249 Kevin Morse - Flour, flavour and nutrients, how a back to the future mill changes everything for wheat farmers - Investing in Regenerative Agriculture and Food

Episode Transcript
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Speaker 1 (00:01):
Why regional agriculture processing is
crucial for healthy soil,healthy people, healthy local
communities, not hyper-local,because that would make it more
fragile.
Learn more about thefascinating world of grain wheat
and flour and we'll learn moreabout the little secret of flour
.
You can buy amazing flour, paythe farmers much more for their
practices to the region, but itmight change the price of your

(00:22):
croissant with 50 cents.
This is the dirty little secret.
Flour is so cheap in the finalproduct that you can do amazing
things without moving the finalprice point.
A lot and a good bakery doesn'thave any problem selling that
croissants which is much tastier, took, full of nutrients and
supports a whole local value webfor 50 cents extra.
Of course there are challenges.

(00:43):
Hitting a price point to makeit accessible is not easy, but
the demand for this higherquality flour has been growing
at least 40% year over year.
This is in and after pandemic.
Now this company is hitting aceiling and they're raising
money to build a newback-to-the-future mill where
they combine all the knowledgeof the past eight years to
significantly scale up, to workwith bigger off-dakers and

(01:06):
hitting an even more interestingand accessible price point.
Enjoy.
What are the connectionsbetween healthy farming
practices, healthy soil, healthyproduce, healthy gut and
healthy people.
Welcome to a special serieswhere we go deep into the

(01:29):
relationship betweenregenerative agriculture,
practices that build soil,health and the nutritional
quality of the food we end upeating.
We unpack the current state ofscience, the role of investments
, businesses, nonprofits,entrepreneurs and more.
We're very happy with thesupport of the Grandham
Foundation for the protection ofthe environment for this series
.
The Grandham Foundation is aprivate foundation with a

(01:49):
mission to protect and conservethe natural environment.
Find out more ongrandhamfoundationorg or in the
links below.
Welcome to another episodetoday with Kevin Morse, the

(02:14):
co-founder and CEO of KurtSpringmeals.
Welcome, kevin.
Thank you, conn.

Speaker 2 (02:18):
Thank you for having me.

Speaker 1 (02:21):
I think it's the first time we have a miller
that's a term on the podcast.
Maybe some people have that,but never with their principle
role or with their hat on inthis case.
What brought you to the worldof milling, to the flower, to
the world of soil, because I'mimagining, I'd say, with your

(02:41):
qualities there were a lot ofother career paths open.
What brought you to literallyworking on revolutionizing the
industry of bread, the industryof wheat, the industry of flour
in the US?

Speaker 2 (02:55):
I wish I had a simple answer for you.
We probably need more than anhour and a half to give you all
the details.

Speaker 1 (03:02):
We can make this a multiple part series.
It hasn't been a straight line,conn, I think almost every
single guest that comes on sayssomething like that it's been
not a straight path.
It makes a lot of sense.
I don't think anything is astraight path.
Regular listeners willrecognize that phrase, so we're

(03:25):
usually onto a very interestingconversation, so please go ahead
.

Speaker 2 (03:29):
Well, good, I'll try to hit some of the highlights
along the way.
I think the first starts withmy family.
As we discussed earlier, Ispent my childhood mostly being
raised by the Italian side of myfamily, growing up in that
really tight-knit community.
There were mostly first andsecond generation immigrants

(03:49):
from southern Italy and Sicily.
It was there that I was.
The reverence for local food,the importance of being able to
raise your own food and reallyappreciate quality, nutritious
food, was something that wediscussed and immersed ourselves

(04:09):
in every day.
I loved it.
I just loved being in thatcommunity around my grandparents
and cousins.
My grandparents were allfarmers when they first got to
this country and then hadgradually become entrepreneurs
and did other things.
My childhood was spent in mygrandfather's six-mile grocery

(04:33):
store with a deli and butchershop in the back.
I've got photos I can sharewith you where I was seven years
old with a straw hat and anapron on making cube steaks and
sausage.
I don't think that's allowedanymore, but I just loved it,

(04:53):
and so that made an indelibleimprint on me in terms of who I
was, what I loved, and then,unfortunately, I also got to
experience.
I was born in the early 60s, soI got to experience what it was
like to be part of a communityand part of a system where there
were still small farms andlocal farms.

(05:14):
And then, as I grew up,director Secretary Butts came
into office in the US andtransformed our agricultural
policy from one of small farms,mostly family-owned, to get big
or get out and plant fence roador fence road those are his two
famous quotes and reallyimplemented policies that

(05:38):
changed agriculture here and, Ithink, around the world forever.
And so fast forward to becominga young man fresh out of
college with a business degree.
I knew I wanted to be anentrepreneur, but I also just
loved having my hands in thesoil and my boots on the ground
and I loved food, culture andsystem.

(06:01):
So I went on a journey reallytrying to find my place in that
system, everything from justexploring the last wild places
in the world as a naturalist andfishing guide in Alaska.
But when I came back home fromthat and decided I needed to

(06:23):
grow up, I ended up working inrural economic development.
I really had this sense of fromwhat was going on and seeing
the impoverishment and how ourfood policies really wrecked our

(06:44):
natural resource communities.
I wanted to help rebuildnatural resource communities and
bring back that sense ofcommunity culture and, frankly,
safety that I felt as a kidbeing involved in that closed
system, and so I worked as anexecutive in economic

(07:06):
development on projects thattried to bring resources back
for everything from recycling towetland mitigation and
sustainable jobs and reinventingour farm economies and seafood
economies.

