Vital Farms

SHOW NOTES

Vital Farm’s prides themselves on having all pasture raised humane products from eggs to butter. CEO Russell Diez-Canseco shares with us the importance of stakeholder capitalism and how Vital Farms works everyday to provide both you and the farms your eggs and dairy come from with quality products and support.

Level Up Your Impact

Often having an impact starts with being informed. How can you choose products that align with your values if you’ve been misinformed or don’t know what certain labels mean. We found a great resource from the Humane Society that we think will help you make an informed decision when you make your next purchase, be sure to give it a read by clicking the previous link.

Links from this Episode

Vital Farms

Certified Humane

EPISODE TRANSCRIPT

Russell Diez-Canseco 0:07
Take one step, you can have an impact on any budget, you can have an impact on any amount of time, take that first step, maybe it’s not your whole shopping list, but maybe it’s one or two items that you’re going to kind of vote with your dollars on. And let that be something you can be proud of.

Benn Marine 0:28
From Dirigo Collective, this is Responsibly Different. sharing stories of certified B corporations and our journey of joining them in leveraging business as a force for good.

Vital farms has been a certified B Corp since 2015. With a score of 108.9. Their certified humane pasture raised eggs and ghee are making access to humane dairy choices and supporting small family farms that much easier. CEO Russell Diez-Canseco sat down with us and shared his journey to stakeholder capitalism, and how vital farms is doing things in a responsibly different way. Welcome to the show, Russell, super excited to have you to kind of kick us off. Can you tell us a little bit about your background? You’ve had a really interesting career. I’m curious what brought you from CIA to grocery to now Vital Farms.

Russell Diez-Canseco 1:30
Thanks, Benn, great to be with you today. It has been a varied career for sure. And it’s been a lot of fun. I’ve learned a lot along the way, you know that I did work at the CIA in the early 90s. And that was actually a way to pay for college. It was a little bit like ROTC in the military. I worked there in the summers, and they taught me a lot. And in return, they paid for college, which was really helpful. Because we didn’t really have a good way to pay for it. Big things I learned at the CIA, how to communicate how to write clearly communicate thoughts clearly and frankly, how to navigate the bureaucracy, which wasn’t as exciting for me. Fast forward, my sort of entree into food came about as a McKinsey consultant after college, I got to work with some really cool packaged goods, brands and some grocery chains. And I loved at a time before the internet was really had matured the way it has today. This was in its infancy, I found that grocery retail offered the most immediate feedback in a business model. So it wasn’t quite click, but it was certainly build a display and see how it’s sold that day. And I love that ability to be creative, and data driven in terms of how you went to market, literally, and then to see the results of your efforts. And you could run those experiments, those A B tests, the sort of fail fast approach that Silicon Valley is so well known for at a time before, it was easy to just click and so I fell in love with grocery and I went to business school and came out of business school and learned there that there was this one very special grocery chain down in Texas called HEB. That had an amazing culture was known for being very innovative and that if I wanted to learn the business from the ground up, that was the place to do it. And so I found myself in Texas working for HEB learning the grocery business from the stores, did all the jobs in the stores, bag, the groceries, put the fish in the fish case, private doughnuts, it was amazing grounding six years of that, and then over time, ended up really becoming rooted here in Austin, Texas, still falling in love with food, and found this company called Vital Farms back in 20, late 13, early 14 that was taking something that I was finding at a farmers market and and which was pasture raised food at the time pasteurized eggs, and they were bringing it to grocery stores, which I thought was incredibly democratizing and liberating, something that was very expensive and very hard to find, to try to try to make that more available. And I was so intrigued by it. I I had to be a part of it and lucky. Luckily enough, they they found a spot for me on the team.

Benn Marine 4:19
That’s amazing. That’s That’s so great. Tell us a little bit about the Vital Farms founding story.

Yeah, so Vital Farms was founded by Matt O’Hare and his wife in back in 2007. here in Austin, Texas. They had Matt had some farming experience prior to that. And one of the things he had noticed from his own experience was that when he had chickens on his farm and they laid eggs, the eggs looked and tasted different than the ones he could find in the stores. And he came to believe that that had to do both with animal welfare and with the very diet that they could get when they could go outside on pasture. Rather than just being able to eat what was fed to them inside a cage, and, and he sensed the market opportunity, that’s kind of a serial entrepreneur. And he, it was time for his next venture. And he sensed an opportunity to bring this higher quality food to more Americans. At the time, a friend of his called john Mackey, who was the co founder of Whole Foods, had co written an article and then ultimately a book called conscious capitalism. And it espouse sort of this different approach a more enlightened approach to capitalism, and to the impact that businesses can have when, when they’re when they have a purpose. And when they’re operated with stakeholders in mind. And he was really, really taken that was a really different point of view for him, he’d grown up, I think, very much in the, in the profit maximization shareholder value maximization Milton Friedman approach as as did I, and, and this really kind of changed his worldview. And so he founded Vital Farms with a market opportunity in terms of changing the way foods produced and with a sort of capitalist opportunity to change the way business is run. And that was the founding story of Vital Varms.

