Guadalajara, the food producer of Madrid. A system of democratic demand and enabled trust trough technology and technocracy
Challenges: Describe the current (2020) and the future (2050) challenges that your food system faces.
The current model The set-up
The global grocery industry has evolved over the past last 50 years from independent stores offering locally grown products to dominant mass-market retail chains providing goods from an international supply base. The overall scale of the mass merchandisers has now captured a significant majority of the overall grocery revenue. These mega chains have grabbed control from the manufacturers and have establish the current standard for terms and conditions for the entire supply chain: sources, quantity, quality, pricing delivery schedules, packaging, returns policy and payment conditions.
This power position, however, has resulted in the following inefficiencies and challenges for perishable foods:
Large quantities of waste or diminished quality in distribution centres and grocery stores. Consumer products systems are designed to maximize fill rates and reduce stock-outs rather than controlling food waste.
Dismissing of supplier who provides the best quality to price ratio due to inflexible business structures.
Ineffective response to trade promotion demand due to lack of accurate timely information, misaligned KPIs, ineffective partner integration and the inability to plan based on analytics.
Lack of adherence to codes of conduct: delaying payments to manufacturers; changing quantities or product-quality specifications with less than three days’ notice without proper compensation to the manufacturer.
Abusing the power that retailers have achieved by pushing the limits of what is fair. Grocery retailers are perpetually extracting better terms from already squeezed manufacturers, going far beyond the benefits a player should receive from attaining economies of scale.
High market concentration leads to higher prices and disappearing diversification of suppliers.
The buying power of the retailers have dictated and shaped the producer’s business model, with the prominent drivers being the market forces on the demand side.
These demand trends originated with urban growth, the baby boomer generation’s prioritization for convenience and low price and the idea of quality over the esthetical perfection of the item. Together these have led manufactures to tactically advance on the technologies that would deliver product high turnaround at lower costs through the use of pesticides, standardization in variety and origin and selecting species or varieties the can withstand long supply chains. All of this prioritized industrialized or heavily processed foods over fresh items.
The new model –
The critical force for change to this high retail profit driven model is coming from the end consumers. The coming of age of the new generation of millennials, with new priorities and preferences, has created a major shift in the demand trends.
Demands for food safety, nutrimental content and health and environmental consciousness need to be meet by offering fresh and organically grown foods with a wider range of varieties. Achieving these new demand requirements has major implications on production techniques and calls for a reinvention on the supply chain and retail model.
Address the Challenges: Describe how your Vision will address the challenges described in the previous question.
The new business model: local distributed agriculture
The simple solution is to supply the urban center of Madrid, 5 million people, through 3 types of production: vertical farming, greenhouse and regenerative agriculture each placed at the closed distance as viable possible to the consumer.
The system is powered by a complex digital platform that will enable management of direct orders from consumers, their votes on proposed improvements on the system and distribution and logistics management as well as a way of crowdfunding capex and run operations in a cooperative incentivized or volunteer style
The final places of service and products are: the abundant family own small grocery shops offering raw ingredients, virtual kitchens providing weekly planed meals and all reminding canteens.
The circular economy nature of the system will yield a new type of food product: a side stream aggregate that is nutritionally dense and small in size
The design and management of the production will be run by a consortium of scientist and engineers in a co-op style to optimize operational cost and have and agile reaction to fluctuations in the production factor involved
Full Vision: How do you describe your Vision for a regenerative and nourishing food future for your Place and People for 2050?
The core of the system, production, regenerative farming and distributed indoors Farming
REGENERATIVE FARMING is the style of farming opposite and set to restoring soils used by the current mega-monocultures of industrial agriculture made viable only by intensive chemical use that had lead to soil degradation and 40% percent insect species facing extinction in the area
The proposed practices are designed to mimic a naturally grown ecosystem engineered to be achieved in a fraction of the time. The results are a sustainable production and nutritional superior product.
These practices aim to rebuilding the soil organic matter through holistic farming and grazing techniques with the potential to mitigate climate change through carbon sequestration thought photosynthesis, five tons of carbon per acre for every percent of organic matter which helps soil hold 20,000 gallons more water per acre And heightened water holding capacity means crops are more resilient through times of drought or heavy rain. By maintaining surface residues, roots, and soil structure with better aggregation and pores, soil organic matter reduces nutrient runoff and erosion, as well
And the healthier the soil, the healthier the crop. When plants have the nutrients and roots systems they need to thrive, they build compounds to help protect against insects and disease. A healthy soil microbiome full of necessary bacteria, fungi, and nematodes is more likely to produce nutrient-dense food, promoting better human health.
Regenerative farming practices boost soil health through a variety of techniques:
As animals move, their hooves break up the soil, compacting inedible plants and allowing nutrients and sunlight to new plants—essentially speeding up the building of soil organic matter, with crushed leaves and stalks creating a natural mulch. This better equips the soil for germinating seeds. And the livestock’s excrement adds nutrients to the ground, further improving water retention.
One of the key principles of regenerative agriculture techniques is to keep the soil covered at all times. This can be achieved through both plant residues and cover crops, which protect the soil from wind and water erosion, lower the temperature of the soil, and feed the microorganisms within it.
