180 Federico Romeri on disrupting the €7,5B Italian CAFO factory farmed beef market

A conversation with Federico Romeri, founder of Pascol, to dive deep into the beef market in Italy and how to move it from CAFO factory farming to a regenerative one.
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Everyone knows the animal protein market has to be disrupted massively and maybe, most of all, the beef market. Take for instance Italy where 85% of beef comes from factory farms, which means inside with a lot of inputs and horrible animal welfare practices plus, of course, the negative health outcomes for those who consume that meat. Plus 50% of the total beef consumption is imported. Saying that this should change is easy, but how do you actually do that? How do you build a supply chain or web from the ground up b2c and b2b and how do you work with the supermarket chains to get your products in front of more people?

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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Transcript

SPEAKER_01 0:00

Everyone knows the animal protein market has to be disrupted massively, and maybe most of all the beef market. Take for instance Italy, where 85% of beef comes from factory farmed, which means inside with a lot of inputs and horrible animal welfare practices, plus of course the negative health outcomes for who consumes that meat. Plus 50% of the total beef consumption is actually imported, many cases from questionable markets. Saying this should change is easy, but how do you actually do that? How do you build a supply chain or web? From the ground up, B2C versus B2B, and how do you work with the large supermarket chains to get your products in front of more people? This is the Investing in Regenerative Agriculture and Food podcast, Investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, wear and consume. And it's that we as investors, big and small, and consumers start paying much more attention to the dirt slash soil underneath our feet. To make it easy for fans to support our work, we launched our membership community and so many of you have joined us as a member. Thank you. If our work created value for you and if you have the means, and only if you have the means, consider joining us. Find out more on gumroad.com slash investing in RegenAg. That is gumroad.com slash investing in RegenAg. Or find the link below. Welcome to another episode. Today we go deep into the beef market in Italy and how to move it from CAFO factory farmed to outside on the Alpine meadows as you imagine in these beautiful commercials. I have the very great pleasure to have the founder of PASCOL today with me. Welcome Federico.

SPEAKER_00 2:03

Hi Koen, thank you for inviting me.

How come you are disrupting the Italian beef market?

SPEAKER_01 2:05

And to ask the personal question we always like to ask at the beginning, how did you end up? I mean, I don't think you were raised as a shepherd and saw the decline of the shepherds going with their cows into the alpine meadows and moving up and down. I think you were raised in a medium-sized city. So how did your interest in the meat market, the beef market, factory farming, and at the end, because we're going to talk about that for sure, soil, how did that start? Because you're a young. The viewers cannot see that, but we put a picture. How did you roll into disrupting the beef market in Italy?

SPEAKER_00 2:41

I studied economics, so another kind of field, but with a lot of connection with the food industry, because everything is about money and economics. I think that's the starting point. To be honest, I made this choice for a selfish purpose, probably. because I don't have the presumption to change the world. And I simply try to make the best possible food choice and to give as many people as possible the freedom to make the same choice. And so, for a selfish purpose, as I said, I needed to eat good food in general, not just meat, but also vegetables and so on. And I think that the food chains in general nowadays have a very bad impact on both the social and environmental dimension. And in the specific, the meat industry has a very, very bad impact. And we are trying to build a different supply chain about beef in Italy.

SPEAKER_01 3:58

That's it. It's a nice answer, but I want to unpack it a bit more as you, I mean, you live in the north of Italy, relatively close to the Alps you probably would have had access yourself if you searched a bit to this kind of meat but it's quite a step to go from I don't know with friends buying a cow make sure it's slotted properly make sure it was raised properly and then putting your freezer full and be fine for a year going from that to processing many other cows and supplying it to others I mean it's a nice notion to say I would like others to have that same option but that means dedicating your work life to that basically and probably Probably more in the startup phase. So when did that click came from? Oh, I want to have access to this, but others don't. I see an opportunity here and I want to start a company and not just like an organization to promote this kind of food choices. What made you choose to basically dedicate your work life to this as well?