That’s amazing. And since then, you all have expanded from eggs to other products, too, right?

Yeah, in the early days, it was really about eggs. Although when I got here in 2014, we had, we had a couple of other businesses. In fact, we were in the poultry business as well. And we sold broiler chickens at Whole Foods back then. So there was definitely an openness and a sense that what we were learning how to do in terms of identifying unmet needs amongst consumers, and then working with small family farms to bring food to market could apply to other categories. But But the next really substantial category we entered was was butter in 2015. And that was at a time when we didn’t have a lot of people or resources around marketing insights. We didn’t do, frankly, a whole lot of homework to identify exactly that that would be a winning product or that or how to do it, it was a little bit more of an observation that some sort of pasture raised or grass fed butters were showing up in shopping carts, where our eggs showed up that many people including my family fried up their eggs in that kind of special butter, and an observation that a lot of it was coming from overseas, and that there was a maybe an unmet need for an American produced special pasture raised butter, and a little bit of that of that learning cheap and failing fast, we thought we would try it and see if it resonated with consumers. And if it did great, and if it didn’t, then we would have learned something. And luckily, it worked.

That’s so cool. You mentioned earlier the conscious capitalism. I’m curious what what does conscious capitalism means Vital Farms.

So it’s funny, this has been a journey for me, I’ll be the first to admit, I remember I went I went to business school in the late 90s. And I remember one day in class having the debate about the role of management in the role of the corporation. And I remember there’s very much a Milton Friedman camp that said, management and companies are about profit maximization and shareholder value maximization, and anything other than that amounts to charity. And that, who better to decide what charities to donate profits to then shareholders. So you your responsibility is give them the fruits of your labor, and they can decide what to do with that. The other side was, hey, there’s this multi stakeholder approach to capitalism, this notion that for what you do to be sustainable for the long haul, it’s got to be sustainable for everybody, your employees, the communities, your customers, your suppliers, the environment. And if it’s not, then you’re not really maximizing long term value creation. And I remember at the time being very much in the first camp, and I think, I don’t know if it was a coincidence or not, but it kind of divided up into the Americans versus the, the international students. The Americans were rooted in that Milton Friedman approach. When I got to Vital Farms, a couple of things stood out to me in this regard. One is every company I’ve ever been a part of, has had its mission, vision and values written out, posted on the wall somewhere. But very few of those companies had a lot of people in those organizations who knew what the poster said. It wasn’t operationalized it wasn’t popularized, socialized. It was something that an exercise somebody had gone through, but it somehow it didn’t come to life in the way that I think it can. And what I found when I got to Vital Farms was that our mission, vision and values which are totally rooted in that concept of conscious capitalism, which we’ll talk more about, were alive. In a day to day conversation, they were a framework through which we made decisions, they were a truenorth, that helped align intent. There, they were even a way to communicate what we’re trying to do to people that might join the company. And I’d never seen it. so central to the way a place operate. And that was really eye opening for me and inspirational for me. But when I saw it come to life, in the way we operated, I started to understand that maybe my view of the role of a corporation needed to evolve. I used to think that if a company did something other than maximize profits, as I said, it sort of amounted to charity, and that it was suboptimal. I think inherent in that mindset, is the notion of a fixed pie, that there’s only so much profit to go around. And if you’re not giving it all the shareholders, you must be giving it to somebody else, what I started to see was the potential when you treated your suppliers, your employees, your customers, as co creators, that you could actually grow the pie in some way. And so there was actually more to go around, he actually created more value. And, for me, that’s been the eye opening kind of experience, the thing that led to my mindset shift was that actually, I think you get to better outcomes, when you’re the trusted partner to your farmers, you get to better outcomes when you pay your bills on time you get to better outcomes when you’re transparent with your employees. And and that’s really, I think, the promise of this more enlightened approach to capitalism. I

think that’s awesome. Okay, can you give us some examples of how you all practice conscious capitalism?