(07:26):
I worked as an executivedirector of a brand new council
of governments on the easternshore of Maryland this is where
Dan Miller and I kind of havesome connections and wrote their
first comprehensive economicdevelopment strategy, which is
required by the government foryou to have in place so you can
get federal funds for economicdevelopment projects, and saw

(07:49):
the need there for access tocapital.
A lot of this is going to soundfamiliar to you.
Saw the need there.
The farmers there are stuck inthe commodity system, mostly
being trapped by the chickenmafia on the eastern shore corn
and soy with no outlet or valueadded opportunity.
So we created anentrepreneurship center and a

(08:10):
loan fund and we made valueadded agriculture a priority for
the region and it was there Ireally became familiar with the
government programs that couldhelp, as well as the barriers to
trying to change the system,because I think what we're all
talking about here is systemchange, and that is a big, big,

(08:33):
heavy lift.
And so it was a wonderfuleducation, not only in different
types of farming, the economiesof scale, the horrific nature
of what our commodity foodsystem does to the people on the
ground.
They're not only where thefarmers trapped in the system

(08:54):
and really struggling, but I sawa seafood industry that had you
know it was amazing for thefirst, you know, 100 years from,
you know, early 1900s to 2000s,and then plummeted because of
over harvesting and disease.
And when that happened, I sawwhat happened to these
communities that, frankly, wereat the mercy of the big

(09:16):
processors and when they usedeverything up and left.
These are communities that arean hour and a half from
Washington DC, you know, a fewhours from New York City, some
of the wealthiest centers of ourcountry, and we had 30% of the
population living at the povertylevel.
We had median wage income forfamilies there at like 19 to

(09:38):
$20,000 a year.
It was heartbreaking, honestlyto see, and also motivating.
I was like this is not right,this has to change, and so I
just continued on that journey.
The Pacific Northwest is reallymy home.

(09:59):
So, after four years on theEastern Shore, I thought I'd
take a different approach and Iwent to work for the Nature
Conservancy here in Washingtonand what a wonderful
organization that is.
I really was attracted to thembecause of their focus on
community and includingcommunity in solutions at scale,

(10:21):
and I was hired to be theirworking lands program director,
with my job being to find waysto align conservation, salmon
restoration, water qualityimprovement with food production
and farming.
And one more wonderful, hard,valuable lesson where I got to

(10:42):
see how the farmers were beingimpacted not only by the
economics they were stuck in butthe pressures they were seeing
from another community of peoplein the environmental community.
And again, what a wonderfuleducation.
We worked with farmers to findways to restore salmon habitat

(11:07):
while making their farms moreviable by improving flood
protection, by improvingdrainage, and we ended up
creating these multi-milliondollar restoration projects that
moved dykes and levees anddrainage systems and restored
salmon habitat and improvedwater quality.

(11:29):
And so I got a sense there ofwow, what's the power of
bringing these diverse intereststogether towards mutually
beneficial goals was fascinatingand rewarding, and so that
those projects and thoseprograms ended up being used as

(11:49):
examples that were turned intostate and then some federal
policy.
That on the state level, Ithink they funded more than $100
million worth of projects here.
So again, trying to get atscale.
State and federal funds werethen focused on what we called
multiple benefit projects thatimproved the viability of

(12:10):
farmland and farming andrestored critical habitat for
salmon.
So I'm going to stop there withsome of the description of my
work.
But my mom always said I was aslow learner.
So at the age of 50, I steppedback and was thinking wow, what
do I want to do next?
This was after it.

Speaker 1 (12:30):
Yeah, because you could have stayed there in those
kind of roles I mean, there'sso much work to be done on that
level and those roles in the US,but for sure in your region as
well Like it would have been.
I'm not saying comfortable, butI'm also not saying easy, but
relatively straightforward tocontinue that path and not
necessarily start what youstarted.

Speaker 2 (12:55):
It would have been, and the Nature Conservancy would
have been a wonderful place tostay.
I don't know.
You can ask Dan, I have a hardtime sitting in my chair and
just doing the same thing overand over.
And I also saw this need as Igot to age 50.
And at the age 50, startthinking about what you're going

(13:17):
to do the rest of your life andthe impacts you want to have
and things you want to do forthis world.
And I had the aha moment reallythen of wow, all of these
things I care about viablefarming, healthy food, food
systems, community, healthynatural systems so much of all

(13:39):
of the issues I was trying tofix was being driven by the
industrial food system, and so Ithought, wow, okay, I'm 50,
maybe I have 50 years left.
I really want to create a modelthat can work here in the Skagit
Valley, that could provideinspiration and an example of

(14:04):
how you can actually transform afood system so that it's
sustainable, so that it'sscalable, so it has impacts that
are meaningful both from anagronomic and economic scale.
And when we talked earlier,it's like what do I believe in?
What I believe from all of myexperiences by rebuilding

(14:28):
regenerative regional foodsystems.
That's the best thing we can dohere and anyplace else in the
world to make our communitiesmore prosperous, healthy and
resilient.
So I was all set.
I'd been farming also for thepast 12 years while I was at the
Nature Conservancy and it waskind of there.
There was great lessons interms of the economics and hard

(14:50):
work of farming.
What were you farming?
Wood crops.
I actually started the firsthumanely raised pasture pork
business in the state.
Yeah, and so I had beenintegrating our pasture pork
rotations into one of myfriends' farms who's a diverse
crop producer, dave Hedlin, andhe was a great mentor and

(15:13):
teacher.
But again, it was a greatwindow into really understanding
the work, the economics, thechallenges of farming and I
thought, wow, this could benefitthe farms all throughout the
Skagit Valley and throughout thecountry by animal integration,
which really was talked about.
I don't know this was 20 someyears ago how it worked the soil

(15:36):
, how it added microbes andhelped increase the biology in
the soil, how it worked the soiland required less tillage or
manipulation when it came timeto plant.
We were Dave was growing abarley and peas that we were
then rotating pigs through orharvesting and feeding them

(15:56):
later.
Was it Dave?

Speaker 1 (15:57):
asking you hey, can you run some pigs here?
Or was it you coming up withthe pig idea and then
approaching Dave?
Or how did that?
Because starting something likethat on the side is quite a
thing.
It's not like, okay, I'm doinga small no-dig market garden or
a small no-dig garden for myselfand then, if something goes
wrong, okay, I don't havetomatoes, that's not such a bad.

(16:20):
I mean, it's an issue if youcome from an Italian family, but
still, this is like livingbeings you have to really take
care of them otherwise.
And so how did that come about?

Speaker 2 (16:30):
Oh yeah, well, part of it was I.
Just I always, you know, I grewup back to my grandfather's
Italian butcher shop and thelove for local meats and
everything we made with pork.
So part of it was my ownpersonal interest, but part of
it is my fascination of tryingto do something different that
really benefited the farmcommunity here, the Skagit
Valley.
It might help for people tounderstand.

