce, the ugly fruits and veggies that end up stranded in a farm. There really is no supply chain to move those from the farm to a potential user.
If it was easy to move five truck loads of twisted carrots from the middle of the Central Valley to a food bank in Austin, Texas to be able to put that food to good work, then we may not have such a big problem. But, unfortunately, those supply chains do not exist. There's plenty of supply chains that move the number ones around.
That is kind of a good thing that the industry has developed, but there is no such solution for number twos and that's why we had to go direct to our farmers. And that's also why we have direct donation programs into food banks, because we find that we can more effectively move imperfect produce from farms to our warehouses.
And then from our warehouses to the local food banks that we support around the country.
Jason Jacobs: And another topic on my mind. And I read a little bit about this, but to be honest, I didn't have a chance to dig in to it as deeply as I would have liked. It's just the distinction between food waste and food justice, especially now since, and I don't know exactly when this is going to ship, but we're of course in the times now of the act of protesting and things like that. So climate justice, food justice, these are topics that are very much on my mind. Can you talk a bit about that landscape and what some of the issues are and where we are there and directionally, where you'd like to see things to go.
Philip Behn: Food is incredibly important to humanity by definition. So if you think about our basic needs as a society, food is pretty much at the beginning of many of these things and therefore it has many different angles that are problematic and present opportunities to do better. The one we tackle as a company is food waste, but food justice is certainly something that requires everyone's attention. And it's basically the fact that good food is not available everywhere around the country and that there's communities that struggle to get access to quality food in particular, fresh fruits and veggies.
As I said before, we have shipped over 350,000 reduced cost boxes to areas that don't have good alternatives to grocery shopping, specifically fresh food. And we're super proud of that program, but again, it's a drop in the bucket. There's so much more that needs to be done towards food justice. And there's many organizations as well as companies that have recognized the need to go and serve those communities so that they don't feel disenfranchised when it comes to their access to food. Having said that, I do believe that it's important for companies to be clear in what their goals are and our number one war, the number one war we're fighting right now, is food waste.
Jason Jacobs: You mentioned that you had recently begun expanding beyond produce. Can you talk a bit about your current portfolio and future portfolio of categories?
Philip Behn: As I said before for about four and a half years of our company's life, we were a produce company. In September, 2019, we rebranded to Imperfect Foods. And there were two reasons for that. The first reason was customers were asking for it. So they were saying, hey, we love you guys. We love all the sort of quirky fruits and veggies, but we also need to buy milk and we need to buy protein and we need to buy bread and breakfast cereal.
So wouldn't it be nice if, in the box that you shipped to me every week anyway, you could add some of those basic items. So that was the customer reason. And the second reason is that over four and a half years, we kind of became pretty good at spotting waste reduction opportunities in the ag sector.
So speaking to farmers, kind of being on top of the crop yields and weather patterns and stuff like that, that led to, hey, there might be some excess supply of ugly carrots or potatoes in this particular region and then going after that and recovering it for our customers. So we became really good at that.
And our teams started to look at other parts of the food system, like manufacturers for example, or baking companies or food products and going to them and figuring out what's going on. And we discovered that in many of these manufacturing facilities, anywhere between 5% to 15% of what they were making, like, whether it be cookies or salty snacks or cornflakes or whatever, ended up being rejected not because the product was bad, but because again, it was not meeting a optical standard. It was a piece of cookie that broke off or a batch of cliff bars or energy bars that ended up being too small or too large. And that was going to waste. So the same sort of problem that we discovered in farms was also happening in manufacturing.
So for those reasons, we decided to go into grocery and we rebranded to Imperfect Foods. Since then, we've added about 250 non-produce items to our catalog. Many of which have an imperfection or a food waste recovery story behind them.
Jason Jacobs: Great. And I guess if you just take a step back from and perfect foods and you look at the problem of food waste itself and you weren't focusing on, or you take the problem of food and agriculture, as it relates to climate, let's say since it's a climate-focused podcast, I know this isn't your area, but where do you think things like regenerative ag or genetically modified crop or that type of stuff fits in? And are you guys doing anything in that direction?
Philip Behn: One of the things about all these different approaches to optimizing our food system. Not all of them are aligned in terms of what they're achieving and they pursue different goals. So sometimes it's very confusing to customers. And even to us, as a company who are sort of specialists in food, when you start trading off well, what's better.
Is it better to do organic or sustainably farmed? Or local versus imported. What is worse? Like flying salmon that is sustainably farmed from Norway to the U.S. or buying local, non sustainably farmed salmon but without the carbon footprint of flying things over from Norway. Those are difficult questions to answer and people have different sensitivities to what matters to them.