Yeah, I’ll give you a couple. So and what’s interesting is because it can be a little bit squishy when you’re trying to explain it, especially to skeptics. And the way I’ve started to think about it is is kind of a flywheel effect that the way when we treat all your stakeholders, as co creators, their contributions start to build on each other. So one example would be, you know, we work with a network of over 200, small family farmers, and they are mission critical, like this company would not exist, our company as it runs today would not exist without those farmers. And it’s not just about getting product, it’s not just about thinking of them as suppliers, and hey, we go to market and we write a contract, and we drive the price down. We have sole source, long term relationships with those farmers. So we write contracts, say we’re going to buy everything you produce, as long as you produce it a certain way. And we have a vested interest in those farmers being financially successful. If they’re financially successful one, then they keep partnering with us, and we have reliable supply, right? If they’re financially successful, we believe they’re more likely to feel a sense of ownership over the standards that we espouse. So we want them to feel connected to and supportive of the mission not seeing it simply as a cost of doing business. And so we put a lot of our own people and resources against training those farmers against supporting them, bringing them resources to help them be successful. And then there’s an interesting thing that happens, we hire a lot of people to go visit those farms. Because we treat the farmers, I think, really well, and frankly, we’re far from perfect, but the bar, unfortunately, is pretty low. And so relative to our competition, I think we have a pretty good relationship with our farmers, because those farmers are generally pretty satisfied with that relationship. When someone from vital farm shows up on a farm, it tends not to be a contentious relationship. Well, if the person we’ve hired to go to a farm has a positive experience visiting the farms. Well, now I’ve got an ability to attract the best people in that job in the industry, because they have a better experience working at vital farms. And so there’s this positive effect of my relatively satisfied farmers, everybody has a bad day. But in general, I think you know, our we have no voluntary attrition. So that’s a pretty good indicator that they’re satisfied with the relationship, self reinforce to reasonably satisfied employees. And I think those two things create a flywheel of great outcomes on our farms. One other example would be the way that we work with our retail partners, and develop long term relationships with them as opposed to more transactional ones. We have our own in house sales team, and none of them has an incentive to go sell a certain volume of product this quarter or this month. They all have the same sort of long term incentives that any of us do, and it’s And it’s designed not to create weirdness in incentives or behaviors. One of the things that long term approach allows us to do is work with our retail partners when we think about new product innovation. So we don’t show up to a retailer and say, we’ve got this new thing, do you want to buy it? We show up and say, we’re thinking about some new products in these categories. Could we talk to you about what you think might work. And so we just would get to a higher likelihood of success because our retail partners are working with us to come up with those solutions. So those would be two examples that come to mind. For me,

Ghose are great. And thanks for sharing those. I know a part of that too, is your products are all certified humane. And I know that those humane centers are set by a scientific committee of internationally renowned animal scientists, veterinarians, researchers, can you talk a bit about the process of certifying humane?

Absolutely. So we first I think it’s important to say there are many. There’s a lot of confusion, unfortunately, especially in the US food system. And there are many standards and labels, some of which have a certifying body behind them, some of which don’t, frankly, we found very early even before I got to Vital farms that that certified humane and its predecessor human, the HHFAC, see the humane farm animal commission, or I’m not sure what the c is. They’re the most credible, in our opinion of the third party certifiers. I think they their intentions are good, I think their execution is good. And I think their standards are really focused on meaningful and measurable improvements in animal welfare on the farms that they audit. And so we partnered with them from the early days, and in fact, worked with them to develop a pasture a standard before there was one in the United States. And what I found really interesting, and frankly, reassuring to me as a consumer, is that yes, they audit our farms. And they’ll go out to farms, and they’ll they have a very extensive checklist of things. And inevitably, there are corrective actions that a farmer might need to take and some learnings for us and the farmer. But they also audit the system. So for example, one of the things that might come up, if you are producing product to a certain standard is, you know, how do you verify that all of the product you’re selling meets that standard? So one of the things that certified humane does is what’s called a system or a system balance, I think it’s called, where they actually say, All right, we’ve audited these farms, we know how much product they produce, now show us how much product you sold. Because if you’re selling more product than we’re auditing, maybe some of your product isn’t meeting our high standards. And so I just love that they they’re seeing it from all the angles, because unfortunately, there’s a lot of incentive out there to cut corners or to, you know, take product that doesn’t meet a certain standard and pretend it does, because you can get a higher price for it. And that’s a that’s a big challenge for consumers and retailers alike. So I think, you know, there’s no, there are very few opportunities to have absolute certainty that you’re getting what you’re paying for. But I think seeing the seal of approval from a group like certified humane is a step in the right direction.