(16:51):
We are a very specialregenerative farming system
that's been in place for 120years, before regenerative was
even a word.
We have 80 crops of commercialsignificance here.
The farmers voluntarily rotatetheir crops potatoes, peas,
brassicas, livestock.
They don't farm their ownground every year.

(17:12):
They trade ground and leaseground with each other, and so
integration and crop rotationsis part of our farming culture
and system.
And so I was like, wow, wereally could use some more
animal integration when Istarted really diving deep into
the system.
And it could benefit all of ourfarmers if they can incorporate
pork or cows into their systems, which some of them were doing

(17:38):
with replacement heifers fordairies.
And so, yeah, I was working atthe Nature Conservancy 50 hours
a week and I was getting upearly in the morning and
checking the animals, feedingthe animals, checking the fence,
going to work, coming back atnight and starting over again.
Do it there.
So wonderful education.

(17:59):
And so when I started thinkingabout the food system, I came
out of the saying yeah, I'mgoing to help start a
regenerative, sustainable meatcompany that adds value to these
farms through all the soilimprovement, other things we've
discussed and then scale thatand open source it and share it
across the country.
And there is a wealthygentleman here who was making

(18:22):
investments and value addedprocessing and he said I want
you to help me build thiscompany.
I want to help you build yourdream.
Quit my job, started thefeasibility, actually started
looking at some farms to investin and partner with.
And then what I learned aboutsome very wealthy people is they

(18:42):
could be a little mercurial.
Three months down the road hesaid you know, I've got so much
going on.
I don't think I want to start ameat company right now.
I was like I just quit my job,I just closed my farm.
You know what am I going to do?
And this wonderful man, steveBren, who is managing this

(19:04):
individual's wealth, said youknow, we've been talking to the
Port of Skagit and to Dr Jonesand his team at the Washington
State University Bread Lab andPatagonia was involved.
Yvonne Chenard had been up andit's like we're talking about a
mill in the Skagit Valley thatinterests you.
And I said, yeah, I mean, Iknow most of those people except

(19:28):
for the Patagonia folks.
I've worked with them, knew allthe farmers.
I immersed myself in what wasgoing on with grains and what
was going on with flour in thisworld, and flour is one of these
.
I wouldn't say it's a darksecret but, like most people
have no idea what a mill lookslike, where the grain comes from

(19:49):
, or any sense the fact thatgrains and flour can be like
wine grapes there's actually ahuge variety that have
tremendous spectrum of flavorsand aromas and colors.
And then, from the economicsstandpoint, I was blown away.
There's five companies thatcontrol 85% of the milling

(20:10):
capacity.

Speaker 1 (20:11):
It's almost as worse, or worse than the animal
protein industry.
Yeah.

Speaker 2 (20:16):
Yeah, it's very similar in those respects.

Speaker 1 (20:22):
And.

Speaker 2 (20:22):
I also learned about the supply chain and flour and
it's like you know, it's globaland those companies have grain
traders all over the worldbuying the cheapest grain
possible everywhere, from Chinato Canada to North Dakota and
Kansas, to Kazakhstan, Russian,Ukraine, and it's polluted,
frankly.
I mean in this country we dohave environmental regulations

(20:44):
and others not so much and Ilooked into the health impacts
of modern flour.
I looked into what's in modernflour in terms of the chemical
pollutants and again another ahamoment.
I was like, wow, this is notonly a really important industry
here, because we've beenrotating grains through our

(21:05):
crops since the early 1900s,mostly at a loss.
Dave Hedlin always says we growwheat mostly for fun, sometimes
for profit, and they've beenlosing money on their cereal
grain rotations so that they Did.

Speaker 1 (21:22):
You see the possibility Did you see?
Because, yeah, and looking atthe dark side of wheat and flour
and all the issues with it,it's very easy to get very
depressed.
But like, did you see?
Like, okay, a local mill couldactually flip that conversation
or flip the potentialopportunities instead of just
last damage.
Or was it another step, or didit take more time?

Speaker 2 (21:47):
No, that was the aha moment for me.
I was like, wow, if you look atit from a business opportunity
and a system change opportunity,flour was ripe for
transformation, just like craftbeer, chocolate, coffee, all of
those commodities, all thosecommodities that had transformed

(22:09):
and at least somewhat captureda large market share by creating
a healthier, traceable,regenerative product.
And so I was like there's ahuge opportunity here, not just
in the Skagit Valley but beyond,and I was like this is it?
If we can create a new regionalmilling system that works here

(22:30):
and then can create everythingfrom sourcing to the internal
systems, to the markets, there'sapplication not only throughout
this country but worldwide.
So that's when I was all in.

Speaker 1 (22:45):
When was that?

Speaker 2 (22:53):
That was April of 2015.

Speaker 1 (22:58):
So we're coming up to eight years, yeah, yeah.
We are just past eight years,yeah, and where do you start
that?
Because it sounds like fundingmight be there, but then some of
the relationships are there.
But I'm imagining the marketside of things, for good flower
grown well is not an easy featto start.
Maybe the Patagonian wasinterested, like where do you

(23:19):
even begin when you say, okay,moline?

Speaker 2 (23:23):
Yeah, well, this is the wonderful thing about the
opportunity here and the timingin this community I refer to
this business.
The foundation of this businessis community and it's really
been like an old fashioned barnraising.
If there's people around thatremember that where somebody
needed a barn, everybody wouldcome chip in and help that

(23:44):
person or the community build it.
And we had all the things inplace here.
We had the port of Skagit thathad made a public decision to
invest in value addedagriculture because agriculture
was such an important part ofour economy.
So they were like we're in,we're going to help invest in
the infrastructure.
We had the Washington StateUniversity bread lab.

(24:06):
Dr Jones and Steve Lyon hadcome over from the commodity
system in Eastern Washington andthey had were blown away and
discovered about what's going onhere with grains.
We weren't even on the wheatproduction here in the Skagit
Valley.

Speaker 1 (24:19):
And the bread lab is extremely important in the world
of flour and bread and grains.
That's not to be unrecognizable.
Some people might have read, Ithink, to pick part of the third
plate of then barber and someother places I've seen it.
That's not bad to have that inyour backyard, basically.

