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Brands Embracing Transparency to Feed Consumers Hungry for Responsible Food Choices

While it might not win any Academy Awards, certainly the best title for a movie this year has to be the food industry critique, GMO OMG. On the surface, it is an attack on genetically modified seeds and what they are doing to our health. Underneath, it is an emotional play on a father’s frustration with the clarity of our food system. What is in our food and where does it come from?

Those questions will increasingly guide consumers’ shopping patterns in the coming years. We have already seen the Farm to Table movement begin to reshape the restaurant industry. There are clear signs the same is about to happen to the supermarket sector.

In terms of genetically modified food, where one lives determines how much might be in your diet. Over the last ten years, the corn crop in such major growing countries as the United States, Canada and Argentina has switched from being less than 10% GMO to 85%. Yet in Europe, due to regulations, GMO penetration is essentially zero.

Which foods contain GMOs and which do not? Good luck finding that out now, but over the next few years it will be much easier. Whole Foods has announced that “by 2018, all products in their U.S. and Canadian stores must be labeled to indicate whether they contain genetically modified organisms.”

In addition, states are beginning the long, gradual movement down this same path. California narrowly rejected such a measure last year, but in June 2013 Connecticut became the first state to require genetically modified food to be labeled. This was done with the caveat that it will go into effect when similar legislation is enacted in four other states (one of which must share a border with Connecticut). Maine has since enacted similar legislation, Vermont has legislation pending, and New Hampshire has started drafting legislation as well.

As this plays out, the question is quickly becoming: can Field to Table become a reality? Can we create a tracking system that is able to quickly and efficiently identify where our food comes from and how it is grown? Whole Foods says it has already received 900 inquiries from producers and manufacturers about how to start this verification process. And they already have thousands of products in their stores that are certified organic and/or GMO-free.

Momentum should continue to build, as several companies have been creating a verification process and the infrastructure is in place to move ahead on a larger scale.

As a socially responsible investment firm, our interest has been in uncovering companies that will enable this trend to unfold. We believe barriers to information are falling quickly across all industries in this increasingly mobile, app-centric world. And food is one of the major arenas that is seeing these barriers crumble.

Two companies, SunOpta and the aptly named Where Food Comes From, are front and center of this trend. We believe that companies such as SunOpta are providing tremendous opportunity for growth. As the global population increases, a dedication to healthy living is simultaneously rising. Companies that provide the mass market an opportunity to eat foods that support health and sustainability have typically seen demands surge.

With about $1 billion in revenue, SunOpta is the largest company specializing in the sourcing, processing and packaging of natural, organic and specialty food products. They have roughly 100 people who work with farmers, serving as their supplier of non-GMO seed and as purchaser of their crops. SunOpta then either sells this grain to processors or turns it into final packaged goods. The company purchased 60% of the organic soy crop in the U.S. last year; as demand grows for more organic and non-GMO crops, SunOpta’s experience in sourcing and verifying them should prove to be very valuable.

Where Food Comes From is a small, profitable, 18-year old company at the heart of auditing in the livestock industry. Employees conduct visits to farms to verify that producers are meeting the standards they display on the label: Organic, Gluten-Free, Hormone-Free, Non-GMO, Grass-Fed, Humane Handling, Source & Age etc. They verify marketing claims for about one million head of cattle per year and about 50% of the pork in the country.

All of the beef, pork, chicken, and turkey products that Whole Foods sells in the U.S. and Canada have an “Animal Welfare Rating” from the Global Animal Partnership, a nonprofit group that set up a 6-Step Animal Welfare Rating Standard. The Global Animal Partnership requires independent, third-party certification companies to assess compliance of operations. Where Food Comes From is one of three companies that are authorized to audit and certify meat products for the partnership (and the only publicly traded company).

Whether we say OMG over GMOs is a question we can struggle with individually. But having clear labels that provide us with this data will be one of the more important changes coming to our food system. Maybe there should be an Academy Award for that.

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