A conversation with Kevin Morse, cofounder and CEO of Cairnspring Mills, about the fascinating world of grain, wheat and the little secret of flour, building a new Back to the Future mill, and much more.

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This episode is part of the Nutrient Density in Food series!
This series is supported by The Grantham Foundation for the Protection of The Environment, which is a private foundation with a mission to protect and conserve the natural environment. The Grantham Foundation raises awareness of urgent environmental issues and supports organizations working to find solutions. Over the last few years, the Grantham Foundation has funded an extensive portfolio of projects focused on reducing emissions and removing carbon directly from the atmosphere.

Why regional agriculture processing is crucial for healthy soil, healthy people and healthy local communities. Not hyper local because that is fragile. At Cairnspring Mills, they are now hitting a ceiling and will scale up.

REGIONAL PROCESSING INFRASTRUCTURE IS CRUCIAL

Part of the future of regenerative farming is investment at scale in this middle infrastructure, with public private partnerships.

”I think, regional food processing infrastructure, is critical infrastructure. And I use that term because critical infrastructure is our job, as a council of government to provide essential services to our communities, water, sewer, roads, everything we need to really have the foundation of our economy in our community and to keep businesses there.”- Kevin Morse

”Look at the pandemic, when everybody realized how vulnerable we are to global supply chains. There are ways here, and I’ll give you an unfortunate example: by actually having that infrastructure in public ownership like we have here. No matter what I do with this business, this mill will be here. And if I fail at it, someone else can come in and take it over and give another try. We have a granary just down the road, that we’ve been contracting all of our grain storage, cleaning and delivery services. Unfortunately, that company didn’t make it. And instead of them selling off all those assets, its infrastructure the port owns. And so, we’re talking to the port now about assuming that lease and keeping that granary active not only for our business, but for the other farmers.” – Kevin Morse

”So, I think if we’re going to make our communities more resilient, like we talked about, here and around the world, this is critical infrastructure. Sorry, I’m going to get off my soapbox. But I’m so excited about the potential. And I can’t believe that the investment community really hasn’t figured this out. But there’s a way to weave together. What’s already here with really smart patient capital to do this at scale with huge impacts.” – Kevin Morse

REGIONAL MILLING IS EXCITING

The foundation of this businesses is the community, says Kevin

”This is the wonderful thing about the opportunity here and the timing and this community. The foundation of this businesses is community. And it’s really like an old-fashioned barn raising. If there’s people around that remember that, if somebody needed a barn, everybody would come chip in and help that person or the community build it. And we had all the things in place here. We had the port of Skagit, that had made a public decision to invest in value added agriculture, because agriculture was such an important part of our economy. So, they’re like, we’re going to help invest in the infrastructure. We had the Washington State University Bread Lab, Dr. Jones and Steve Lyons come over from the commodity system in eastern Washington, and they were blown away and discovered about what’s going on here with grains. We weren’t even on the wheat production then, here in Skagit Valley.” – Kevin Morse

FLOUR IS SUCH AN INTERESTING INGREDIENT. YOU CAN PAY THE FARMER MUCH MORE WITHOUT MOVING THE PRICE OF THE FINAL PRODUCT TOO MUCH

At Cairnspring Mills, they have high quality standards, and farmers have to meet them. They also pay the farmers a premium. In the early days, they put together what’s called enterprise budgets to understand what a farmer would need to break even and make money on the crop. Their founding principle is: it has to work for the soil, and it has to work for the farmer.

”Flour is one of these… I wouldn’t say it’s a dark secret, but most people have no idea what a mill looks like, where the grain comes from, or any sense the fact that grains and flour can be like wine grapes, there’s actually a huge variety that have tremendous spectrum of flavours and colours. And then from the economic standpoint, I was blown away. There are five companies that control 85% of the milling capacity and the flour.” – Kevin Morse

”Now, that was the aha moment. For me, I was like, wow, if you look at it from a business opportunity, and a system change opportunity, flour was ripe for transformation, just like craft beer, chocolate, coffee. All those commodities that had transformed and, at least somewhat, captured a large market share by creating a healthier, traceable, regenerative product. And so, there’s a huge opportunity here, not just in the Skagit Valley, but beyond. And I was like, this is it. If we can create a new regional milling system that works here, and then can create everything from the sourcing to the internal systems to the markets. There’s application, not only throughout this country, but worldwide. So, that’s when I was all in.” – Kevin Morse

”…taking care of our people. But if the baker can’t sell that loaf of bread to the consumer and close the loop, then we don’t have a business. And so they’ve been paying almost 50% more. We’ve been charging on a commercial level, sometimes double what the commodity prices are for flour.” – Kevin Morse

THE NEED FOR PATIENT CAPITAL, THIS IS NOT A VC INVESTMENT, IT’S A PATIENT BUSINESS MODEL

They have a number of investors that they’ve talked to over time. And there are a couple of things for them to be aware of, and one is that regenerative farming is place based.

”Regenerative farming looks different just about every place you go. So, one is: just setting the expectations and being clear, there is a tremendous opportunity, from an investment standpoint, to invest in the infrastructure, the middle infrastructure needed to bring regenerative farming to market. But one, they have to be clear that not everybody’s farm is going to look like a Gabe Brown’ss farm, right? From Kiss the Ground. Two: this is a patient business model. And they have expectations of a 10x return in three years is not what we’re talking about. But we are talking about, I think, a really healthy return over a 5-to-7-year period, from what we can see as remodelling out the new mill, and that it can be replicated.” – Kevin Morse

”We have the infrastructure in this country to scale and really provide secure meaningful investments for people. And I guess I have to say, we’re not a venture ready investment. And frankly, I’ve stayed away from venture investments, because we don’t want them controlling the board, maximizing profit at the stake of our values and principles, and then selling it for some multiple down the road to one of the big corporations.” – Kevin Morse

OTHER POINTS DISCUSSED

Koen and Kevin also talked about:

• Sourcing grain and sourcing protein
• Raising money to build the mill
• How do you have skin in the game

LINKS:

• Cairnspring
• WSU Breadlab
• The third plate book by Dan Barber 

LINKED INTERVIEWS:

• Dan Barber, great flavour, health benefits and healthy ecosystems can only come from healthy soils not a lab
• Dan Miller on the crucial role of locally owned processing in regenerative agriculture
• Nutrient density in food series
• Anne Biklé and David R Montgomery – After studying more than 1000 papers the definitive answer, we are what our food ate
• Zuzanna Zielińska – Women’s hormonal health starts with regenerative agriculture and the focus on quality and nutrient density food
• Fred Provenza – What should we learn from domesticated animals when it comes to food as medicine
• Stephan van Vliet – The first randomised clinical trial comparing agro-ecological grown and supermarket food
• David LeZaks and David Strelneck – Why the USDA gave a $600K grant to figure out how to pay farmers for quality
• Erin Martin – Saving $750K by providing nutrient dense fruit and vegetables to 50 people with severe diabetes for 12 months
• Pierre Weill – After certifying the quality of over $3B of animal protein a year, now turning to vegetables
• Eric Jackson – Want to work on nutrient density? Start with animal protein
• Yasmine Cathell – Deep nutrition research on a 350 hectare commercial arable farm, everything from counting worms to sap analysis
• Mary Purdy – Why a supplement company launched a flour product
• Paul Greive – How the biggest exit in regeneration led to millions of more chickens on pasture

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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.