That’s awesome. And how often do they do those checks?

Um, you know, I’m not sure what the latest is, I think it’s somewhere between every year and every 18 months. It and I’m honestly I’m not close enough to the real specifics of how often in which farms and how that works, but, but I certainly in my years at Vital Farms have been with them when they’ve audited a packing plant. I’ve been with them when they’ve been at our headquarters looking through accounting invoices. I mean, it’s it’s a very comprehensive approach that starts on the farm but certainly doesn’tend that is so cool. That is awesome.

So what does pasture raised life look like for animals? What does that mean to our our furry and fluffy friends feathery friends?

First and foremost, it starts with an understanding of the needs of the animal and that starts with animals that can exhibit their natural behaviors and the natural behavior starts with a natural environment. So, it’s interesting in the early days of pasture raising, we use that word pasture quite literally. And there was almost a sense of pasture looking a lot like a golf course we needed a lot. Over time, what we’ve learned is that look, laying hens are descended from Asian jungle fowl. They actually love tree cover. They love a very, varied landscape. They love rocky outcroppings, and they love tiles of you know, sticks and brush and things to peck around and things that harbor kind of the bugs that they like to pick out as well as the varied vegetation that they like to peck up and so on our farms, it can really vary from farm to farm. But there’s definitely a preference and an emphasis on tree cover. Because that lets the birds feel safer to range further from the barn where they sleep at night and stay out longer, because they feel safer when they go outside. And typically, they go outside after they lay eggs in the morning. So within a few hours of sunrise, and they come in pretty close to dusk. And during that daytime, those daytime hours, it’s free choice. There’s lots of doors and potholes and different ways for them to get out and we love them going outside. I think one of the concerns or critiques I’ve heard some people raise around brands that espouse outdoor access as well, it’s just access, but do the animals really go outside, we actually work really hard to help foster them going outside because we think it actually makes their lives better off, but it can actually make the operation more profitable. For the farmer birds that go outside. They’re they’re eating a more varied diet, the the eggs can be affected in positive ways in terms of how they look or how they taste. And and so one of the things we’re doing is actually, we’ve created a learning and development farm. So that we can do a better job of of putting all of what we think are the best practices in place, measuring the results, and then go out and maybe even prove, hey, the more often and the longer parts of the day your birds go outside, the more money you make. Because we are farmers know that’s what we want them to do. And I think they do a pretty good job of fostering it. But you can imagine how much creativity we release we unleash on their part about fostering even more ranging behavior if they know it could improve their financial health.

That’s amazing. I have to say I did have Vital Farm eggs for breakfast. And I did notice how much more vibrant the color was like it was really it was really incredible.

I’m glad you enjoyed it. Yeah, it

was good for sure. So can you explain to the audience a little bit about what the pasture belt is? That was a new term to me that I’d never heard of before?

Russell Diez-Canseco 22:12
Yeah, for sure. So this was a choice that we made as a company many years ago about what we could be and what we couldn’t be. What do I mean by that? So we believe that pasture raising is not just about as I was describing earlier, well, we opened some doors on a barn and we gave the birds the choice to go outside. And we don’t really care if they go outside or not. And I think that may, in fact, be the case, in some types of outdoor access, food production, that aren’t outcome spaced, hey, we open the doors, we don’t know where the birds went outside or not. We genuinely want outdoor access and outdoor take rate, we want the bird to be out. We want the bird to be out long, but we think it’s good for them. It’s good for the food. Well, when we when we looked around the country, and this was I mean, look, there are a lot of consumers in this country that want local for lots of good reasons. Many of our consumers, you’re in Maine, right. And many of our consumers are are in on the coasts. And many of our consumers are in parts of the country that we don’t believe, lend themselves to year round, meaningful outdoor based lives for farm animals, especially chickens. In Maine, the summers are gorgeous. The winters, not so much, right?

Benn Marine 23:38
This is true.

Russell Diez-Canseco 23:39
And so I could put a farm in Maine. And I could say this is pasture raised. And it might be and I might even be able to get certified that way. But I don’t know that it would be consistent with what we believe pasture raised looks like and what we’re telling consumers, it should look like because in those winter months, maybe there’s snow on the ground, maybe there’s ice, maybe it’s inclement weather. And maybe even if we open the doors, the birds wouldn’t go outside because frankly, it’s cold, right?

Benn Marine 24:10
And other humans don’t want to go outside them.

