More vertical integration at the source of the food is needed for regenerative agriculture and its farmers to thrive in developing countries, according to Greg Krupa, head of investor relations at US-based healthy snacks company GoodSAM Foods.
Typically, raw goods such as cacao, nuts and fruits are exported from these smallholders to other countries for processing and packaging, subsequently taking value away from the growers themselves, he says. GoodSAM is helping trail-blaze a model where food is not just grown but also processed close to the farmer.
This “direct trade” model cuts out the middlemen — frequently known for gouging the growers on price — so that GoodSAM works directly with the growers and their farmer associations.
“One of our big goals is to be an off-taker for these farmers that are growing in these regenerative systems that I think Americans are not used to seeing,” says Krupa. “You drive down the highway in the Midwest [US] and you see these massive, mono-cropped systems heavily reliant on petrochemicals, whereas farmers that we work with are growing macadamia, avocado, plantain, mango, beans all in the same kind of agroforestry system.”
Investing in these growers while simultaneously providing consumers with non-GMO products grown using traceable, eco-friendly practices is at the core of GoodSAM’s mission.
Investing in regen ag ‘at the source’
“What we’re trying to do is to be a part of transitioning towards regen, which is only about 1% of all agriculture globally, and building a farmer-direct model,” says Krupa.
The company sources nuts, coffee, and fruit chips from growers predominantly in Latin America and Africa. It works with farmers associations to build fair pricing for growers, usually 2x to 4x what that grower would receive via the traditional middleman model.
The idea is to build vertical integration at the source, rather than export raw materials to be packaged and processed in another country, like the US.
“We look for partners that are investing at the source,” says Krupa. “A lot of the different partners that we have — organizations like Limbua or Fairafric in Ghana, for example — are processing and packaging chocolate bars, chocolate covered macadamias, etc. You’ve brought in X kilograms of, say, chocolate and cacao, now you can come into the facility and process and we export it to our partners in Europe.”
GoodSam has similar partnerships in Kenya, Colombia, and a handful of other countries, working with farmers associations and food companies to grow, process, package and export fruit chips, nuts, coffee, and other products to the rest of the world.
As well as paying organic and fair trade premiums, GoodSAM reinvests 1% of all top-line sales back into the farmers and their communities. Meanwhile, the direct-trade model also ensures farmers a living wage, and GoodSAM also provides technical support to growers for farming and processes.
Direct trade vs fair trade
What sets direct trade apart from its perhaps better-known counterpart fair trade could be boiled down to traceability.
Tracking goods along the traditional supply chain is expensive and time consuming, and has hampered fair trade to some degree over the years. While the concept supports high quality and living wages, it doesn’t cut middlemen and brokers out of the process, and it can be difficult to tell how much money is actually getting back to farmers.
Because direct trade cuts out middlemen, traceability is relatively easier to guarantee, according to Krupa. This also helps in ensuring products bearing the “regenerative agriculture” label are actually grown using said practices.
“So much of the of the work is not only partnering with the right organizations, but also the the auditing that we do on the ground to fulfill our regen standards,” explains Krupa.
Presently, GoodSam is the only CPG brand in Whole Foods allowed to put the words “supports regenerative farming” on its packaging.
‘We’re trying to galvanize support’
Roughly 50% of GoodSAM’s sales are nuts currently. Coffee is the company’s second-biggest category followed by chocolate then fruit chips.
This year, GoodSAM launched a line of fruit chips in Whole Foods stores in the US, where it also sells a variety of nuts.
While whole foods is GoodSAM’s biggest retail partner, the company’s e-commerce business is growing too, says Krupa, with goods available on Amazon, Misfit Markets, Hungryroot, and Thrive Market, among others.
The company is currently focused on the natural channel, rather than at mainstream, big-box supermarkets or membership-based chains such as Costco.
“We’re trying to galvanize support from the market segment that is interested in the work that we’re doing, and we know that that exists mainly in the natural channel,” says Krupa.
To be sure, opportunities with big-box retailers have presented themselves, he notes, adding that GoodSAM’s founder Heather K Terry has put more than 300 CPG products on shelves over the course of her career and has strong connections to mainstream stores.
GoodSAM will “probably start to entertain” possibilities with big-box retailers in the next 24 to 36 months.
‘More doors to open’
GoodSAM recently made a $3.1 million first close of its Series A round. Alive Ventures, Desert Bloom and Connecticut Innovations co-led the round.
The company has a goal of raising $5.5 million by the end of February 2025, and Krupa notes that it has “another $1.5 million near close.”
“We still have more doors to open, and then we also have more products to get on shelves,” says Krupa.
“Of course, there’s a lot of investment always being made in our supply network, because we work so closely on the ground with farmers. And then we will be investing more into our digital and retail brand building strategies to attract and connect our community to our brand mission.”
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