SPEAKER_00 4:55

To be honest, I love to do startup in general, to do new things that are not already done before. And You know, we focus on meat so far, but it's not my life reason. You know, I try to change this sector now, but probably I'll do something else in the future. You know, the important things for me, it's just giving a good impact to the world and about food or other industries, not that point. So I think, you know, it's a sense of ethics probably that guide my my steps

SPEAKER_01 5:41

and so let's describe pascal as i think in italy it didn't exist something like that you have um i would say similar or let's say colleagues in in other countries and like special meat boxes the ethical butcher in the uk and some other places and and did you look around in italy you thought oh there's nobody is is like supplying ethically sourced small producers obviously proper grazing management and we're going to talk about that to the supplier. You said, okay, let's set up PASCO. If you have to describe now, because obviously you're fundraising, you're presenting it a lot, how do you describe PASCO in a few or a few more sentences?

SPEAKER_00 6:19

We started from an objective problem. Around the 85% of meat we consume in Italy comes from intensive kind of breeding. And around the 50% of the entire cake comes from abroad. So the supply chain is unsustainable yeah it's broken both for the methodologies and also for the logistics so just to

SPEAKER_01 6:44

recap 85% which is I think in Europe more or less the same even a bit higher I think in many places comes from factory farmed cows that never seen the light of day that are fed on imported feed in many cases and we all know the destruction that comes from that plus the animal welfare is horrendous I mean you shouldn't feed soy to a ruminant ever And then on top of that, you're mentioning 50% of the total market actually is imported, which comes from many, many different places. Some places better, many places worse than what you find close to you. So there's a broken market there waiting to be disrupted. And how do you approach that?

UNKNOWN 7:21

Yeah.

SPEAKER_00 7:22

So we select small farms who breed cows, cattle extensively. So basically they bring cows to the pasture and they ensure high level of animal welfare and basically life accordingly to biological needs. Following first principles,

SPEAKER_02 7:43

basically.

SPEAKER_00 7:45

Yeah, it's pretty easy. You just have to observe nature and just copy and paste. Everything is written there. You don't have to invent anything new. And what we are doing, it's cool about traceability also, because on any piece of meat, you can say which is exactly where the meat comes from. So we have an innovative traceability system. And so we have a livestock team who select breeders and support them also with free consultancy and so on and we are also developing you know side project for instance we are talking with no offense for friends of the podcast i will

SPEAKER_01 8:38

i will link them below virtual fencing if you want to know more very innovative and of course for alpine meadows potentially disrupting and interesting you can do you can do interesting things yeah

SPEAKER_00 8:49

yeah so first of all we select breeders so we're already integrated with the territory, with the environment, and we try to improve further their farm. Then we buy cows. The slaughter is very close to the farm. We have selected breeders in six regions in Italy, in the northern and central part of the country. And we have many slaughterhouses in any region in order to make that process So it's very, very short. Is

SPEAKER_01 9:25

that an issue? Because we had a full interview with Dan Miller, which I will link below as well, on slaughter facilities in the US where cows have to travel seven, eight, 10 hours to get to a slaughter facility. And in many cases, it's a huge industrial one and they don't do the cuts you want or they don't have space. In Italy, is that not an issue? Can you find slaughterhouses that work well, of course, but that are nearby these farms? Or is that becoming challenging also in Italy?

SPEAKER_00 9:51

No, we have them because we have also a regulation approved by the ministry and also these slaughterhouses enter into this regulation. But they're still there. The slaughterhouses are

SPEAKER_01 10:03

still there. That infrastructure luckily didn't disappear yet. Okay, that's fundamental. So you have them slaughtered nearby and then what happens?

