Alan Lewis Interview - Part 1

Alan Lewis directs Government Affairs and Food and Agriculture Policy for Natural Grocers - Vitamin Cottage, a thriving 60-year-old natural food grocery chain operating 90 stores in fifteen states. His work sourcing healthy sustainably farmed foods for Natural Grocers keeps his customers happy and healthy and enables numerous family farmers to thrive. Cottonwood Creek Farms is one example. Alan is active in many trade organizations and sits on the Boulder County Food and Agriculture Policy Council. His focus is on communicating with local and federal policy makers using frameworks that are non-confrontational and inclusive. In his TEDx talk, archived in VIDEO’s – Candy’s Room, Alan reveals the sophisticated methods used by the food industry “fibberati” to manipulate, deceive and distract us and suggests that we can resist these nefarious tactics by making conscious food choices based on core values that support a sustainable and just food system.

As an industry insider, Alan Lewis knows just how badly the food system is broken. Alan’s insights are far reaching…

Here is the first part of my interview with Alan. He talks about what makes Natural Grocers so unique as a natural food grocery store chain and his efforts sourcing natural foods from regional sustainable family farmers, helping them grow their businesses and building the rural communities they are a part of.

In the next part of the interview Alan and I discuss the historical relationship of American farmers and the government, the secret design behind modern government farm policy, the battle to protect meaningful truthful product labeling, Big Ag’s takeover of university agriculture departments, research and ideology. We also discuss localized food re-distribution and other promising solutions going forward.

Sign up with us to receive all of this. Here’s part one:

ABOUT NATURAL GROCERS

ALAN: I’m going to start with a little bit of history.  It’s easier to understand the narrative that way. Don’t panic! I’m not going to go too deep into the background. 

60 years ago, 1955, you’ve got a young married mother with several young children. She is making ends meet but she is not feeling well. She doesn’t have enough energy, she’s got a lot of pain, and nothing that her doctors are doing or prescribing is helping her feel better. 

She had a hunch that it was what she was eating. It’s hard to imagine how bad food was back then - it was so processed, so heavily preserved. Talking about Wonder Bread, Margarine, Smuckers, Kool-Aid and Twinkies for lunch on a good day. Her hunch was that if she changed what she ate that she would feel better. So slowly but surely, she started eliminating anything that was suspect -- basically most of the national brands, because they were all heavily preserved, with colors- 

STEPHEN: Dyes.

ALAN: Dyes, yep, all of that synthetic chemical junk. It wasn’t very long before her health problems had completely reversed. She became vigorous and clear-headed and energetic. That moment was the genesis for her lifelong mission of finding better ways to eat and helping other people address of their own health problems through better nutrition. So much distress is caused by processed food malnutrition - or dys-nutrition, which is my term for it. 

So leaping all the way ahead to today, that’s why Natural Grocers doesn’t sell anything with artificial ingredients in it. So what are those? Preservatives, sweeteners, colorings, emulsifiers, extenders, whatever. If they really are artificial and they weren’t considered food in the past, then we’re not going to consider them food now. 

STEPHEN: Okay.

ALAN: A lot of this approach is now related to pesticide residues and allergens. Allergens have traditionally been a minor problem for Americans, but they’ve become a huge problem now. Natural Grocers supports all the special diets where people can’t have gluten or peanuts or meat or dairy or nuts. Meat allergy - which my wife has - is now a recognized medical condition related to auto-immune issues. She’s become allergic to animal fat. As much as it smells good to her, she can’t touch it. Our stores are very important to these consumers. We give them many choices, even within their strict dietary regimen.

STEPHEN: Wow.

ALAN: Beyond just that health and ingredients nexus, there’s always been a broader, holistic perspective. If a product is not created in a way that’s sustainable environmentally, or if it’s not created in a way that provides a good living and a safe work environment for the producers, that’s also a problem for us. Sometimes it’s just beyond our view and ability to create change. But a lot of times, because of our history and principles, we were at the forefront in taking action.