One teaspoon of healthy soil has more living organisms than there are people on Earth—vitally important building structure and overall soil health. Mechanical, physical, and chemical (synthetic fertilizer, herbicide, pesticide, and fungicide) disturbances all have a negative on the soil microbiome, putting soil nutrient cycling and environmental resilience at risk. Limiting the disturbance of the soil maintains the soil structure and prevents erosion.
Nature is more collaborative than competitive. Diverse ecosystems—whether it’s through plant or animal speciesmean healthier and more resilient soil.
Regenerative prioritizes soil health while simultaneously encompassing high standards for animal welfare and worker fairness. The idea is to create farm systems that work in harmony with nature to improve quality of life for every creature involved,
Aid technology that is derived from the underlying principles of regenerative agriculture that address the root cause of problems, such as weeds or pests deploying the highest degree of automation by a methodology of measurement and action. The technology components are sensors, robots, drones, time-release biological crop treatments and genetic modifications
The designs must be ad hoc for each module of biodiverse land and provide little friction to farmers adoption - solving a real problem and making regenerative processes even more regenerative or making the processes work for each farmer that could engage with robots while an associate is there to provide support. This will potentially reduce the cost of the service and allow the grower to maintain control over the operation while workers can upskill in lieu of working on rote seasonal tasks
benefits of climate control growing environments are: year-round growing, chemical-free pest control and faster growth than outdoors with seemingly higher-quality produce that is grown efficiently, locally and with a potentially lower environmental footprint
2nd generation vertical farms yield 55 times more produce per unit of area compared with conventional farms. For the first time in modern history, food could be grown in cities, where it is eaten
Although CAPEX will remain high compared with conventional and organic farming OPEX reduction trends the industry today by up to 80% in labor and by up to 50% in power cost using modular structures and plant management automation to transfer its growing towers around the warehouse, as well as harvesting automation.
Traceable Supply Chain and on-demand Market Place
The purpose of this project is to develop an end-to-end supply chain service that is de-centrally architected and possesses all of the significant elements of an on-demand delivery service. It will feature traceability throughout the logistics and value transactions, validated by open source cryptographic technologies. This will enable easier matching of buyers and sellers, wizard based contracting with automated conditioning (e.g. quality or transporting conditions) and escrow based payment.
The social mission is to minimize unfair pricing, gain product history and food quality insights, and reduce multinational agricultural influence in favour of more localized economies.
ON DEMAND MARKET PLACE
The ecosystem will provide a grocery marketplace where consumers can buy products directly from manufacturers, enjoy more transparent pricing for a wide range of high quality products on a more personalized level, and save through direct promotions. Manufacturers compete for consumers and interact with them directly. The goal is also for consumers to have unimpeded access to independent and local manufacturers, including farmers, which do not easily fit with large retailer supply chains or procurement practices.
The impact of a direct market is:
- Efficient Market: Goods and services that add value to the ecosystem can freely trade at their fair market prices and quantities without unnecessary influence from biased third parties
Waste: Decrease in food miles by enabling consumers to easily access local manufacturers, including farmers. An efficient and effective "pull" system will reduce inventories and out-of-stocks that will result in decreased food waste.
Promotions: Replace trade promotions with a more personalized, direct and effective marketing, thus driving grocery prices down and facilitating the effective direct interaction between manufacturers and consumers.
DECENTRALIZED TRACEABLE SUPPLY CHAIN
Enabling technical will provide the authoritative solution for making the food industry more transparent and democratizing the access to food related information as a common property. The benefits of a common “authority” made accessible to the consumers are to helping small farms to be more competitive, reduce the scale and effect of epidemics as well as food frauds, and educate people through incentivizing conscious consumer behaviour.
The impact for a traceable supply chain is:
- Medical: Fewer foodborne illnesses and deaths
- Social: Visibility to true consumer demand, improved consumer trust
- Economic: Decrease in product recall costs, export tariffs, and VAT revenue extracted from consumers. As this develops, platforms can also help with remittances to rural regions and provide other rural farming finance solutions
The ground breaking features introduced over the current supply chain model
CONTROLS Authority control can be embedded to any part of the process enabled by the QR codes and mobile app, to read/write/update data about a tracked item and recorded on the blockchain for authenticity
Food safety alerts are built into the whole process, and can be triggered by certain events. E.g. if a livestock transport takes longer than the average will trigger an alert to the veterinary at the receiving side to check the transport.
DEMAND COMUNICATION CHANNEL Final consumers request their purchases predictions over the platform to be more accurately close in meeting supply with demand
PROGRAMABLE CONTRACT AND PAYMENT Development of smart contracts to run the order payment and fulfilment process automatically
FULFILLMENT CENTER OPERATORS are owners or operators of existing warehousing facilities and/or delivery fleet. They provide the space where workers take products delivered by manufacturers
and assemble orders and then pass the assembled orders to couriers
REPUTATION SYSTEM scoring provided on the platform for participants to rate their connected suppliers through their common business transactions
INCENTIVE MODEL manufacturers will be able to apply any logic in the smart contract to create bespoke reward programs according to their needs: Loyalty, promotion, cross marketing, referral or feedback
BLOCKCHAIN & SMART CONTRACTS
Blockchain is a shared-database technology, works with linked databases that update digital ledgers unceasingly.
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.
● Smart contracts
● Payments – coin transaction ledger. implemented on a public network
● Supply chain management - Traceability transaction ledger. on a private blockchain