SPEAKER_00 10:46

And then we transport the meat to a central plant basically in Brescia. in Lombardy. And then we process the meat in different cuts and we distribute it. We started in 2019 on B2C channels, so the e-commerce basically. And then we approach also the B2B channels because our value proposition, it's not about the distribution of the product, but about the product itself. So we don't care a lot where the product goes. The only important thing is that with the product, it's also the message, the vision, because, you know, we want to make customer, to give customer the freedom to make a choice different in order to, you know, with their money, adding value to the system. Because we think that, you know, the product biggest way in order to change things it's consciousness in consumption

SPEAKER_01 12:01

yeah so you you start there's so much to unpack there you start i'm assuming uh you obviously pay more to to the the farmers then they would and i would love to explore more also why they're not doing this themselves like what's holding them back and then there's a very interesting piece we're gonna get to which is b2c so direct to consumers online which obviously everybody you can keep all the margins etc i think many people underestimate how expensive it is to get things uh in a fresh way to people's house and then you went to you started to talking to the big supermarkets actually talking to you're actually selling through them and you said yeah we don't really care if they do the distribution as long as the message gets their meaning it has to be in a pascal way presented it cannot go into some kind of commodity market and then be be white labeled is that an issue actually um let's let's start with the question of trying i'm imagining you're trying to sell the whole animal like the fact that you're doing obviously b2c you can steer that like you can have the boxes you can have pieces together then moving to b2b like is that an issue like do you get left over with certain pieces more than other or is the deal with a big supermarket look you have to take everything and and that's the deal because yeah we're slaughtering animals not pieces of animal

SPEAKER_00 13:11

yeah this is a very different difficult thing you know because we as you said we buy just entire animals and so you know the i think the secret in order to sell everything in in a good way is having a lot of clients in different sectors. For instance, butchers, of course, large distribution stores, and also, for instance, burgers stores. So you have to have... a lot of clients in order to vehiculate any cats without problem and of course at the beginning of this uh it was this was a big problem uh but now we already have uh you know a good amount of client in order to sell everything uh in a good way

SPEAKER_01 14:03

and and for the producers you work with what

SPEAKER_00 14:07

what

SPEAKER_01 14:08

holds them back to do this themselves like why if they already work with a local butcher to slaughter basically then what keeps them from selling it themselves compared to selling the animal to you is that much easier is that like the marketing piece obviously distribution like what makes them wanting to work with you apart from that you probably pay hopefully early and good prices

SPEAKER_00 14:34

yeah I mean there are no large enough fields in order to scale these kind of farms. So if you want to do extensive kind of breeding in Italy, you have to keep your farm small or medium at the maximum. You cannot, you know... What is medium? How many

SPEAKER_01 14:52

animals are we talking about with medium?

SPEAKER_00 14:54

in average between 100 and 300 animals per cattle. So not a lot. And if you want to scale it, you have to do intensive because there are not enough big spaces in order to put all these animals at the pasture in Italy. Because it becomes a herd,

SPEAKER_01 15:16

basically. Of course. So they are relatively small.

SPEAKER_00 15:20

Yeah. So the local farmers... in this dimension cannot build for instance managerial activities cannot build a sales team cannot organize in a very well system logistics and supply chain they you know the intensive breeding have short term return on investment because the animal life cycle is shortened I mean you have a a ready animal maybe in one year and a half. In this case, maybe you need three years, so the double. And you cannot either do marketing and communication in a good way because you're probably two people, three people, four people at the maximum, and you don't have the know-how and the capabilities in order to vehiculate the value proposition and all the values that your farm has. And so they have very big problems about commercial activities. They sell to private people, as you said before, that they buy the entire cows and put into the refrigerator, or to local butchers. But any time it's like a bargain with the butcher. And so they raise cows, but they... don't be sure to sell the wool production. And what we do is, of course, support the breeder, pay them more compared to the market, and ensure to buy the wool production. So the breeder can think just to breed and to improve the methodologies in breeding, pasture, and so on, animal welfare. And yeah, I think this is the best way in order... any step of the supply chain, focus just on his own.

SPEAKER_01 17:28

His own specialization. Yeah. And so how has been the impact for some of the breeders? Like how, like you're relatively young as a company, three years, you mentioned 2019, like some of the oldest ones you've been working with, like how has that changed? Has that fundamentally changed their business outcome or like have they hired new people or gone back to the land? Like what has been the impact of offering this sales channel, basically, or this secure, well-paid sales channel? Have you seen impact on the land or impact, in this case, with the communities?