Are you more concerned about compensating farmers fairly? Are you more concerned about efficient use of water? Are you more concerned about GMO or organic versus non-organic and that's why I think it's so important for companies like Imperfect Foods to be clear about what is the mission that we are pursuing.
And our mission is to eliminate food waste. It is not to eliminate food waste in organic items. So we look for items, organic items, non-organic items, items in the Central Valley of California that are 30 miles away from our customers and items that come from Mexico that maybe are 500 miles away from our customers.
And we look at all of these opportunities and try to recover that waste. And then what we do instead of making a judgment as to what's better and what else, we tell the customers exactly where the product comes from. And we tell the customers exactly what the imperfection story is, so that they can make a call and say, you know what, I know this is not an organic product, but it was going to go to waste. And instead of it being wasted, I'm actually going to buy it and I'm going to, maybe not go for organic carrots this week, I'm going to go for nonorganic imported from Mexico because it's waste anyway. That's been our approach and hopefully other companies will experiment with different things and we'll see what's the best way to tackle those trade offs.
Jason Jacobs: I'm just processing here as you're talking. I think how I'm feeling, and tell me if I'm wrong, is that I feel like food waste is an important thing. I feel like food that would have otherwise been wasted, finding a home and driving up efficiency and making those resources stretch farther is important. It feels less like a climate story to me.
And I know this is a climate change podcast, but I mean, how much is climate front and center for what you guys doing versus just kind of a periphery benefit? That's nice, but not a core focus.
Philip Behn: What causes the direct link to climate change is actually not the food itself, but the fact that agribusiness is incredibly resource intensive.
The metrics that we look at is for example, how much water goes in into producing the food that gets wasted. It's literally over 20% of all fresh water that we produce in the U.S. goes into farming things that never see the light of day. There's a direct impact on water usage. And as we all know water usage is something that with climate change is going to change dramatically over the coming years.
So we need to get ready for a world that is able to feed its population with up to 40% less water available just because of drier years and drier weather patterns and so forth. Similarly, if you think about the arable land, the food that gets wasted today in the U.S. represents about 18% of total crop land that we have.
If you think about a world that needs more buffer zones to contain some of the impact of climate change, we need to repurpose some agricultural land to become those buffer zones, to regrow forests, for example, or prairie land in them. And we can't afford to have 18% of arable land producing food that doesn't get eaten.
So that's when it really becomes urgent, in light of climate change that we do something about food waste. There's a direct correlation between food waste and wasted resources. That we really can't afford to have.
Jason Jacobs: Correct me if I'm wrong, but aren't those areas that matter better outside of the scope of your control in the supply chain?
Philip Behn: Well, they are and they aren't. So that fact that we're utilizing we're shifting consumption from number ones to number twos with the customer that we serve, it means that eventually demand and supply should adjust. So if more of supply gets utilized, it means that you actually need less agricultural production to fulfill demand. That's what we're aiming for. So we're aiming at reducing those 20 billion pounds of food that go uneaten every year ideally to zero, that's going to take a long time, but we will get there. And once you do that, you actually don't need as much arable land. You don't need as much water.
You don't need as much fertilizer to go into feeding the population. So that's the direct contribution of waste elimination to climate change and agricultural resources.
Jason Jacobs: Are you guys a public benefit corporation?
Philip Behn: We are in the process of getting certified. So hopefully we will be announcing that soon.
Jason Jacobs: Interesting. And what are the biggest differences between being a public benefit corporation and a traditional C Corp?
Philip Behn: There are differences. It's different organizations that certify you; it's different questions that get asked. Interestingly, we actually meet all of the criteria except for some very kind of almost like administrative items.
What kind of light bulbs do you guys use? Are they energy efficient, then what's the energy efficiency standard? So we're in the process of adapting some of those things. But if you think about the bulk of our operation, it is an operation that we can already call compliant with a lot of these certification agencies.
And that's great because we start from a position of strength and then we just need to get the administrative layers of that sorted.
Jason Jacobs: What do you think about this trend of brands declaring that they're carbon neutral and I mean, kind of an adjacent thing to, to public benefit corporations, but is that, I mean, especially given where you came from on the sourcing side at Walmart, you've got to have an opinion there.
