Morgan Stanley
  • At Scale Podcast
  • Nov 9, 2021

The Honeybee Effect

Transcript

Audrey Choi:

Hi. I'm Audrey Choi, Chief Sustainability Officer at Morgan Stanley, and CEO of the Institute for Sustainable Investing. Welcome to season two of At Scale. Let's start by imagining January in Gackle, North Dakota. A semi-truck is pulling up to a large warehouse. Inside, there are rows upon rows of stacked boxes.

John Miller:

Darn cold outside, but it's a temperate 40 degrees on the inside, and the semi drives in one end, stops right in the middle.

Audrey Choi:

That's John Miller. This is his warehouse, and unlike a lot of warehouses, there's no fluorescent lighting overhead.

John Miller:

We want it to be dark and quiet and calm and safe, and I'm in that building just about every day, monitoring and checking, making sure that the fans work, that the oxygen level is good, that the humidity level is low, that the temperature is stable. And it puts these bees into a deeply restful state.

Audrey Choi:

Yes. John Miller is a beekeeper, and every January he wakes hundreds of millions of his bees out of that restful state and sends them to work. But first, they've got a nearly 2,000 mile commute by semi-truck.

John Miller:

Yeah. It's about 40 loads down, and then you can get 350 to 450 hives on a semi, depending on how heavy those beehives are. Tarp it all down safe, and then you open the door on the other end of the warehouse and the semi driver departs and gets on the freeway and heads for California.

Audrey Choi:

And to put this in perspective, John is just one of about 2,000[1] beekeepers trucking over a million hives[2] to California every year. Why? To fulfill their critical role in putting food on our tables. You've heard about the butterfly effect, how a small change can have a big, sometimes unpredictable impact. Well today on At Scale, we find out how the tiny honey bee is actually an economic and ecological giant, responsible for one third of our global food supply[3], and connected to more than four trillion dollars[4] in economic activity. And that matters, because honey bees, our essential[5] insect workers, are in trouble.

John Miller:

I see every year American beekeepers lose 35, 45% of their hives. We can't sustain this. This is unsustainable.

Audrey Choi:

Last season on At Scale, we met people finding innovative solutions to our global plastic waste problem. This season, we're taking a close up look at things that may seem insignificant, things we may take for granted, but like the honey bee, they have or could have a big impact on the way we live, the flow of capital, and the future of our planet. And if we invest in them, and really understand their power and potential, they can help us build a more sustainable future. And when it comes to honey bees, it's all about pollination power, something Dawn Musil learned as a teenager on her family's apple orchard in Ohio.

Dawn Musil:

We had 40 acres and it was usually pretty consistent in terms of crop fields, but then there's one year we just had really bad apples. Small, under-formed, and brought in a crop consultant and they informed us that it's largely because of a lack of sufficient pollination. So if you think of anything you eat, say chocolate, avocados, apples, that started off as a flower and then from the bee visiting, they were able to move the pollen to the next plant, which is what enables that fruit, or the baby of the plant, to be born. And so they recommended to get in some beehives, and you can't just go to the grocery store and get beehives. And my mom and I started beekeeping to help with the pollination.

Audrey Choi:

Once the bees came in, the crop flourished. The experience left a big impression on Dawn. She went on to become a bee broker, connecting farmers who need pollination help, with beekeepers who wanted to make extra income.

Dawn Musil:

I'm just bouncing from bee to bees. I've also done other things. I'm not just a bee person, but mostly I am.

Audrey Choi:

That pollination work is a big deal because...

Dawn Musil:

More than 70% of all of our food is reliant on pollinators, and the major pollinator that we use in particular is honey bees, Apis mellifera.

Audrey Choi:

What's different about bees as opposed to butterflies, or flies, or any other insect that lands on flowers?

Dawn Musil:

Yeah. That's a great question, because they're pollinators as well. Butterflies are very incredibly important pollinators. The only really big difference is pollination efficiency. The bigger the bee, the better and more pollen they can move from plant to plant. Butterflies move smaller amounts, but also I think the biggest factor is that we don't have managed colonies of butterflies. It's honestly ten thousand years of human history in engaging with beekeeping, and so we know how to manage hives for our agricultural practices.

Audrey Choi:

But over the last 50 years, there's been a big shift in farming and food production, a shift that explains why billions of bees now travel around the country in semi-trucks. John Miller has watched it happen.