Importance of animal impact on pastures in The Alps

SPEAKER_00 18:03

Yes, of course. They're changing. They're growing. For instance, of course, we just select breeders who already are at a very high level. But for instance, they cultivate a lot of field with conventional methodologies and they're changing to organic methodologies, for instance. They're buying more animals. There are many abandoned fields to do pasture, mainly in the Alps, and they are recovering them. But yeah, we started in 2019 in two people, and me and my co-founder were both economics students, and probably we couldn't distinguish a donkey from a a cow at the beginning and so just in the last year we built a strong team about livestock and we are getting results now and next year we are seeing

SPEAKER_01 19:10

more and just the impact of animals on like you mentioned their abandoned pastures in the Alps like what happens if they are abandoned like would it why is the animal impact there or is the animal impact important? And if yes, why?

SPEAKER_00 19:25

Yeah, there is a very big, you know, biodiversity system related to the pasture. So insects, other animals, plants, and so on. And, you know, according to WWF, we are losing around the 20% of semi-natural species because we are stopping doing the practice of pasture without animals. And so I think that the soil can erode, first of all, because there are fields without trees, without anything. So if there are no animals who fertilize the soil and so on, there are systemic damages, basically. And in other cases, simply the forest or the trees can get back and get the pasture

SPEAKER_01 20:25

and what are your plans on that side like on the grazing there's a lot of discussion obviously we had a lot of conversations here in the podcast as well what do you see there as potential to work with these farmers that are already at a relatively high level like what do you see that you can do with them over the next years to improve grazing to start measuring soil organic matter the impact of the animals on the land also biodiversity etc what are your plans on the let's say, the side effect of having animals on the land in a proper way?

SPEAKER_00 20:58

Yeah, we are working with universities also, for instance, the University of Florence. And first of all, we are trying to implement a measurement system into the fields in order to understand exactly how the amount, for instance, about organic matter into the soil or all these things. So we would like to collect data, first of all. And it's pretty obvious that following the nature path, as we said before, is the right choice because you have to copy and paste. But we would like also to measure the data in order to understand specifically where we are going. How are the farmers interested that are

SPEAKER_01 21:53

they like how are they receptive when you you come in of course to to two guys that don't distinguish a donkey from a from a cow and you say ah maybe grazing could be different like how do they take that or what is your strategy there to to take them along let's say in in this journey of of discovering um how to get more biomass more biodiversity more life more healthier cows better grass management etc um but not wanting to be the let's say pushed off the farm as go back to the city and and go do something useful.

SPEAKER_00 22:24

I mean, our breeders follow us because, you know, they trust us because we prove that we are trustable. But we explain them also that from an economic point of view, in the long term, you know, the nature path is the best one. Because, you know, in the short term, you know, with chemical and so on, of course, you can... improve the quantity of product that you make. But in the long term, it's all about fertility of the soil. It's all about biodiversity. And I think that now, and quality, of course. Nowadays, you know, sustainability, it's probably a matter of, it's an optional choice. In 10 years, maybe 15, 20, 30, I don't know, but it will happen. Sustainability, it will be a mandatory choice. So Either diese or you don't eat.

SPEAKER_01 23:29

And what about the quality? Do you do, I mean, obviously you are eating your own, your own pudding. Let's say you're, you're one of the clients, but what do clients say? Customers say, what do you, what do you, have you seen? Are you doing any potential research in the future on, on like say the nutrients compared to, and then we get to the supermarket piece, which is fascinating, but like next to the ones, like imagine the supermarket in the shelf, there is the Pascal aisle. And then next, next to it, is, let's say, the factory farmed ones, etc. How would you describe the difference between the two in taste, in color, in nutrients? How would you describe that to someone that hasn't tasted the difference yet?