Speaker 2 (24:38):
Fatwares are really lucky and so they're really the
thought leaders.
They had the farmers who werealready growing these different
varietals of wheat that theywere trying to bring in that
matched our maritime climate,that had better baking and
flavor qualities.
The Big Mills they source grainbased on protein, not flavor,
not always baking quality,because they can always add

(25:00):
enzymes and all the other crapthat they throw in modern flour
now to make it bake better, andso all of the pieces were
somewhat in place.
Tom and Sue Huntin from CamusCountry Mill had started a small
mill of their farm and came upand were consulting and showing
how it might be done.
So the farmers were growing thegrain, the port was stepping up

(25:25):
and then restructuring.
The bread lab was alreadydeveloping and releasing these
varieties.
Patagonia had shown up and saidGavanshanard had made a visit
and said I love the SkagitValley.
This is amazing, and it made averbal offer to support if they
could find an entrepreneur forthe mill.

Speaker 1 (25:44):
And so I had up just a tie.
Has the mill technology changedas well, going from because I
think it's come through a curveof extreme scale as in bigger,
better economic scale, addingall the enzyme and other crap
they're adding et cetera, etcetera, like enormous factories,
but as we've seen, I thinkmaybe first in coffee, but like

(26:05):
you've got smaller grinders,smaller roasters.
You got this technology toslowly get a bit more affordable
, a bit smaller, because ofcourse if you have to put half a
billion to build a mill, thatdoesn't make any sense in your
region.
Has that been?
Did it become also accessiblefor still industrial scale but
smaller scale stuff for you?
Like if you said, okay, we'regoing to build a mill, were

(26:26):
there blueprints or were thereexamples of the size you were
imagining?
I mean not the one very smalllike home milling I've seen some
of those but the one I think Ican actually run a profitable
factory and a profitable mill.
And has that changed at all thelast decades or has that not
yet?
In that you stitch it togetheryeah, that's a great question.

Speaker 2 (26:50):
The short answer is no.
There wasn't equipment andaccess to equipment that could
function at the capacity andregional scale we were thinking
about.
So a little background on flour.
I think it's important for thelisteners to know transformation
has been crazy over the past100 years.
We had 24,000 mills in thiscountry 100 years ago.

(27:11):
Now we have 166.
So we have got incredibleconsolidation and concentration
and centralization of our flourproduction and those mills can
make up to 6 million pounds offlour a day.
That's massive.
If you ever go see an industrialflour mill, it's city blocks

(27:32):
along with silos.
It's 10, 15 stories high andthey are just cranking out rail
car loads of flour every day,24-7.
So there really wasn'tequipment and machinery that I
could find in this country.
So guess where we had to go?

(27:53):
Right in your backyard.
Yeah, I did my own journeythrough Italy A few years before
this and saw some of the smallmills that were working at a
regional scale.
And then we ended up going toDenmark where there was a
company producing smaller,regionally scaled systems that

(28:13):
Tom Huntin, who is a co-founderof this mill, was already
working with, and so we lookedat mills in Denmark and Norway
using this equipment and cameback inspired and took their
designs and modified it withtheir team to produce a modern
stone mill system that wouldproduce enough at scale at that

(28:37):
time and what we thought wouldcash flow the mill and make it
profitable.
And so part of the journey hasbeen reinventing or finding the
equipment to do this scale.
We knew what we said to ourinvestors in our community is
like we've got a lot to figureout, from the business model to
the internal systems, to thegrain storage, traceability and

(28:58):
supply chain management, becauseno one was really doing this.
And so that's where theinnovation, the exploration and,
frankly, a lot of hard work andhard lessons went into this
company.
We had to figure it all out.
There weren't any blueprintsfor us to follow, other than
some of the inspiration from thepast.

(29:20):
One of the business criteria waswe had to operate at a scale,
not only to have the meaningfulimpact we wanted in the
community, but also for theeconomic return and to supply.
Our work with the bakers wasreally like we have to be able
to be dependable, can't be likea boutique mill that might have
flour one week and not the nextand sell flour for $16 a pound,

(29:44):
you still have to be somewhereclose to what we can make in
terms of the economics work, andso we wanted to scale it big
enough for all to meet all thatcriteria but not get overly huge
where we're just another massproducer.
We're actually originallycalled watershed mills because
we had this vision of a mill bigenough to serve a watershed and

(30:07):
name the mills.
We had a trademark conflict anddidn't have money and lawyers
to fight it, but that just giveyou a sense of the scale we were
thinking about.
And so now, right now, this millis right around breakeven and
we're also bumping up ourcapacity and we'll make 6
million pounds of flour thisyear, running two shifts a day,

(30:29):
five days a week.
That's as much as the one bigmill.
And so we've learned Verydifferent flour.

Speaker 1 (30:37):
I think In terms of quality we get to the quality
piece, but it would be offendedif you call it the same product,
I think.

Speaker 2 (30:47):
Well, and that's it.
So what we did is bring back Iuse a movie and analogies a lot,
so this is like a back to thefuture mill.
So we have very modernequipment that's computer
controlled for the most part.
We still set the stones by handand listen to the stones as

(31:08):
we're operating them, but we'veincorporated a modern roller
mill that then leads to stonemills, and so we make a European
style bread flour, so that it'sa flour that most people are
used to, but it's stone milled.
And the way we stone mill it,we intentionally mill the brand
and the germ, which is where allthe nutrients, flavor and color

(31:31):
live into the end productinstead of sifting it out, and
that's what big mills do.
And so we were first to marketwith a system and a flour of
this type in the country, and wedidn't have any sales and
marketing budget when we started.

Speaker 1 (31:48):
Yeah, I was going to say because I can imagine the
technology, the processing thefarmers were sort of already in
place and we'll talk about itlater what it means for them now
to sell a crop, not at a loss,but usually at a good price, to
something local compared to howit was before.
But what was the market like?
Or how did you approach thatpiece?
Because six million pounds ayear is still a lot of flour,

(32:11):
it's not as much as the big guys, but they have a market to play
with.
So how do you sell?
This is not like a small hobbymill.
How do you sell that much?
Or how do you approach sellingthat much quality flour to a
market that might not be used toit?

Speaker 2 (32:26):
Yeah, that's a great question, because I'll go back
to the old fashioned margarineAlso.