Take Mo Siegel, from Celestial Seasonings. He and his merry band of hippies went through the Colorado mountains and meadows looking for wild harvested herbs to make teas and medicinals with. We were his first retailer. He walks into the store one day and says, “I’m gathering stuff. I’d like you to sell it for me.” That’s the kind of relationship we like to have. Where we know and agree with the ethics and the principles of the producer. Where we can be sure or be able to certify about how those products are made. 

Practice aligned with principles can be a very powerful catalyst. Mo did pretty well for himself. Celestial is a global natural food powerhouse right now. It’s still making natural products -- although some people would say, as a company gets that big it may start to lose its way. We’ll see.

STEPHEN: Was this how Natural Grocers started, or is this what Natural Grocers evolved into?

ALAN: It was always a purest health food store focused on educating its customers -- almost to a fault.

STEPHEN: Explain the relationship with the name Vitamin Cottage?

ALAN: Originally, due to the founders’ focus on nutrition, supplementation with vitamins, minerals and herbs was (and is still is) a big part of our ethic. The original company names go way, way back. In 1955, the idea of the business was captured in the name Builder’s Foundation. If you’re going to build your health, here’s the foundation to build it on. We were pretty quirky, right? Both idealistic and stridently forthright.

The first retail operation was established on the west side of Denver, in a house that looked like a cottage. So if you’re selling some fresh whole foods and lots of vitamins from a house that looks like a cottage, it’s not too big of a leap to call it Vitamin Cottage. That name goes back almost 50 years. Even though our vitamin and supplement business has grown substantially, and continues to grow, the natural foods part of our business has grown faster. Food is now over two thirds of our business. Vitamin Cottage Natural Foods Market was used in the 90’s. Natural Grocers has been the primary brand name since 2004.

STEPHEN: The business is doing well. 

ALAN: I can’t answer that directly due to SEC compliance, but yes it has done well. 

We’ll be finishing our second quarter of the fiscal year on March 31st, and then 45 days later we’ll announce the quarter results. But for last fiscal year, we had sales of $540 million. I think we had 90 stores as of September 30th. We beat expectations on a number of measures and the market was happy with us. There was a nice bump in our stock price. So I think the answer is, as of that day, yeah, we’re doing well. 

STEPHEN: Good. Tell me about your competition.

ALAN: It’s very competitive. I’m out here in Los Angeles for Expo West, the national event for natural foods products. The awareness of and demand for health food is still growing really quickly, but there are also a lot more people selling it. 

In a market like Colorado, especially central Denver, you go into a Kroger supermarket, you can find many of the natural products that we sell. You have to dig through the junk food to find the health food, but it is there. All conventional retailers are aggressively pursuing natural and organic product sales. And I saw a billboard yesterday for Kroger. It said “Lower prices on thousands of natural and organic products in our stores." That’s how aggressive they’re getting. And there is Sprout’s and Trader Joe’s – the poser crossover stores -- which market themselves as health food stores but really sell lots of junky cheap food.

And Whole Foods is still being this really fun, smorgasbord kind of glam supermarket. They’re more and more like a conventional grocery every today. They don’t seem to be as dedicated to a creating stronger ethic and higher principles as they might have once wanted to be. We’ll see how they respond to consumer’s having so many new choices.

 

SOURCING FROM FAMILY FARMS

STEPHEN: Before we talk about the Cottonwood example, let’s talk about how you source and the benefit to the sustainable farmers and their communities. That’s exceptional.

ALAN: At the broadest level, it’s surprising to most people how many organic farms are in Colorado. We have a short 90-day harvest season for the most part. But there are a really large number of natural and organic farms on the western slope of the Rockies, along the Front Range and on the eastern plains. One of the reasons is that Natural Grocers grew up with them and they grew up with us. 