SPEAKER_00 24:09

Yeah, the taste is original. I mean, you feel the meat. About properties of the meat, it really depends on the pasture, on the animal, on the zone, on the area. There may factors that can influence this and we of course make averages in order to you know give data in general to our customer that these data are very very higher than the average of the conventional market about protein about many things that are contained to the meat

SPEAKER_01 25:08

vitamins etc and so how has been the response from customers when they taste? I mean, you get a lot of repeat. I mean, you're growing as a company, so I'm imagining, yes, like people discovering like how meat used to taste or how meat could taste, et cetera. What has been response from the market?

SPEAKER_00 25:28

Yeah, they love, of course, the taste of the meat, but I think that our customer mainly buy Pasco because of the value proposition. So they like to spend their money in this way they like to give money to breeders who follow this kind of methodology they like to ensure animals a good life basically and all these things so and also in marketing communication we put a lot of focus in about these topics we don't focus a lot on the product that it's very very good but it's okay we focus mainly on the you know side I think that your choice.

SPEAKER_01 26:13

And so then how did you and why? And let's talk about the details there. Decided to start selling in the big supermarkets, the big, I wouldn't say quote unquote enemies, but the large ones that are selling all the low quality ones as well. How did that happen? Did they reach out to you? Did you reach out to them? Why didn't you stay in? Let's sell directly online. Let's keep that, let's say, relationship completely with us. Why did you decide to go to the large distribution distribution centers to supermarkets, which are massive in Italy, just to understand. There are a few really, really, really big ones.

SPEAKER_00 26:49

Yeah, mainly in this country, the e-commerce market is not scalable at all. If you have one product, mainly because people won't buy meat on one website, fish on another, vegetables on another one, and just wait maybe two or three days for the So you reached sort of a limit of what was possible. I think that the problem is not distribution. I think the problem is production and consumption. So we have to, first of all, I think educate the customers because they give money to producers in order to produce. And I mean, we have a producer and customer that should be educated, of course. And the distribution just follow the education of these groups. I mean, I don't think that the big distribution and large distribution are the root of the problem. I think it's just a consequence.

SPEAKER_01 27:56

And so you started talking to them or they started talking to you and then what does it mean for your margins? Obviously, you keep more of it, but you have more costs if you're selling directly. How does that work in large supermarkets? Because what you don't want is become the discounted article, like the one they get people in with like some of the veggies are always used and some of the meat as well to pull people into the supermarket and then we hope you buy some brand things that have more interesting margins like how do you dance with such a big player that obviously is able to push or not because they are massive compared to such a small player as you

SPEAKER_00 28:32

yeah we hired some people in the you know large distribution sector and you know large distribution a lot our product we are not a commodity we are not just about margin for them but we are also about branding so in our case our margin is very good and you know taking into consideration the deliveries that are very very you know the B2C deliveries that cost a lot in this country the margin is pretty much the same that's a fair margin and And yeah, as I said, the distribution brings Pascal into their store also because the branding, because they love to associate their brand with someone who tries to bring value to the environment, to the small breeders and so on.

SPEAKER_01 29:32

Do you see people then buying it in the supermarket and some of them buying it then directly from you or they stay in the supermarket? Because as you said, it's easier to buy your fish, your veggies and everything in one place and bring it home immediately? Or is there some linkage between the B2C and the B2B?

What would you tell a room of investors in the meat industry

SPEAKER_00 29:49

So we will be in 220 stores by the end of June, but so far we are just in 25 supermarkets. So we don't have enough data in order to say that. To say too much about that. I hope that they will buy in the supermarkets and then online.