John Miller:

The dynamic has really changed because this planet seeks insect-pollinated foods. They're healthy and nutritious and good for us. Our western honey bee is the global champion of pollination, but the demand, the demand for insect-pollinated foods, that's only going to expand. Especially as we try to feed this hungry planet.

Audrey Choi:

John knows his bees do important work, and he's spent a lifetime learning about them.

John Miller:

This is a super organism just loaded with individuals. There may be a hundred thousand individuals in this super organism we call the beehive, where no one's giving directions but everyone obeys. Isn't that incredible? This is just the most interesting job ever. I've got the best job in the world.

Audrey Choi:

John actually grew up on the job. His great-grandfather started Miller Honey Farms in 1894[7]. Today, John keeps about 16,000 hives, which is medium sized when it comes to migratory beekeeping. And until fairly recently, most of their income came from honey.

John Miller:

So in the old days, it was a 30% pollination income, and 70% honey production model. Well, it's completely reversed now.

Audrey Choi:

Now, a huge chunk of John's income comes from one crop, a crop that relies on pollinators.

John Miller:

The almond industry in California began to emerge in the early '70's, and the demand for pollination services began to grow, and soon outstripped the readily available beehives in California. And so beekeepers like us started bringing bees to almond orchards in central California.

Audrey Choi:

And when they roll up to those orchards, John's bees join billions of others in what is described as the biggest pollination event on Earth[8]. Over the last 25 years, the California almond industry exploded, jumping from 370 million pounds to 3.1 billion pounds[9], feeding our growing appetite for the almonds, as well as almond milk, almond flour, and almond butter. Today, California alone produces a staggering 50 to 80%[10] of almonds worldwide. The orchards cover an area the size of the state of Delaware[11]. But without honey bees, it doesn't happen, and while almonds are the most lucrative pollination crop, with farmers paying between $150 to $200[12] per hive, managed honey bees play an even bigger role. They sustain our food system, pollinating around 90[13] different commercial crops.

John Miller:

With peaches and plums and the early season cherries are in California, in April we will send bees up into Washington for apple pollination. And once the bees have finished their work in the apples, they're pretty much ready to then come across and return to North Dakota in May.

Audrey Choi:

Peaches, plums, cherries, apples. In fact, one out of every three bites of food you eat was pollinated by a honeybee or other insect. Our dependency on pollinated crops shot up 300%[14] over the last 50 years. Globally, pollination services are worth more than three trillion dollars[15], and now because we expect to have these foods all year round, at a reasonable cost, for a growing population, there's a lot of pressure on honey bees and they're feeling it.

John Miller:

I see every year American beekeepers lose 35, 45% of their hives. I see every year beekeepers struggling and restoring their outfits to... the count they need to make a living. But it costs enormous amounts of money and time and labor to get the hives back up to strength.

Audrey Choi:

There are a lot of reasons behind the big bee losses. Parasites like the varroa mite feed on bees and spread disease. Then, there's the pesticides farmers use to maximize crop yields, and the stress of travel. But another problem looms large for the tiny honey bee. Turns out, these little food producing powerhouses are running out of food of their own.

John Miller:

There just aren't enough flowers. We need more flowers, because modern farming is roadside to roadside, ditch to ditch, and not a weed anywhere in the corn or the soybeans or the wheat, and there's just fewer flowers everywhere.

Audrey Choi:

When the bees aren't on the road doing their essential work, they're back home in North Dakota making honey, honey that will feed them through the winter while they rest in that climate controlled warehouse. But they need flowers to make those honey reserves, and when they don't get enough, John has to step in.

John Miller:

I'm the gatekeeper for these hives, and it's my responsibility to, if I can't put them in prosperity's path, a big field of blooming flowers, then I must prevent them from perishing. So feed them, or give them a medicine to keep them healthy.

Audrey Choi:

And this past summer, John faced another challenge, one that's a lot harder to solve. Climate change. When we first spoke, one of the worst droughts in modern history[16] was still scorching much of the American west, mid-west, and parts of Canada.

John Miller:

Right now in North Dakota, and big chunks of Canada, it's a desert. If you’re a honey bee, it's a desert. It hasn't rained here for six weeks.

Audrey Choi:

In 2020 alone, that drought is estimated to have caused up to $23 billion[17] in economic losses, and in the future, those losses could be even higher. The drought took a toll on John's bees, and wreaked havoc on California's water-hungry crops. Some farmers even abandoned fields of almond trees they couldn't irrigate[18]. As consumers, there's no doubt we will feel its impact too, because fewer bees and fewer crops means higher prices[19] at the grocery store. And when John looks even further into the future, and sees more drought and extreme weather, he's worried about what this means for business, but more importantly, what it means for bees and the food supply.