Russell Diez-Canseco 24:13
And conversely, we’d love to be local in California. But in the summers, it’s really dry there often. And the result is that there’s not a lot of vegetation. And so is it meaningful outdoor access if the birds go out, but it’s there’s not a lot of grass or tree cover because it’s so dry. That didn’t feel right to us. And so we said, You know what, as much as consumers in LA, and in Augusta and in Manhattan and in San Francisco want local, to be local to them means compromising on what we think we’re doing and what we’re telling them we’re doing. And so we made a choice years and years ago, that we could only do this in in places where it was wet enough. To create meaningful vegetative cover, and warm enough to have year round outdoor access that was meaningful, and and we basically looked at weather patterns and climate studies and and we look at it by zip code. And they’re, they’re basically I think it’s 10 states that we believe full in the pasture belt, we’re in eight of them today that are basically in the southeast, it’s it’s the northwest corner of it is basically Southwestern Missouri, and the Southeastern corner of it is, is somewhere in Georgia. And and when new farmers call us to see if we might work with them, the first thing we do is look up the weather map.

Benn Marine 25:39
That makes sense, that makes a lot of sense. What are kind of the flip side of this coin? What are some telltale signs of factory farms for consumers that are thinking, you know, reexamining their own purchasing?

Russell Diez-Canseco 25:52
Yeah, it’s really interesting, it’s very hard to tell at the grocery shelf, unfortunately, you know, for us, philosophically, if I think about what factory farming means, to Vital Farms, it means a focus on cost reduction at the expense of your stakeholders. And it shows itself in in myriad ways, whether it’s the quality of the jobs that are created by that system, the quality of the environmental outcomes, and the risks that are created, you read the headlines about, you know, animal operation waste entering water streams and killing fish, or, you know, you have a big storm on the East Coast, and they’re floods and they’re in the big one of the biggest impacts is the, the impact of the, of the manure, you know, pawns that get flooded out, I think about the people working in the packing centers and, and whether they were well protected in this very challenging last year, we’ve had. So lots of ways in which that focus on cost reduction at the expense of everybody else shows up whether it’s in the environment, whether it’s in people’s health and welfare, whether it’s in, you know, rural economies, whether it’s an animal welfare, and that’s essentially what we are trying to improve. We’re trying to improve the lives of people, animals and planet through food. And the backdrop against that is the predominant way in which foods produced in this country, which is, as you know, as you described, a factory farming,

Benn Marine 27:29
How I’m curious how has farming, you know, if at all changed in recent decades?

Russell Diez-Canseco 27:35
You know, I we, I certainly spend most of my time focused on what we’re doing and a little less time focused on what others are doing. And I love I’m so encouraged by more and more brands coming to market to disrupt some aspect of factory farming. Some of them are plant based alternatives to animal proteins, because they feel like the evils of factory farmed animal food production, that’s the that’s where the action is, and the fastest way or the surest way to disrupt that is to take the animal out of equation. Others like us see that there are even environmental benefits to keeping the animal in the equation, but just doing it in a very different way. So on the one hand, I’m so encouraged by the proliferation of companies that are kind of working on this problem in some way, we all I think, have the same good intentions, and we’re just approaching it in different ways. But it’s against a backdrop of continued concentration of food production into fewer and fewer producers on bigger and bigger operations. We have a few kind of statistics that we were able to kind of pull up around this topic. And I think we look specifically at dairy farms because it’s a really it offers a really stark view of what’s happening in food. In 1987, half of all milk cows in the United States were in herds of 80 or more, and half were in herds of 80 or fewer. Since that time, the midpoint is risen consistently. By 2017. The midpoint was 1300 cows, the pace of consolidation and dairy far exceeds the place of consolidation in most us agriculture. In 2017, there were a little over 54,000 farms with milk cows and nearly 2000 Farms had herds of at least 1000 milk cows and and so there’s just this very consistent trend over time to fewer and fewer operations with more and more and more intense amounts of livestock and amounts of animals being run again, with this incentive to lower costs by scaling up and up and up. We’ve seen consolidation in in laying eggs as well, the biggest egg company in the world is the biggest is also in the United States. And in you know, when we read about their plans, their plan is to continue growing by acquisition and consolidating the industry. So I think That’s still the underlying trend.

Benn Marine 30:01
Wow. I’m curious to where you are getting into some dairy products like the the butter, and is it ghee? Am I saying it right?

Russell Diez-Canseco 30:11
Yeah, we have ghee

Benn Marine 30:12
What is? Is that the same premise as like with the with the with the hands? Is it also pasture basic? Isn’t the same kind of model?