SPEAKER_01 30:09

Yeah, but for your margins, what you mentioned, it doesn't really matter. So it's also, I mean, it's a lot less hassle, obviously, if you sell it to one supermarket chain and then they do the distribution, which you mentioned a few times, you don't want to, or you don't think it needs to be reinvented. That's not where the root cause is. The root cause is our food choices and the production methods. And so what would you say to, let's say, for sure you're talking to them as well in Milan and other places, to the finance world, to the people looking at, and in some cases financing, the large industrial very intensive and very extractive meat industry let's say we're in a theater let's change the setting a bit we're in a theater we're on stage and this is a meat conference in Italy and we're having this conversation there what would you tell them what would you tell them when they walk out of that room what they should do or what they should be looking or what they should be digging a bit deeper what would be obviously without giving investment advice but what would be your direction for the finance world that is involved in the meat industry to go to?

SPEAKER_00 31:15

This is a very difficult question. I think the problem is rooted into the system, into our ideas and mentality. So I think that until we change that, you know, going to the financial system or others. Okay, but we have them. We

SPEAKER_01 31:35

have them in that audience. They're sitting there. So what would you tell them? Like, nature is always right or visit this farm, look at it. visit this and this or look at that where would you guide them what to read or what to taste what would you tell them to how to influence or nudge that mentality how can we get them to be open to think differently

SPEAKER_00 31:58

unfortunately I think the fastest way is just to mention you know a wallet because you know sustainability nowadays it's also an investment opportunity You

SPEAKER_01 32:11

tell them like, look, it makes more sense economically.

What would you do if you were in charge of a 1B investment portfolio tomorrow morning?

SPEAKER_00 32:16

Yeah, it makes more sense economically. You don't see this in next five years, maybe, but you will see in the next 10. I mean, now sustainability, it's an optional choice and it's an investment opportunity. When will be a monetary choice won't be anymore an investment opportunity. It will be, you know, a needed opportunity. You have to do this in order to eat or to drink or to breathe you know a good year and so on so you're saying it's the ideal moment

SPEAKER_01 32:51

it's the you want to create a bit of fear of missing out a bit of FOMO of like look this is an investment opportunity now it might take a few years but you don't want to miss out on this wave

SPEAKER_00 33:02

yeah I think that fear of missing out will be a good way we have a fear of missing out in many sectors where you know it's there is no sense in order to have FOMO. But in this sector, probably the FOMO is very needed.

SPEAKER_01 33:24

And what would you do if we switch the conversation? You are in charge of a large investment fund, let's say a billion euros, and you can invest it anywhere with any length of time as well. So you don't need to be restricted to the traditional seven, eight year fund, etc. You can invest it however you like. What would you focus on? Is it the end animal protein side or is maybe something completely different the oceans what would you focus if you are not running Pasco but actually running this investment fund to put money to work in regeneration in sustainability

SPEAKER_00 34:00

yeah first of all investing in Pasco and then probably just buying resources I will buy fields I will buy forestry I will buy you know water resources and so on And I would try to protect them and get... the maximum from them at the same time respecting them I mean I think that we have to build production and consumption system that are consistent with the biological systems so I would like just to you know experiment in natural places how to produce and consume in a very consistent way with the natural systems.

SPEAKER_01 34:56

And would you do that in Italy or in other places? Where would you focus your attention?

If you could wave a magic wand and change one thing in the ag and food space?

SPEAKER_00 35:03

I think I'll differentiate it. So I will do it in different places in order to have different opportunities about contingency in general in order to have different characteristics of soil, areas, zone and so on.

SPEAKER_01 35:23

And And what would you like to experiment most with? Is it the animal integration? Is it extreme composting technology? Is it, I don't know, remote sensing using satellite? If you had unlimited resources like now, what would be your first experiment to say, okay, if we run out, what would we push on?

SPEAKER_00 35:46

probably agroforestry. So, you know, a place where there are at the same time trees, animals, plants, water, and so on, and try to find a balance into a system, basically. Try to find a balance with the natural things that surround you.

SPEAKER_01 36:07

And then, I'm sorry we take your fund away, but we give you a magic wand where you can change one thing in the ag and food space, and or in the land use space or sea even, of course, you can choose that. What would you change overnight if you had, would you take out all, I don't know, antibiotics from the system or all animals outside? We've had that answer a long time ago. Actually, somebody mentioned that. I think Iroquois Valley Farm, one of the co-founders, like what would you do or something completely different, like food traceability on all animal protein or all food or CO2 labels? I mean, what would you, being so deep into all the sites, actually all the way down to the consumer, but also the big distribution and the production if you had a magic wand but you could only change one thing what would you do?