Speaker 1 (32:31):
There, you didn't have any blueprints.

Speaker 2 (32:33):
I think no blueprints .
So we built this mill and wehad this great network of bakers
, farmers, bread lab and otherswatching us.
We had great investorsPatagonia and a number of impact
investors here.
We still had hardly any money.
I literally worked for sixmonths for nothing.
We raised a small convertiblenote round for like $90,000 to

(32:57):
get it started, to put gas inthe truck and make a few trips.
But when we prior, as we weredesigning and building the mill,
we had already made contactwith people like the bread
farmer just down the road whoare my neighbors, and they were
helping us understand the marketand the types of flour to make.
They're already starting totest some of the grains that we

(33:18):
milled on a small mill to get itin their hands.
Chad Robertson was coming upwhile the mill was in
construction, the founder ofTarteen and helping me
understand what he was lookingfor.
In his prints I was Pianco MelDarbyshire from Grand Central
Bakery in Seattle, george DePascuali from the Central Bakery
, leslie Mackey from MacrinaBakery all here in Seattle.

(33:39):
We're circulating through themill and educating us, but we
are also educating them on thedifferent type of flour we can
make.
And so when we opened the doorsand started milling in May,
june of 2017.
They were already waiting toreceive the flour and I was
literally driving it to them,either in the back of my truck

(33:59):
or you know, putting it on asmall truck and partial pallets
and sending them down to Seattleor just down the road.
And what really you know?
All I can say is that they gottheir hands in the flour, they
put their hands in the dough,they baked bread with it and
they had people taste it.
And it was revelation.
People were like we didn't knowbread could taste so different.

(34:24):
We didn't know it could tasteso good.
We didn't know it could smellso good.
The colors, the aromas we'regetting are unlike anything we
have ever had.
And so for three years we weregoing a 40 plus percent a year,
with zero marketing budget otherthan my old, 60 year old hands
on a keyboard posting pictureson Instagram.

(34:45):
I can't even say trying to becool, but just like to show
their story.
And so we grew by word of mouth, beyond our expectations.
And you know, people thought wewere nuts and probably still do
get into this commodity systembecause they're like flour and
teabag with us, like can't doanything there.

(35:07):
And last year we grew 56%.
This year in Q1, we were tryingto throttle back just because
through the pandemic we werealso discovered and we've just
pushed our team to the limitshere in terms of what we can
handle physically and mentally.

(35:27):
But we continue to grow beyondour projections and expectations
and now we're at the pointwhere this mill is pushing to
capacity and we wanna take allthe lessons we've learned from
supply chain management,internal systems, markets,
distribution and create the nextgeneration mill that can really

(35:51):
operate at the scale and ineconomics that can be replicated
around the country and aroundthe world.

Speaker 1 (35:57):
So, wow, I think we kind of went on a crazy journey
there, really the quality andflavor focus is fascinating, and
apparently for a price point,at a price point that makes
sense for your customers andmakes sense for you, I mean.
So you were almost a break-even, so it's definitely not deeply
loss-making.
And then for the farmer piece,how has been the development

(36:19):
there?
What kind of practices, what doyou have?
Minimum standards to work withfarmers Do you have?
Like how close?
I mean, you keep saying it's acommunity, so I'm imaging very
close, but how close are you tothe farmers?
And what do you see that gamebetween quality of the flour you
want and the grain you want in,and how does that affect or how
, where does the quality comefrom in terms of farming

(36:42):
practices?
Is that like, how has been thefarming side of things here?

Speaker 2 (36:47):
I don't want to say that's the easy part, but again,
we've been regenerative.
Before regenerative was a term.
We're already doing animalintegration here.
We're already doing croprotations, we are doing cover
crops and so the way the farm,we have over 5% organic matter
in our soils here.
You go down in the CentralValley it's like less than half
percent.
So what the farmers have beendoing here is really a quite a

(37:11):
sustainable system.
There's always room forimprovement.
So we have some of the mostproductive soils in the world
here.
So for us it was just a matterof defining our specs on the
grain we needed and setting theprice.
And you know, we have organicfarmers and this is one of the

(37:32):
controversial things we can talkabout and we have what we call
so they follow the standardorganic, national organic
standards, right which everybodyis bought into and supports.
And then we have what we callour regenerative conventional
farmers who are doing croprotations, who are doing animal
integration, who are doingon-farm composting, doing cover

(37:53):
crops, who are growing favabeans for nitrogen and plowing
them in the soil.
As in cover crop, you're alwayslooking at ways bottom line to
improve soil health.
Right, it was all aboutbreaking disease cycle.
Do you treat them differently?

Speaker 1 (38:08):
Like in terms of pricing, et cetera.
Do you treat them differently?
And second question do you seea difference in quality?

Speaker 2 (38:16):
Yes.
So we have high qualitystandards, so they have to meet
them and we also pay the farmersa premium.
The cost of production here inthe valley is very expensive
compared to some of our largercommodity production areas.
You know, our land rent heregoes here from $400 to $700 in
acres.
Now because of the price thepotato and tulip growers are

(38:36):
willing to pay for the brassgrip growers, and so we got
together and put together what'scalled enterprise budgets in
the early days to reallyunderstand and this is where the
farmers helped us what a farmerwould need to break even and
make money on the crop, becauseour founding principle is it has
to work for the soil, it has towork for the farmer, and a lot

(38:58):
of that comes down to economics.
And so for our regenerativeconventional, they have to be
using regenerative practices.
We don't allow glyphosate as aharvest date, we don't allow
neonic insecticides and most ofour farmers are already farming
like that and so they are allfriends, family and neighbors to
start out.
And any new farmers we'vebrought in are usually referrals

(39:20):
in people we've met through ourexisting network and so that's
our supply chain and they areproducing grain that is at a
quality and consistency.
But there's a myth that smallmills can't be as high quality
or consistent as big mills, andwe've dispelled that myth and

(39:46):
called bullshit why would it beBecause you're not able to mix
and blend, or why?

Speaker 1 (39:50):
would when would that myth come from?