Russell Diez-Canseco 30:20
Yeah, I appreciate the question. We have sort of a pasture raised standard for those dairy cows as well. And we’ve been lucky enough to be able to partner with dairy farmers that do operate in a different way, not unlike the way that we got our start in eggs. Because we’re still earlier in our journey in developing our dairy business, we do rely more on other companies to help us especially with the production of the product. So we don’t have our own butter churn, for example, we work with another company who does that really well. But we do have direct relationships with dairy farmers, we have a dairy standard that we work with them on, we visit their farms. And thankfully, it is not uncommon to find dairy farmers producing milk and raising their cows in a in a pretty inspiring way. You just got to go find them.

Benn Marine 31:20
That’s awesome. That’s great. How does a better life affect animals, eggs, or milk? Is there? Have you been able to do any studies on that? Or is there any other information about that.

Russell Diez-Canseco 31:32
You know, there are studies third party studies that show nutritional benefits, when animals are able to have access to outdoors and have a more varied diet, you know, so for example, some egg cartons will make a claim that says vegetarian fat. And if that claim is true, it means the bird wasn’t allowed to go outside. Because as soon as it goes outside, it’s going to find a bug. And now it’s not vegetarian feed. We don’t make that claim. Because our birds go outside every day, some some of them will choose to go outside eat some bugs, and some that day we’ll choose not to the challenge for us is it’s hard for us to make a consistent nutritional claim, because our birds have a lot of free choice in the matter. And so, you know, the only way for me to know for sure what the nutritional composition of our eggs are, would be to control all the inputs, which is, put them in cages and feed them a very specific feed formula. So third party studies universities have shown nutritional benefits from free ranging from outdoor access of animals, for example. But those aren’t things that we’re able to claim, frankly, because there’s so much variety in our animals behaviors, and and therefore in the foods they produce.

Benn Marine 32:42
That actually brings up a question for me, just as a consumer thinking about, you know, when you go to the store to purchase eggs, there’s like cage free, free range, you know, your case pasture, right? Like, what do all are there different standards? Or is it marketing jargon or not? Like, what does it all mean?

The one thing that is crystal clear to me is that it’s really unclear to most consumers. And, you know, we eat, you know, there is a sense that maybe there is some misleading terminology, but I would say before you even have to go there. Even if everyone were doing exactly what they said they were doing. There’s just a lot of confusing claims out there. Right. Some of them are regulated, and some are not. So for example, if an egg carton says cage free, it means those birds shouldn’t have ever been in a cage. I mean, that’s pretty straightforward, right? Some of them don’t have a government regulatory stance, but maybe have a third party perspective. So the term pasture raised does not have meaning. in federal law. There’s no government regulation of the term pasture raised. And so we chose early on to partner with a third party like Certified Humane, because, frankly, we needed to help consumers have trust and confidence that they were going to pay so much more for something that we were saying was special that they were getting what they were promised, were where we have found some interesting frustration on the part of consumers is when they’re just confused about what a term means. So a lot of there’s been a lot of press around the term cage free. Over the last several years, some states have even passed laws requiring that birds not be raised in cages, and many restaurant chains, grocery store chains have made commitments to no longer buy and sell eggs from birds that were raised in cages by a certain date. They made those commitments. When we asked consumers A few years ago, what that meant, what cage free meant to them, many of them in fact, more than half of them in our research, described birds that got to go outside. They thought cage free meant Primarily outdoor bass production. And many of the people who had chosen to buy cage free eggs bought them because that’s what they had in mind, not because they were misled, not because anybody lied, but simply because it’s a confusing term. And so a lot of our marketing effort is really an education effort of saying, like, what this what we do is not cheap, may not be for everyone, but let’s at least help you understand what it is what it isn’t. So you can make an informed choice.

So just so I’m understanding, so it sounds like cage free doesn’t necessarily mean outdoor access. So they might be like locked in a barn or something, but they’re not in a cage. Is that – am I understanding that right?

Yeah, that’s right. And so if you think about a consumer who may want, who may want to buy food produced in a way other than factory farming, however they’ve defined it, you might say, gosh, does getting rid of the cages really get me where I want to go? It still could be really concentrated. I mean, there are there are companies in this country building egg farms that have 3 million chickens on one farn – 3 million. Right? Our whole company doesn’t even have 3 million chickens. And we’re in eight states with over 200 Farms, right? So did we really change the nature of a factory farm simply because we took the animals out of the cage? And some people would argue no.