SPEAKER_00 36:52

I think it's a compromise choice and in any case this choice will have a lot of effect on the system on society and so on and I will go stronger on it and I will totally exterminate the chemical products of course we will have a lot production in the next few years and maybe many crises also about anger and so on but I think that in the long run it will be it will have very positive effect for the ecosystem in general stopping using chemical products on ground water and so on

SPEAKER_01 37:39

and what is exciting for you I mean you're going from 200 or from 25 to like 220 stores so that's pretty exciting but the rest of the year we're talking in late spring 2022 how does the rest of the year for for pascal look like what are our big milestones or things you're you're looking forward to and also maybe a bit scared about

SPEAKER_00 37:59

i mean we would like to still adding value to any steps of the of the supply chain so from the breeders we are trying to work with institutions so for instance european union union in order to find the funds uh in order to make the transition faster and as I mentioned before I would like to implement the partnership with NoFence and maybe also Rumi, I mean all the tools that can bring value and then of course finding more clients because more clients we have, more producers and farmers that we can build and And in the middle, we'd like to build a customized software in order to bring all the data about the supply chain together, about transportation, about farms, livestock, pasture, and so on, and try to make a lifecycle assessment of the whole supply chain in order to understand the real impact in order, of course, to CO2 emission, but also to systemic benefit. fit or malus to the system. So, you know, we'd like to measure the biodiversity of the environment where our farms work, the quality of the soil, the quality of the water, and so on. And we'd like to do it in blockchain,

SPEAKER_01 39:36

if possible. I will definitely link it below if it's out when this is out. We did a long interview on lifecycle assessments with Mariko, which was fascinating. She's the co-author of the one that they did on white oak pastures which I think is the first LCA on a multi-species farm and also the first that actually did soil analysis and included the sequestration potential in a life cycle assessment which is quite scary because it means until now we never did that and we had a long discussion on the multi-species side with also the carbon focus and probably a bit too much focus on carbon and also on the emission side and what needs to happen let's say to make them much more robust much stronger because they only tell half of the story at the moment. And the other half is either based on very old models or based on data that we simply don't have. I will link below. So Rumi, which is interesting to find out obviously more and NoFence, virtual fencing side of things. So I think there's a lot to do. And is that, sorry, that's the last question. Is that the limiting factor at the moment, the amount of customers you have, or because if you had more customers, you could easily scale up with more of your are farmers like there's more space there or is it also a limitation of finding the farmers or you say no that's there we have enough space enough animals enough growth easy growth let's say

SPEAKER_00 40:56

the mainly limitation nowadays are about operation because you know it's not a software is a real life supply chain so

SPEAKER_01 41:06

it's stuff that needs to be fresh otherwise it decays yeah there's a it's not that you're selling almonds that are dry and you're fine or software like you said you're selling something that yeah is a literally alive.

SPEAKER_00 41:18

And we are working also through many geopolitical contingency, for instance, the pandemic, the war, the price of raw materials went up a lot in the last six months, basically. So we had a very big problem about packaging because our package is half cartoon and half plastic. And it's both... recyclable, of course. But we booked around 3,000 cartoncini. Did you say cartoncini? Boxes. boxes, right? And they were not working, basically. So we lost a couple of months with clients such as Coop and others because we couldn't package the meat.

SPEAKER_01 42:13

And the packaging industry, the cardboard is very difficult to get a hold on. Yeah, no, it's not a software that you can just switch on a few servers at Amazon and you're fine.

SPEAKER_00 42:22

And at one time you have a lot of producer and not so many clients that And then one week later, you have too many clients, not so many producers. And you have to keep a balance, you know, growing. It's very, very difficult because you have to be always in balance and at the same time growing month per month.