Since the sixties, Colorado consumers grew up in an environment where health food was accessible and local. Because of that, our natural food producers always had opportunities to meet this additional demand. There was a cycling up. More farmers were able to stay organic and become organic because there was growing consumer demand in Colorado. 

The proof is in the pudding. Texas has 25 million people and 25 Whole Foods. Colorado has 5 million people and about 25 Whole Foods. They have not opened more than handful of stores in Texas in the last 5 to 10 years. It seems that where they see the opportunity is in Colorado, not Texas. It always makes me wonder about Texas.

With all due respect, Natural Grocers developed the health food market in Colorado. We were part and parcel of establishing the health food ethic and creating both the demand and the supply. You know, we’re glad the demand has allowed competitors to morph into ersatz health food stores. But, underneath all that is a 60-year history of providing that educational component, setting standards, supporting suppliers and making that connection between the farmer and the consumer. We are very proud of our contribution.

On the other side of the demand curve, we’ve got a farmer who is trying to decide over the next 5 or 10 years what she’s going to grow. Is she going to become certified organic? Is she just going to grow conventional wheat or sugar beets or barley or millet or beans or whatever her farm can support? With our 35 stores in Colorado, and the consistent long term consumers who shop with us — it gives farmers more confidence in natural and organic choices. I think we should take some credit for it. It seems a little bit arrogant, but it shouldn’t. Colorado farmers know that if they grow organic, there’s a steady demand for it and they’re going to get the price premium to make it all worthwhile. 

We’re at a stage where we’re hyper-efficient. Our informal motto is, ‘If you can’t afford it, it’s not health food.’ To keep costs down, we rely heavily on our intermediate produce distributors like Grower’s Organic, Fresh Pack, Albert’s, and dozens of other smaller organic distributors. Instead of a farmer having to load up his truck and use a lot of diesel and his time to make the rounds to each of our stores, Grower’s Organic is pulling up to that farm, loading up the produce that’s harvested and ready to go, and they’re making a single trip to our stores to distribute the product from many farms. One of our initiatives is to preserve the identity of those products as belonging to that farmer and that farm. It may have been handled by an intermediate distributor, but you know that’s Steve Elha’s herbs, or Isabella Farm’s carrots. Our customers love that.

STEPHEN: And Cottonwood Creek Farms was an obvious example, because he had what, 400 hens when you met him? And now he has about 4000.

ALAN: He’s got 4000 now, that’s right. I met Matt Kautz at my neighborhood farmers market when he had only 400 birds. The business was still just a twinkle in his eye. I visited his operation and audited his standards. I told him, if you stick to what your are doing and take out the GMO feed, we will buy every egg you can produce. 

The question is what does he do now? Maybe 4,000 birds is enough, or maybe his extended family and his rural community want to create additional efficiency. Put in more hen houses on different land. Build up an infrastructure for pastured eggs and be able to service a lot more retailers. 

STEPHEN: You have a demand for his eggs. If he had 6000, 8000 hens, can you continue purchasing all of their eggs?

ALAN: There’s a trade off right now, because a $6 a dozen egg is pretty darn expensive compared to cheap industrial eggs. So the conversation is, can Cottonwood Creek scale up to the point where the retail price can come down? Because retailers don’t make a lot of money on dairy, eggs or meat. There’s not a lot left we can give, and there’s distribution costs in the middle. Once Cottonwood Creek has financing paid off, has infrastructure in place, the incremental cost of more production is a lot lower and growth is a lot less risky. It may bring the cost of his entire operation down on a dozen by dozen basis. That may spur demand. 

And so, this is a really critical decision, right? He’s got to trust us, we’ve got trust him and our consumers. That old adage about “betting the farm” is really what happens. What you see is everyone hunkering down with very sharp pencils to decide how much risk there is to growing, and how the standards can be maintained and improved.

Remember, there are still nay sayers who think that natural and organic food is somehow a fad. But that’s a pretty long term fad for it to be susceptible to go away quickly. 

