CIVC’s smart contracts and pricing model aim to make organic food affordable, expand regenerative farming practices.
Colleen Kavanagh’s life mission is to improve nutrition, a goal she has attacked from multiple angles. For years, she worked to effect change on the policy front, lobbying on Capitol Hill and writing legislation aimed at elevating federal nutrition standards and improving access to healthy foods. Frustrated by slow progress there, she shifted to the industry side, launching mission-driven, purity-transparent, gluten- and allergen-free food company Zēgo in 2013.
The Certified B Corporation tests its nutrient-dense, delicious oatmeal, muesli and other breakfast offerings for more than 400 toxins, including heavy metals, pesticides and mycotoxins. Zēgo won two Natural Products Expo West NEXTY Awards in 2020: Best New Natural Kids Product for its Peace. Love. Crispies Cereal, and Best New Pantry Food for Double Protein Oats.
“Zēgo’s purpose is to provide safe food that will nourish you and help you be your best self, and a major part of that is making sure there is no toxic residue,” Kavanagh says. Along with verifying purity, the company champions radical transparency, reinforcing to consumers that they have a right to know whether food contains harmful substances — before they decide to buy. Zēgo uses its packaging to discuss its strict standards and even guide consumers to lot-specific testing data.
“You can just scan the QR code on our bag and see the results,” Kavanagh says. “Other brands could give you the same information, but they won’t do it unless you ask. We say, hey, we’re purity verified — what about the other guys? And we kind of peer-pressure them into doing it.”
With Zēgo’s winning recipe of healthfulness, transparency and tastiness fueling the brand’s success — and advancing Kavanagh’s mission to improve nutrition — she certainly could’ve stopped there. But she didn’t. Instead, Kavanagh and her team have spent the last few years tackling a whole new endeavor, one that’s multifaceted, ambitious and aimed at creating broader impact than a single brand could do.
Called CIVC, short for Collaborative Integrative Value Chain, this project involves taking ownership of Zēgo’s supply chain and introducing an ecosystem business model that benefits farmers, soil health, fellow mission-driven brands and, ultimately, consumers.
“We are leveraging market forces to make our vision of a healthier food ecosystem a reality,” Kavanagh says. “We drive to that vision through smart contracts, filling middle-of-supply-chain gaps and a revolutionary pricing structure — all of which work within our market system so consumers demand and companies want to supply the food that is best for personal and global health.”
From brand to supplier
Kavanagh’s journey to becoming supply chain actor really began in the late 2010s, when she met a group of Montana farmers who grew a “really pure, clean oat,” she says. They also owned a gluten- and allergen-free oat-processing facility and brand, both called Montana Gluten Free. Forging a partnership with this group prompted Zēgo to pivot away from nutrition bars, its initial marketplace offering, and enter the breakfast category.
Shortly after Zēgo’s oatmeal launched, COVID erupted. Navigating the turbulent pandemic years got Kavanagh thinking even more critically about her supply chain and contemplating self-manufacturing. “I just saw the writing on the wall for small brands,” she says. “If you’re not vertically integrated, you can only get your costs down so far, and it’s not really low enough to survive and scale.”
Also during this time, Montana Gluten Free’s farmer-owners wanted to retire, so they approached Zēgo about purchasing their facility and brand. After meeting with local farmers, food advocates and economic development folks, Kavanagh learned there was a huge need for regional processing of gluten-free grains. “At that time, there wasn’t anyone else doing oat processing, and there was nobody who could dehull millet or buckwheat in that whole region,” she says. Kavanagh and her team decided to go for it. They won a $3 million Organic Market Development Grant from the U.S. Department of Agriculture to buy the facility, expand its capacity, bring in new equipment and employ an expert team. Now, after almost three years of intense work, the facility, renamed CIVC, is almost up to full speed.
Value chain reimagined for good
As its name implies, CIVC is more than just a processing plant: It represents an entirely new supply-chain paradigm. Focused on organic and regeneratively grown, gluten-free crops, it prioritizes people and planet at every step, from the farmers to end consumers.
Starting with farmers, CIVC works directly with regional growers to process, purchase and market their oats, buckwheat and millet. “For example, in Wyoming, farmers sit on millions of pounds of organic millet because they’re waiting to find dehulling and a buyer,” Kavanagh explains. “We provide a regular place they can go. We can do it as either a tolling service — if a farmer has a load they’ve already sold, and they just need it cleaned and processed — or we can clean it, grind it into flour and sell it for them.”