Oh, that makes sense. And that’s also a good clarifying point. Speaking of pasture raise, you give customers the opportunity to trace the origins of their eggs while offering a 360 degree view of the actual farm. How do you all do that?

Russell Diez-Canseco 36:38
Yeah, this, this was a real passion project for a small team within vital farms. And it took us several years, this was a we were on this journey for about four years before we were able to bring it to life. So it starts with frankly, having direct relationships with farms instead of buying eggs on the wholesale market, right. So and that’s our business model. I don’t know, I don’t know of a lot of other companies, at least the United States that only buy eggs from the farms that they have direct relationships with, and then manage the supply chain from that farm all the way into the egg carton. And so we one have, we’re able to control that egg throughout the the supply chain, and we know exactly where it came from and when it was laid. And the other thing it required was the ability to translate that information that came off the form onto the carton. So the carton of eggs that you get on our cartons, it says the name of the farm that it came from, and the has a use by date, or sell by date. Well, in order to get the name of the farm accurately on that carton, when the eggs are put into the carton, somebody the computer a computer has to know what eggs are going into that carton. And so we when we built our world class egg packing center, in 2017, we specifically chose equipment that was produced in Europe actually, that had the ability to track each individual egg as it made its way through the washing process, the sorting process, the quality control process, and then ended up in a carton so that we could say with certainty those eggs came from this farm. And now they’re going to this pack. And the printer prints the name of the farm on the on the end of the pack. The last part is the fun part, which is going out to all those farms and taking the video. And again, because we’ve invested in having those direct relationships, and we’ve got our own people visiting those farms so often, that that was frankly, just the fun part. It wasn’t such a burden.

Benn Marine 38:40
That’s so cool. That’s so cool. So what should people look for when buying meat and dairy to ensure animal welfare is a priority?

Russell Diez-Canseco 38:48
That’s a great and it’s a big question. You know, the first is, I do think that if you don’t have the privilege to know your farmer, which is I think the ideal, and and, you know, we we eat, you know, grass fed and pasture raised animal proteins, and we buy them from a farmer that, you know, my wife grew up with. I mean, we’ve known him our whole lives. And so there’s trust there, right? And that’s the thing that you you try to create, even when you can’t know you’re from how do I get that same level of trust. One way is, is to look for foods produced with that third party certification, you know, and I’m a we’re big supporters of certified humane as the most credible third party certifier. So that’s a that’s a great starting point. Another is to ask, but certified humane is they just certified to a standard and you can look that standard up on on the web, to help understand whether it’s what you want, once you know what you’re looking for. And once you can trust that you’re getting it. Now you want to start to ask tough questions of your suppliers. If you’ve got specific issues you’re trying to address around things like Hey, are you farms in Maine and do birds go outside in the winter? It may be okay with certified humane, but you might want to ask the farmer more directly. And you can do that. And you know, brands that are trying to change the food system, in my estimation, have a lot of incentive to be very transparent about what they do as we try to be. And so if you can’t get your questions answered, that would be a good signal that maybe you haven’t found the right partner yet.

Benn Marine 40:24
That makes sense. Speaking of third party certification, you also are certified B Corp.

Russell Diez-Canseco 40:29
We are.

Benn Marine 40:29
I’m curious, can you speak a little bit about that journey? And what led you to decide to become a B Corp?

Russell Diez-Canseco 40:34
Yeah, it’s really interesting. It’s because B Corp is having a moment. And I love it, because it’s, I think B Corp is an organization that essentially created a certification process for businesses that are trying to do more than just maximize profits. And, you know, for most of our history, we’ve been a small, fast growing company, we’ve had our heads down, we’re just trying to get work done and generally try to do the right thing more than we do the wrong thing. And we had the privilege of having some really inspiring investors in our company through the years before we had our IPO last year. And they are what are called impact investors. These are investors, private equity funds, or venture capital funds that have, as part of their charter, a goal of having a positive impact on the world in some way, some measurable way, and making investments in companies that they think can do that. And so back in 2014 – 2015, a few of these funds, they had a reporting process where they have to report back to their limited partners on this impact. So they came to us and they said, hey, we need you to complete a body of survey forms and documentation called the GIRIS ratio, GIRIS. And and that will help us have sort of a third party verification of the good things you’re doing. And we did that, and we got a score back. And the score, that methodology is what’s used by B Corp to certify companies. And they said, hey, you qualify to be a B Corp, would you like to be one, and we didn’t even know what it was. And it turns out that it was a way for us to show the world again, with a third party behind it, that we were doing some some things that we could be proud of, frankly, that we’re helping make the world a better place. So it was nothing more complicated than he looked, we were able to get credit for some good things we were doing at a time. And in an organization that doesn’t like to toot its own horn, frankly, around some of those things. Over time, what we’ve learned is that people want more, they want to know more, they want more transparency, they want to know what our goals are, and how we’re achieving those goals on everything from the environment to diversity, equity inclusion. And so we are actually building a team out to do that very body of work, because it’s not enough to get credit for your past impact, you got to keep being the change you want to make in the world. And that’s what we’re doing.