Speaker 2 (39:52):
Some of that, some of that, but it's also because we
have some small boutique millersaround the country that have
bigger challenges withconsistency and quality and
don't operate at the scale, andso somehow they got translated
into this can't be done, andwhat we've shown is, with the
right scale, the right supplychain, the right milling system

(40:13):
and again, this is a back to thefuture milling system We've got
the ancient craft of stonemilling blended with modern
computer technology and otherequipment Convance, dust
protection, explosion protection, all those things and we've
invested in simple things likehigh tech grain and flour
analyzers that the big mills use.
That can.
We can take samples every halfhour hour of our flour and make

(40:35):
sure we're hitting our proteinand our mineral and ash specs,
our moisture specs andeverything else, and so it can
absolutely be done at this scale.
And that's one of the things wehad to prove to the baking
community and we've done that.
And so the farmers get paidmore.
They get paid above commoditiesso that they make money.
Our staff gets paid living wagejobs, and then that value has

(40:58):
to get carried all the waythrough.
This is where, again, this is asystem.
We could do everything we'redoing here, going with
regenerative farming,non-commodity grains, specialty
milling, taking care of ourpeople.
But if the baker can't sellthat loaf of bread to the
consumer and close the loop,then we don't have a business.
And so they've been payingalmost 50% more.

(41:20):
We've been charging on acommercial level, sometimes
double what the commodity pricesare for flour, and that might
sound like a lot and that's beenone of the barriers in scaling,
but it's kind of going away now.
It's like oh my gosh, it's mycogs, you're going to double my
cogs.
I can't do this.
I love your flour, but I can'tbring it in my system.

(41:42):
And then when you actually dothe math, like flour in terms of
the cost.

Speaker 1 (41:48):
He's not a big piece of the cost yeah, it's like 8%.

Speaker 2 (41:51):
Everything else is direct overhead and variable
costs.
And so, for example, if youlook at a croissant and you do
the math all the way down to asingle croissant, it's going to
cost maybe a dime more percroissant.
And you say, if you have abetter tasting croissant, better
smelling croissant and you havea story and the consumer knows

(42:12):
you're getting safe, cleangrains that are specialty milled
and they're supporting farmers,can you sell that croissant for
50 cents more?
And they're like oh yeah, Iguess we can.
And so that's been part of thejourney is changing the economic
mindset.

Speaker 1 (42:24):
That's why I think grain is fascinating and I'm
very happy you're working ongrain, not on animal protein,
because I think on animalprotein it's much more difficult
because the difference is somuch more and in many products
or restaurant plates et cetera,it's a significant piece of the
cost.
Because it's such a significantcost, normally In grain we're
going to do probably a pastaepisode at some point but in
grain, even if you pay double tothe farmers in a pasta dish or

(42:48):
in a bread, it does change, butnot so much because it's not
such a big piece of the coststructure which makes it such.
And it's such a big crop,obviously, but also a crop with
so many hectares, you'retouching so many acres through
grain that it's a veryinteresting entry point.
And on the farming side, do yousee a quality difference with

(43:09):
the ones that are, let's say,obsessively focused on soil or
is it very difficult to saycompared to the ones that are
hitting your very high standards, but let's say just hitting
them?

Speaker 2 (43:19):
Yeah, that's an interesting question, Colin, and
I'd say yes, maybe.
Again, it's hard todifferentiate because most of
the farmers have always I'mworking with have always been
obsessed with soil health.
That's how they've survivedhere in the Skagit Valley.
What I can say is, when I lookat those grains, compared to

(43:41):
others in terms of nutrientdensity and flavor that we see
in other places around thecountry, our grains are far
superior.
We might not always be as highin protein here because of our
maritime climate, but I cansolve that too by sourcing.
So I think it's important totalk about sourcing grain.
Everybody's like oh, so you'rehyper-local, you source

(44:03):
everything local.
Well, we do source the majoritylocal, but if we're not buying
commodity grains and we'retotally relying on farms that
are within 15 miles of the milland it rains here in the Skagit
Valley in August when our wheatis ripening we could lose the
entire crop to sprouting andhave nothing to mill for a year.

(44:25):
So we source here, but we alsosource a couple three hours away
in eastern Washington withother regenerative farmers just
to manage risk.
Also, quality and protein,because even though the bakers
love us, we still got to providethem a consistent high quality
product.
So what we've learned is ahyper-hyper-local supply chain

(44:49):
is very risky and it doesn'tgive you flexibility in terms of
managing quality.
By regionalizing that, which wealways wanted to do, that
solves the issue, and so we areseeing higher quality grains
from our growers who areimplementing regenerative
practices, more flavorful grainsand, in Skagit Valley, because
of our soils, more nutrientdense grains.

Speaker 1 (45:12):
And when you say nutrient density in flour and
grain, what do you specificallylook for?
What do you measure for?
But what are the things youlook out for when you test?

Speaker 2 (45:22):
Well the things again .
I haven't had a lot of moneyfor testing, but I've been able
to benefit from what the breadlab and the others have done.
Here in the valley we growgrains that seem to be
consistently higher in thingslike iron and some of the
micronutrients and minerals thatthe grains can contain.

(45:46):
People don't know hownutritious grains can be
Everything from folate tovitamin B6, of course, all the
fiber that's in the brand butthere's been preliminary
research done and I'd have to goback because I'm also getting
old and have CRS disease going.
That's called Can't RememberShit.

(46:06):
There's some other studies thathave been done that I can
reference you later on thenutrient density and the grains
here.
Please do.

Speaker 1 (46:16):
Yeah, because I think it's a no.
Sorry.
Let me ask a question insteadof making a statement.
Do you feel the bit of thebubble and not the bubble, the
hype and the talk aroundnutrient density that I think
has been now coming up the lastfew years, especially last year
and a half with what your foodate, of David Montgomery and

(46:36):
Pikli and then some otherpublications that came out and
other research?
Are you excited about thatpiece?
You keep saying nutrientdensity and quality, which
obviously is the main driver.
Do you think nutrient densityand the connection to soil
health could be an additionaldriver for operations like
yourself?
Like the health aspect to this?