STEPHEN: The supply side of things interests me a great deal. Now that a company like yours is helping establish the demand, the market place for it, what’s next?

ALAN: Back to Matt Kautz at Cottonwood Creek. He’s a really smart guy, and his wife is smarter than him -- which is typical on the farm! He has a very clear goal. His goal is to keep that farm healthy, keep his boys on the farm, raise them in a pristine environment according to his and his family’s values, and build a business that they want to continue down the road so that Matt’s grandchildren have the opportunity being raised in that environment according to those principles. 

Notice that goal didn’t’ say he wants to get rich and retire in Florida. He wants to work hard, we wants to own something meaningful, he wants to build something based on really deep, healthy community values. And that’s what you pay for when you buy Cottonwood Creek Farm eggs. Those values and those principles and the viability and sustainability of that farm cost $6 a dozen. If you wanna pay $1.99 a dozen, you’re paying for something else completely different. 

STEPHEN: When a consumer buys food, is their purchase an investment in the Gulf of Mexico, or to somebody like Matt and his family.

ALAN: The only way you get $1.99 a dozen eggs, first of all, is the retailer is making no money. They’re giving them away just to make you happy. You’ll have at least 10,000 birds in a single closed barn, no access to the outside. They are—

STEPHEN: Suffering in just deplorable living conditions.

ALAN:  Yep, and their natural biological processes are artificially regulated through feed supplements and artificial lighting. Even in a less crowded caged environment, there’s going to be several birds in a cage, and maybe one at a time can flex its wings. You’ve got a lots of die-off inside the barn from chickens that cannot handle the stress. You have the potential for passing along avian flu quickly to the entire population. 

STEPHEN: They require constant doses of antibiotics in their feed.

ALAN: Constant low levels of antibiotics just to keep them healthy, and as a side effect they grow faster. It’s illegal to give them growth hormones, so typically if you see a package that only says ‘raised without hormones’ and nothing else, that’s a dead giveaway that’s a factory farmed chicken.  That’s pretty much GAP standard for one of our main natural foods competitors. Check it out. Look how low that standard is. 

What is the consumer is not paying for at the store? Really unhappy chickens. Massive amount of concentrated toxic chicken poop. Instead of being spread out and worked into the soil by chickens on a pasture, re-invigorating the farmland, like on Cottonwood Creek, it becomes this concentrated environmental Superfund site. 

Whether liquefied or dried, and they can put it on farmland in high concentrations that is not good for the soil. When you dump or spray animal poop heavily onto the land, it really disrupts the soil and vegetation health. It’s not a healthy soil amendment; it acts more like a poison.

STEPHEN: It would accumulate on the topsoil. It doesn’t just ‘self-absorb’ into the soil.

ALAN: Right – most of the nitrogen volatizes. It goes off in the air. And then if you try to incorporate it - it’s always bad to till the soil - you’re going to damage the soil’s natural processes for managing natural nutrient release used by the plants. The soil science is fascinating, and I’m only into my 10th book, so I’m a novice. But the key to the story of industrial chicken production is the intense pollutant that results from it. 

So, back to that $1.99 dozen of eggs. That’s just the agricultural and environmental part. From the economic perspective and political perspective, those farmers have to sign a 7 year agreement with Tyson or Pilgrims or Perdue, and that agreement says, ‘You will build a barn of this size to this specification. You will buy all your feed from me. You wil buy all your chickens from me. You will buy all your medicine from me. I’ll come by in 4 to 6 weeks when your birds are ready, and I’ll decide whether I want them and what price I’ll pay for them. If I take them, I’ll process them, package them, and send them out to the retailers.’

The result of these agreements is that the entire profit in the value chain goes to that vertically integrated processor —it goes to Tyson, or Perdue, or Pilgrim’s Pride. The only thing left in the farmer’s hand is the bank loans and the risk. The only person who is going to lose in that equation, if those birds get sick or fail to thrive or get condemned or whatever, is the farmer. And then that farmer takes the entire brunt of that disaster. Nice system. Enjoy those $1.99 eggs! Someone else paid for them dearly.