Philip Behn: We have an internal goal to become carbon neutral or zero waste is our definition. Zero waste in our world includes carbon neutrality, but it's obviously more than that in our case. Now that's a longer term goal, so that's not going to happen in the next five years. But the way we think about it is every single decision that we make, like a new facility, a new fleet of delivery trucks, a new sourcing contract, we make sure that it is accreative to our goal. It has a marginal reduction in footprint, a marginal reduction in waste, a marginal reduction in overall resource consumption. And by doing a lot of little things, you end up basically designing an organization that has a net positive impact on the planet.
Jason Jacobs: What is your motivation to go down that path and in general companies that do it, I mean, is it a branding thing or is it a feel good or do you think it can have a real impact?
Philip Behn: I can't speak to other companies, but the way we look at it is we feel, we know what's right for the planet and what's right for our customers.
And that has to do with being obsessed about waste elimination across the food system, as well as in the way we operate our business. So it's the right thing for us to do as a company, people feel great about working for a company that is committed to doing so. And sometimes these certification processes help you make sure that the accounting is right. Unfortunately, the U.S. Government, the federal agencies that regulate business, haven't really done a good job at coming up with carbon accounting. So you have to rely on other standards and, if every company invented their own, I think that would kind of lead to claims that are probably not credible.
And therefore these agencies do fulfill a valuable role in helping companies make sure that we're measuring things correctly. So that's one of the reasons why we like it. But as I pointed out, it's the right thing for us to do as a company. I actually believe that customers are going to eventually give a lot more credit to companies who are committed to doing something about climate change, food waste, social causes, et cetera, versus companies that don't have that as an explicit goal. So it's the right thing for the company. It's the right thing for the customer. And eventually it's the right thing for investors as well.
Jason Jacobs: Do you think it's really going to be customer driven or do you think that the government has any role in helping facilitate this? Either in ways that have to do with carrot or ways that have to do is stick?
Philip Behn: Personally, my opinion is that it's "both and" the problem is too big and it's too critical for humanity to be left to an individual stakeholder. I think government NGOs organizations like food banks, as well as private companies, we all need to exercise coordinated action to really tackle food waste as well as climate change. In the absence of governments stepping in, I think industry has been creative and a force for good. And we'd like to sort of think of ourselves as a company that is leading the way in that respect, but it's not enough.
I'll be very clear about that. Government does need to intervene. Government does need to set standards, targets, and consequences.
Jason Jacobs: What about offsets?
Philip Behn: They've been tried in the past. I think they are a way for people who have a very high marginal cost to reduce their footprint offsets in a good sort of emissions trading scheme can work well. Honestly, where we stand as a company, there's so much that we can do before even looking at offsets.
By reducing real sources of waste that are creating damage to the environment and the planet that we're starting there. I think eventually once you get to kind of the higher marginal costs, then you need an offset program as well.
Jason Jacobs: Last question in this regard, but just as you think about getting further down that path, since that is a path that is kind of front and center for the things we care about on this podcast, where do you need help?
Where are the gaps in your experience or knowledge or visibility for that matter?
Philip Behn: We're trying to build a company that is resilient and is there for the long term. So we're learning every day about agricultural technologies that are changing and innovative companies in the agricultural sector. Like you think about everything that's going on with vertical farms and data science to kind of model crops and yields.
Those are really interesting fields that we need to understand better as a company. We feel that we're pretty plugged in, but there's so much more than we can do. Kind of, those are the areas we're investing a lot in getting smart about.
Jason Jacobs: Great. And well, I feel like this was such a wide ranging discussion.
So thanks for bearing with me here. I mean, it's been great from a learning standpoint for me, but it's gotta be a little hard for you to keep up since I feel like we've been bouncing from topic to topic, but is there anything that we didn't cover that we should have, or any parting words for our listeners?
Philip Behn: This was a great conversation. I learned a ton and hopefully I was able to help your listeners understand what we do as a company better. I just wanted everybody to remember. That we are a small company. We need so much more folks to kind of join the fight. Customers really want to do something about it, but it's hard and it takes a village.
It takes government action. It takes innovative companies, Imperfect Foods to come in and do something about it. And it takes NGOs and our partners like food banks around the country and the world to really make a dent here. So thank you for the opportunity to talk about it and the opportunity to invite others, to come into the sector and make a difference together.
Jason Jacobs: Likewise, thank you so much for making the time to come on the show and thank you for all of your important work in this area.
Philip Behn: Thanks for having me, Jason.
Jason Jacobs: Hey everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey you can visit us at MyClimateJourney.co.
That is ".co" not ".com" Someday we'll get the ".com" but right now ".co". You can also find me on Twitter @jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving review on iTunes. The lawyers made me say that. Thank you.