Speaker 2 (46:58):
I think it's absolutely essential to it and
I'm excited about the fact thatmore and more people are looking
at the connection Because,again, our major what we
believed in when we startedregenerative farming makes our
community more healthy literallyprosperous and resilient

(47:20):
literally both.
So we wanna grow more healthy,clean food and get them into our
community and into the world,and so the work that David and
others are doing to draw thatconnection and prove it is very
helpful.
I don't have the resources todo the testing and it's

(47:43):
incredibly expensive to sendflower off to labs and get the
vitamin analysis and everything.
We're still pretty scrappy here.
So I guess the bottom line ofthe answer is yes.
And then we wanna continue tobetter understand and prove
where we're getting, hopefullygetting a LFPP grant through

(48:03):
USDA that Dan helped us with tocontinue to do research and look
at impacts of our regenerativefarming practices on the soil
and on our end products.
So that's a high priority forus.

Speaker 1 (48:18):
And do you see, like with your baker customers and
friends, that that qualitybeyond the flavor, let's say
quality in terms of nutrition,could be something they're
interested in?
Are they asking what's in thisflower different than, or is it
really okay, I want a muchbetter tasting and smelling
croissant, even though it'sprobably, or that is probably,

(48:40):
very much connected to what'sactually in the flower?
Obviously, like, is there aninterest from your customers?
Because if they don't care andthey're not gonna explain it or
share it somehow with their endcustomers, yeah, we can have
this amazing research, but is itgonna go very far?
Do you see an?
interest in here from the bakers.

Speaker 2 (48:56):
It's evolving some yes, some no, to be honest.
So Scott and Renee at the breadfarm are asking and talking
about that.
Chad Robertson, every time wetalk or I see him say he wants
to provide his customers withmore flavorful, healthy breads.
Others are still really focusedon just the quality and the

(49:21):
flavor differentiation.
What makes me excited aboutthis movement is the markets
demanding that, and markets canchange systems, and so already
we're in development of plansfor a new mill.
They could have significantlymore capacity with our same
process, and some of thecompanies talking to us big

(49:46):
offtake agreements are askinglike not only do we want better
quality flour in the story, butwe wanna make sure we can say
we're delivering more nutritiousfood to our customers as well.
So the market is growing, butit's still in its nascent stages
.

Speaker 1 (50:05):
Fascinating, yeah, and switching gears a bit to do
a few we're gonna say finalquestions, but they usually lead
to more.
What would be after working inthis, like, let's say,
relocalizing, re-regionalizing,processing and you must talk to
investors now as well, becauseyou're on a fundraising path for

(50:26):
the new mill and the operationswhat is would be your main
message, of course, withoutgiving investment advice, but
your own message to people Idon't manage in your own money
or other people's money aboutthis opportunity but also the
risk.
What would be your maintakeaway or giveaway for them to
remember?
If there's one thing theyremember from this conversation,
what would it be?

Speaker 2 (50:48):
That's a great question and I've thought a
little bit about that.
I think we have a number ofinvestors that we've talked to
over time and I guess a coupleof things for them to be aware
of is that regenerative farmingis place-based I've talked to
there's a lot of hype out there.

(51:09):
I think, as you touched on,there's very inspirational films
that show the potential ofregenerative farming, but
regenerative farming looksdifferent just about every place
you go.
So I think one is just settingthe expectations and being clear
.
One is there's a tremendousopportunity from an investment

(51:32):
standpoint to invest in theinfrastructure, the middle
infrastructure needed to bringregenerative farming to market.
But one they have to be clearthat not everybody's farm is
gonna look like Gabe Brown'sfarm right From Kiss the Ground.
Two, this is a patient businessmodel and they have

(51:57):
expectations of a 10x return inthree years is not what we're
talking about, but we aretalking about, I think, a really
healthy return over a five toseven year period, from what we
can see as we're modeling outthe new mill, and that it can be
replicated and that there'salso I think one of your other

(52:19):
questions was what would I do ifI had a billion dollar fund?

Speaker 1 (52:23):
We have the we take away my questions, but please,
please go.

Speaker 2 (52:26):
Well, it's kind of wrapped together here.

Speaker 1 (52:28):
I know that's why it's always the follow-up that.
What would you do, Kevin?

Speaker 2 (52:33):
It's one big burrito.
So we have the infrastructurein this country to scale and
really provide secure,meaningful investments for
people.
And I guess I have to say we'renot a venture-ready investment
and frankly I've stayed awayfrom venture investments because
we don't want them controllingthe board, maximizing profit at
the stake of our values andprinciples and then selling it

(52:56):
for some multiple down the roadto one of the big corporations.
So but we have thisinfrastructure and this comes
from the economic developmentdays.
You know we have.
We had the.
Was it the DevelopmentCorporation Act of 1979 that
gave economic developmententities the ability to, you
know, sell tax-exempt industrialrevenue bonds or even

(53:19):
non-tax-exempt bonds and raisemoney for infrastructure.
There are ways, just like thepublic-private partnership here
at the port, which we haven'treally touched on they bought
all the equipment and leased itback to us, so we didn't have to
raise $2 million for ourstartup.
So there are ways for to poolprivate capital with public
financing mechanisms to buildthis infrastructure and almost

(53:43):
guarantee a really good,consistent, modest return for
investors.
So I think part of its eye iswhy it opened what's really
needed, what's the timeline,what is really regenerative in
that place, and to have a veryclear understanding of what the
profitable business is.
I still like the idea of youknow a business running and

(54:07):
operating the mill and theinfrastructure, because we are
forced to look at efficienciesand costs and to make it work
and return for our investors.
But there's a tremendous.
I think I could take a billiondollars and double it.
I think I could take a billiondollars and work on
public-private partnerships tounlock the rest, the ports can

(54:35):
buy infrastructure back.
So if investors wanted to comein and build the infrastructure
and sell it back, they couldsell it back at a profit and
then the port can turn aroundand lease that back to the
company.
There are so many ways, and DanMiller really understands this,
and that's why I hope to buildanother three to five mills

(54:56):
before I retire, with him andothers, and to have a meaningful
introduction.
Yeah, yeah, and to havemeaningful impact in communities
around the country, around theworld, by bringing a more
patient, reasonable approach toinvesting in this infrastructure

(55:18):
.
It's feasible right now and Ithink one of my personal points
of view that also really informsthis approach is I think
regional food processinginfrastructure is critical
infrastructure, and I use thatterm because critical

(55:40):
infrastructure is our job as acouncil of government to provide
essential services to ourcommunities Water, sewer, roads,
everything we need to reallyhave the foundation of our
economy and our community and tokeep businesses there.
And you're saying production ispart of that.
Oh, hell, yes, I mean, look atthe pandemic when everybody

(56:01):
realized how vulnerable we areto global supply chains, I think
.
And so there are ways here, andI'll give you an unfortunate
example by actually having thatinfrastructure and public
ownership like we have here.
No matter what I do with thisbusiness, this mill will be here
and if I fail at it, someoneelse can come in and take it

(56:21):
over and give another try.
We have a grainery just downthe road that we've been
contracting all of our grainstorage, cleaning and delivery
services.
Unfortunately, that companydidn't make it and instead of
them selling off all thoseassets, it's infrastructure the
port owns, and so we're talkingto the port now about assuming
at least and keeping thatgrainery active, not only for
our business but for the otherfarmers.