STEPHEN: Christopher Leonard in his book The Meat Racket, writes at length about the rigged system of purchase pricing. How Tyson will pay different farmers varying prices for their chickens. A lot of time it’s very subjective. Even when the farmer has a good chicken harvest, and gets a decent price, and things seem to be working out, he can have things turn for the worse at any time in ways completely beyond his control. The farmers in that system never seem to get ahead.

ALAN: And don’t think that he can go out and buy chickens somewhere else. Because they won’t sell them to him, and even if he manages to find chickens or build up a flock of his own, there’s no one who will buy those birds from him because they’ve removed the local and regional processing. 

The only processing available for that number of birds is the massive conglomerate-owned processing plants. This is why Cottonwood Creek, for example, has their own egg cleaning facility on site. It’s outfitted with all refurbished equipment, but it’s FDA inspected and food safety compliant. If he had to send those eggs out and have someone else clean them or sell them into the industrial processing system, he would make nothing on the eggs. The closing of local and regional food processing capability is a longstanding strategy of Big Food. And it’s one of the key methods the food movement is using to fight back.

So little Cottonwood Creek is growing a lot of his own feed, he’s getting good chickens from a small affrodable supplier. He’s providing most of the labor to feed the animals and collect the eggs. He is doing the cleaning, packaging, and labeling on site. He has most of the value chain captured for himself. Our distributor gets a small cut, and then we put a little bit on top. That’s a farmer who is control of his destiny.

STEPHEN: Well, you’re retailing. It’s not charity.

ALAN: It’s responsible retailing, yep. The farmer producing the $1.99 eggs, she is simply indentured to Big Ag and not accounting for external costs. That’s why they’re so cheap.

STEPHEN: Factor in all the subsidies from the government as well.

ALAN: Subsidized grains. Yeah. Don’t get me started!

STEPHEN: Government subsidies come from our taxes. We’re all supporting this.

ALAN: And by the time your kid gets sick and needs antibiotics and they don’t work, take another look at that $1.99 dozen of eggs. See how those savings pale compared to a $12,000 regimen of exotic antibiotics to treat MRSA over six weeks.

STEPHEN: So it’s about raising consumer awareness about how they’re spending their money. First of all, it’s a much better product. It’s a much healthier product.

ALAN: Oh my gosh, I left that part out. The taste and texture. Chefs love these eggs. It’s a different experience. 

STEPHEN: You’re supporting this type of farmer and this type of operation and his family, and on top of that, his success in turn supports all the support businesses in his community. So you’re sending money back into the rural communities. All of that is connected. The goal is to try to sharpen that $6 a dozen price if possible. If they’re selling, there’s the demand, he’s fine. But even so, if they were cheaper, more people are going to be able to afford them.

ALAN: Yeah, and I’m sure that’s Matt’s long term goal, to have more people eating more quality food. It’s not about getting rich or getting big. He wants security and an honorable business. Part of his goal is lowering the price to provide better access to consumers and more opportunities to producers like himself.

STEPHEN: The sustainable farmers I’ve met or learned about all want the same thing. They want to find a way, a method of sustainable farming that’s viable in a modest way, and that there’s some stability there. They do want to control as much of the value chain as you call it as possible, and operate in a localized economy whenever possible.

It is inspiring to me how Natural Grocers, by providing a marketplace where so many people have access to all of this healthy pure organic food, in turn supports so many sustainable organic small family farms and farmers, and, in turn, the rural communities they are a part of.

 

In the next part of the interview Alan and I discuss:

  • the historical relationship of American farmers and the government,
  • the secret design behind modern government farm policy,
  • the battle to protect meaningful truthful product labeling,
  • Big Ag’s takeover of university agriculture departments, research and ideology.
  • We also discuss localized food re-distribution and other promising solutions going forward.

Sign up with us to receive all of this.