CIVC also aims to build out new sales channels for organic millet, a crop with wild price fluctuations that make it tricky to move. One potential solution is the pet food industry. “Like 99% of organic pet food and animal food is imported,” Kavanagh says. “Millet is highly desired as a protein source and has a good fat profile, so that’s something we’ll look into as we get all of our machinery set up.”
On the brand front, CIVC services private-label brands Zēgo and Montana Gluten Free. It supports other values-aligned brands too, both by supplying ingredients and offering various co-packing services — although CIVC doesn’t operate like the average co-packer.
“Co-packers try to squeeze for price on the supply side and squeeze brands for price on the sell side,” Kavanagh says. “It can be a rather antagonistic relationship. We wanted to change that, so the facility isn’t considered a profit-making center.” Of course, CIVC must break even to stay viable, she adds, but it keeps margins as low as possible.
“If we can give farmers better prices, then they can expand their organic and regenerative acreage, which we desperately need,” Kavanagh explains. “Then we can give values-aligned brands better co-packing rates, and they can lower the price on-shelf so more consumers can access them.”
CIVC already has its first major buckwheat client: Lil Bucks, which was named Emerging Organic Brand of the Year at An Organic Night Out, an awards program at Natural Products Expo West that benefits The Organic Center and Organic Voices. Though its buckwheat is grown in Idaho, close to CIVC, Lil Bucks had been shipping it several hundred miles away for processing. “So, we save them a lot of money in shipping by processing it closer to them,” Kavanagh says.
Even before completing its infrastructure buildup, CIVC was already experiencing big demand for its services and products. “We’ve actually been a little overwhelmed by the demand!” Kavanagh says. “We have the first couple hundred thousand pounds of buckwheat from Lil Bucks that we’re working on first,” Kavanagh says. From there, more buckwheat business is all but guaranteed. “There is big demand for it, which we didn’t expect but are delighted to find,” Kavanaugh says. “Buckwheat surging in popularity, and there is nowhere else to process it in the region, so we can perform a great service around that.”
This year’s tariff roller-coaster and market uncertainly have further boosted demand for CIVC-produced ingredients. “On the oat side in particular, we’ve had a lot of people calling us looking for secondary suppliers,” Kavanagh says. “Certainly, people are realizing that getting all of their oats from Canada or another country creates a vulnerability.” Even so, the fact that U.S. oats cost more than Canadian oats gives some buyers — especially those from large food companies — pause, she adds.
Creating a farm-focused pricing model
Furthering CIVC’s impact, Kavanagh is currently developing a farm-focused pricing model, aiming to roll it out by the end of the year. “I realized that in the oat category — and I assume other categories — the pricing differential between conventional and organic is set on what they think the market will bear as opposed to what it actually costs,” she explains. “Because that differential is higher than it needs to be, it’s holding back growth of the organic industry.”
Under her model, more money goes back to the farmer, specifically to expand or improve their organic and regenerative acreage. Meanwhile, the price gap between organic and conventional narrows, enabling more consumers to buy organic products. “Of course, I’m making a big bet that I’m going to win on volume,” Kavanagh says. “But I’m willing to take a risk in order to find better systems and business relationships that work for everyone.”
As another key initiative, CIVC is implementing Zēgo’s purity-verification system throughout its supply chain. This way, when ingredient buyers call, CIVC can provide precise toxin data. Even if her company doesn’t land every sale, this high-level transparency pays off, Kavanagh insists, by demonstrating that it’s possible and, hopefully, prompting buyers to pressure other suppliers to follow suit. This is a lot like how Zēgo empowers consumers to pressure other brands — but with far fewer ingredient suppliers to compete with than brands, Kavanagh says CIVC’s influence as a supplier is much greater.
Now that she has a bigger platform to drive change, is Kavanagh ready to ditch Zēgo? No way.
“We will never get rid of the Zēgo brand, because the way we talk to consumers is through our packaging,” she says. “We still have to get into the hearts and minds of consumers. We have to convince them that they have a right to this information, that it matters to their health and that they should be actively involved in asking other brands to provide this level of transparency.”
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