Benn Marine 43:07
That’s amazing. That’s amazing. Any other parting thoughts or advice that you want to leave with listeners?

You know, something I’ve worked on a lot, there’s a poster behind me, I don’t know if your viewers can see it, it says, done is better than perfect. I’m a recovering perfectionist. And one of the things that I’ve really come to believe is that you shouldn’t let perfect be the enemy of better. That in our in our in our way. And the way that might translate for somebody who’s watching or listening today is if you have the sense that that maybe the way foods produced or some other, you know, service or product that you buy is produced could have an impact on the world. And that maybe you’d like to vote with your dollars for something that’s done a little bit differently. Don’t let the need for it to be perfect stop you from taking that first step. So for example, you know, I’m a little bit biased, but I think we have the best eggs in the world. But they’re also some of the most expensive eggs in the world. And if you think that animal welfare is important, or you think that something different than factory farming is important, but maybe are very nice, but expensive eggs aren’t in your budget, do take one step, get get to cage free as a starting point. Get to free range as a starting point. You can have an impact on any budget, you can have an impact on any amount of time. take that first step, maybe it’s not your whole shopping list, but maybe it’s one or two items that you’re going to kind of vote with your dollars on and, and let that be something you can be proud of and feel good about.

Time to level up through action and impact. This segment is meant to provide you with ways you can get involved in a local and global level. With one challenge mentioned in the episode, you can do all of what follows or choose your own adventure. If it feels overwhelming. I’m encouraging you to listen for one action in the following listed actions to give a try. If we all make even the smallest of changes, you would be amazed at how it can ripple out. Sometimes the best impact to have is to be informed and know what your options are, so you can make the most informed choice when you choose to vote with your dollars. We found a really great resource from the Humane Society that explains what all those labels on egg cartons mean when it comes to the lives of chickens. We link to it in the show notes at responsiblydifferent.com/podcast/vital farms, be sure to check it out. preview of some coming attractions here near go collective. We’re working on creating more resources and tools for folks like yourself looking to create change both through voting with your dollars. And as business owners, we have a mission of transforming our economy to one or people and planet are equally or more important than profit. If you want to stay up to date with what we’ve got cooking, be sure to head over to responsibly different comm and sign up for the upcoming monthly newsletter by visiting the support page. Next time on Responsibly Different you’ll get to hear from a leader in social capitalism. His work promoting fair trade won him a Nobel Prize of business. His work as an activist and entrepreneur has changed the lives of 1000s. That’s right, we sat down with Dean Cycon, the founder of Dean’s Beans.

Dean Cycon 46:59
Look at your supply chain. If you’re buying anything and using anything, including your shipping, are you using UPS or FedEx or the post office? You know there’s issues, there’s issues you got to look at with all those things. FedEx doesn’t allow unions. FedEx hires, contracts with men to buy the truck, and the truck owner hires the workers. The truck owner has no responsibility to pay the worker well, or, I mean, this horror stories I hear from the FedEx Delivery men on the ground. But you don’t know that because they don’t really work for FedEx, they work for the guy who owns the truck. The truck owner has a contract with FedEx. So FedEx, those aren’t their employees, they don’t pay benefits, they don’t have nothing to do with them. UPS is a union shop, it’s totally the opposite. The Post Office, we know about the Post Office, if we want to keep the Post Office alive, we got to support it, you know, and get rid of the people who were in there ripping it off and closing it down. So even even something as simple as mailing your business packages. There are values choices that come from whatever your act is. So I think if you look at everything you do slowly over time, and say, Hmm, what are the issues here that people are talking about? You can find everything online and and how are we dealing with that? Are we comfortable with the way we do or don’t deal with this issue? Or maybe it’s an issue we should start thinking about

Benn Marine 48:38
Till next time. Be Responsibly Different. This is a production of Dirigo Collective Claire Closson is our Project Manager, Jeremy Glass is our Writer. The music is an original score by our very own Kevin Oates and I Ben marine am your host and editor. To learn more about Dirigo Collective visit dirigocollective.com

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