(56:43):
So I think part of the future ofregenerative farming is
investment at scale in thismiddle infrastructure with
public-private partnerships.
I mean I'll send you a linklater on a little video or one
of our investors produced on ouroperations during the pandemic.

(57:24):
We had 400 cars around the blockevery Friday picking up
50-pound bags of flour, and wekept our community.
We are sending out 120, 140,000pounds a month to the community
that needed food and the millrun the stuff we sift off at the
end of our process and put in abig bin out back.

(57:45):
The feed companies couldn't getcommodity and mill run out of
Portland and so they are showingup here twice a week entering
our brand silo.
We are feeding just about everydairy cow, pig, goat and
chicken in the three-countingregion.
So I think if we're going tomake our communities more
resilient, like we talked abouthere and around the world, this

(58:06):
is critical infrastructure.
Sorry, I'm going to get off mysoapbox, but I'm so excited
about the potential and I can'tbelieve that the investment
community really hasn't figuredthis out.
But there's a way to weavetogether what's already here
with really smart, patientcapital to do this at scale with
huge impacts.

Speaker 1 (58:25):
And do you see farmers as co-owners of that in
the future?

Speaker 2 (58:30):
I do, and part of our new model will be to actually
give farmers a percentage, likewarrants or a percentage of
equity in the mill.
So not only are we paying thema higher price, but they're also
benefiting from theirparticipation in the system.

Speaker 1 (58:47):
Because then you really lock it into, let's say,
to look, of course, many, Ithink, mills for sure you as
well started this co-ops byfarmers together and then grew
out of that and then we knowwhere that ended.
I'm not saying let's all starta co-op, but definitely how do
you have skin in the game andhow do you make sure the lines

(59:07):
are very short and when you needsomething you can rely on that,
which we've seen, of course,with the flower opportunities
and issues during the pandemic,which everybody started baking
and then everything was empty inthree seconds.
And a question I would like toask at the end if you had a
magic wand and you could changeone thing overnight, what would

(59:31):
that be?
So, one thing only, but itcould be anything, could be
better taste, could beconsciousness, could be end of
cave operation, anything youpossibly imagine what would that
be?

Speaker 2 (59:45):
You sent me that question and I have like 15
answers.

Speaker 1 (59:48):
I do prep people for this I do prep people for this.

Speaker 2 (59:51):
It's not that I just started, yeah, yeah, and I
really appreciate that.
I've been one of the ones thatI have been running through my
head and I have like 50different answers.

Speaker 1 (01:00:02):
That's the one that comes up now.

Speaker 2 (01:00:04):
The first one was like an environmentally safe
alternative to glyphosate, but Ithink that's a simple one.
These are.
We're talking about systems andsystems scale impact.
And back to another movieanalogy.
Remember I grew up, I watchedMen in Black with my kids and

(01:00:24):
they had the flashy thing.
Instead of making people forget, I would like to have wave that
magic wand or click that flashthingy and it would be about
consciousness.
You touched, you stole mythunder.

Speaker 1 (01:00:39):
It would be that we had insight.

Speaker 2 (01:00:43):
We had insight and understanding into all of the
effects that modern industrialagriculture has had on our
health, on our communities, onour resilience, and so that it
could become a global priorityand initiative to transform our
systems to be more regenerative,because it does like, if I was

(01:01:06):
just to say, environmentallyfriendly alternative to
glyphosate.
That just fixes one thing.
I think, when we're talkingabout systems, it's a systemic
issue that really acquires aglobal consciousness, that
includes markets, that includesinnovation, that includes
technology, and I think thatthat would be what I would do,

(01:01:29):
is I would create that globalawareness and understanding that
motivates people to changethese systems at scale, both
here and around the world.

Speaker 1 (01:01:39):
I cannot imagine a better way to end this
conversation.
I want to thank you so much.
We literally scratched thesurface, but would love to check
in over time as the new millcomes online.
Of course, good luck with thefundraising off that and then,
which might be the mostdifficult piece, but probably
building it is going to be a lotof other challenges, because it

(01:02:01):
sounds good on paper and thenit always looks different.
So I want to thank you so muchfor what you do and for taking
the time to share here with usthe journey of flower and the
journey of regent, of growingflower and taste and flavor.

Speaker 2 (01:02:14):
Thank you, cohen, and again, thank you for what
you're doing.
Again, this is part of theglobal awareness and
consciousness that we justdiscussed.
So, again, this is reallyimportant.
We can do everything we'redoing here and other small mills
can do what they're doing, butwithout people really listening,
understanding and then takingthis information to make change

(01:02:39):
takes a village.
So thank you for having me onand look forward to a follow up
conversation, because I think wehave another couple of hours of
material to go throughAbsolutely.

Speaker 1 (01:02:49):
Thank you so much, Kevin.
Have a great day.

Speaker 2 (01:02:51):
Okay, okay, bye now.

Speaker 1 (01:02:58):
Thank you so much for listening all the way to the
end.
For the show notes and links wediscussed in this episode,
check out our website.
Check out our website atregenteregraculturecom.
If you liked this episode, whynot share it with a friend or
give us a rating on ApplePodcasts?
That really helps.
Thanks again and see you nexttime.

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249 Kevin Morse - Flour, flavour and nutrients, how a back to the future mill changes everything for wheat farmers

Episode Transcript

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On Purpose with Jay Shetty

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}249 Kevin Morse - Flour, flavour and nutrients, how a back to the future mill changes everything for wheat farmers