SPEAKER_01 42:45

So is that what you enjoy? You mentioned at the beginning that I like to create things that are not there. You're smiling a lot now. You cannot see that on the, you cannot hear that in the audio. Maybe you can actually. Is that what you enjoy or is it also uncomfortable at some point?

SPEAKER_00 42:58

Yeah, I love uncertainty. I mean, I don't like things, routine and things that work. Otherwise, you would have worked at a bank in

SPEAKER_02 43:08

Milan, yeah.

SPEAKER_00 43:09

Yeah, yeah. I will do something else,

SPEAKER_01 43:13

of course. And so, do you see with this crisis, I mean, I keep saying last question, but with these crises on pricing, et cetera, and prices of inputs, in many cases, I think people have seen the crazy... fertilizer prices already last year and now, of course, with the war even more. Do you see differences in the low input farmers you work with and, let's say, the high, high, high input ones? Are the prices getting closer to each other in the supermarkets? Do you see any of that yet? Prices are being changed? Do you see that you have less? Because, for instance, Wild Farm that I talked to recently, they say, yeah, we use so little inputs that we are, of course, we're suffering because electricity and petrol and other things are back packaging, but it's not the raw, like the input prices for us. We don't have so much of that. So we're less suffering than our competitors. And maybe finally the prices of bread are getting close to each other of the low input ones. Do you see that as well, or is that too early?

SPEAKER_00 44:13

Yeah, I think that's a very interesting thing because, you know, our supply chain is very self-sufficient also in production of raw materials, such as cereals. Of course, our cows are raised extensively. So the amount of cereals they eat, it's very, very small. It's like about the 20% of the total ratio of the nutrition of the cow. And all these cereals are basically homemade in the farms, GMO-free and so on. And in the conventional beef supply chain, the amount of cereals that the cows eat, it's around the 80%. So that's four times. So we

SPEAKER_01 44:58

go from 20 to eight, just for your, like, okay, you can do the calculation and they're not, they're not grown on the farm itself for sure.

SPEAKER_00 45:05

It's the opposite. And these supply chain are very dependent, uh, uh, about importing, uh, cereals, uh, for instance, from Russia, Ukraine, Ukraine, and so on. And in this case, you know, when, when there is a war and a problem about the raw material in general, these prices goes up a lot and the price of conventional meat at the supermarket when pretty much close to our meat. So you pay basically the same for a product that it's completely different.

SPEAKER_01 45:43

That's fascinating. Do you see that? I mean, you're in relatively small supermarkets, but do you see now that that helps in terms of sales and maybe also in general, the whole discussion on this self-sufficiency and food sovereignty and should we import a lot of stuff? I know in many European countries, there has been a big discussion on fertilizer, on grain and weed, etc. Have you seen an uptick since the beginning of the year in terms of sales or is it very difficult to see?

SPEAKER_00 46:10

As you said, we are still in so few supermarkets, so I think we'll see it in the next year, in the next few years. That's the reason why I was suggesting to investors to invest in this way because this is an example of how a good supply chain for the system is also good for the wallet for the investors because one of our goals is to build a totally sufficient supply chain so without anything imported or exported outside the supply chain

SPEAKER_01 46:59

It's a very interesting

SPEAKER_00 47:02

focus. You protect a lot yourself from whatever happens. Currencies, crises,

SPEAKER_01 47:09

communities. I think many people underestimate how many madness, disease, health. There's a lot there. I want to be conscious of your time as well and look forward to speak to you in the future and see how far you got and what kind of very interesting experiments and larger than experiments you have been implementing so I want to thank you so much for your time Federico today and good luck thank you and thank you for what you do and good luck with disrupting I think it's the 9 billion euro Italian beef market which is a bit of space to grow

SPEAKER_00 47:45

yeah maybe 7.5 but you know still so big still

SPEAKER_01 47:50

enormous yeah thank you so much

SPEAKER_00 47:53

thank you a lot bye ciao

SPEAKER_01 47:58

Thanks again and see you next time.