John Miller:

Sadly, American beekeeping is becoming unraveled because we can't sustain this. This is unsustainable. I don't know how many times we can bring it back. I really don't.

Dawn Musil:

We know that bees are dying. We understand that there's losses. It's very big in the news, but what is this bigger picture?

Audrey Choi:

For the past few years, Dawn Musil has been looking at the big picture from a new perspective, as an MBA student at Oxford University. And that helped her see an opportunity.

Dawn Musil:

What you have right now in the pollination economy is a lot of movement and transportation of these hives around the country. It's pretty high carbon emissions, and you're risking more stress on the hives, more potential spread of disease.

Audrey Choi:

Dawn teamed up with three other Oxford students to create Beebank & Brokerage, a tool to finance a more sustainable pollination economy. They're starting out by helping sideliner beekeepers, people with 50 to 500 hives, break into the lucrative $20 billion[20] pollination industry.

Dawn Musil:

They're not full time beekeepers, so they're not out there building these relationships with farmers. And so we help manage that, the relationships, the contracts, and the logistics.

Audrey Choi:

That matchmaking, or bee-brokering work, lowers cost and creates stability for farmers and sideliners. And by focusing on connecting sideliners to local farmers, they reduced transport emissions, stress on hives, and the spread of disease. The banking part of the business comes into play because sideliners who want to grow, or even just maintain, need capital. And right now that's hard to come by.

Dawn Musil:

Agricultural workers, or people looking to scale up, often are dependent on collateral like land, and beekeepers don't often have that. They're often holding their hives on someone else's land, and if your collateral is something that is pretty risky, being a beehive, it's harder to offer those loans. So certainly there are companies that do that, but it's more of a one-off rather than a designed instrument.

Audrey Choi:

I mean, given how critical bees are to agriculture, and therefore global food supply, is finance for bees not part of existing agricultural subsidies and other programs for farmers large and small?

Dawn Musil:

Well, we would love to talk to more people who are working on the same problem. So far, we haven't really found anyone else doing that, and that's what we're working on. There are small grants available for people who are starting in beekeeping, and that's something we also find valuable to be able to help people access. But they're often pretty small.

Audrey Choi:

Beebank & Brokerage helps out by offering a range of working capital loans. $100,000 might go towards buying treatments and nutrients to keep pests like the varroa mites from destroying a colony. It might help a sideliner set up a wintering warehouse like John Miller's so the hives have a better chance of being in good shape for pollination season. When you think about it, investing in small scale, local beekeeping operations is investing in our own food supply and climate resiliency. By 2050, we'll need to feed two billion[21] more people. Adding just one beehive per acre of apple orchards would increase crop yields by nearly 15%[22]. On a hungry, warming, increasingly unpredictable planet, that can make a big difference. Plus, there's lots of room to grow.

Dawn Musil:

If things scale as effectively as we'd like to, then Australia also has a massive beekeeping market that is experiencing some shifts right now, as well as trying to, there was massive loss of hives and resources over COVID because certain provinces were cut off. And so there's just a lot of potential for systemic shifts in apiculture, and we'd like to see it grow across the board.

Audrey Choi:

Because of that potential, Beebank & Brokerage won the 2021 Kellogg-Morgan Stanley Sustainable Investing Challenge. Each year, the challenge issues a call to graduate students from around the world to bring us their best ideas for a financial innovation that could be not only profitable and scalable, but also drive significant environmental or social impact. Beebank & Brokerage's support and loans offers a unique solution. They might also help beekeepers access bee saving technology that involves taking a closer look and listen to the secret life of bees.

George Clouston:

Just clicking on hive number one, I can see that they've been flying quite well today. There's about 15,000 trips.

Audrey Choi:

George Clouston is a beekeeper in the northwest of England. He's also head of global development at BeeHero, a company that uses sophisticated hive monitoring technology to support effective honey bee pollination and gather data about their welfare around the world. Today, George is at home, but checking in on his beehives five miles away. He simply logs onto an app on his computer.

George Clouston:

I can see that the temperature is actually really good. It's very stable, 34 and a half degrees.

Audrey Choi:

George can see all this thanks to a few high-tech devices installed in his hives, devices he's been helping to develop for more than a decade.

George Clouston:

So that's the little sensor.

Audrey Choi:

He holds up a small, white, plastic clip about an inch wide that has a microphone in it.

George Clouston:

It has a temperature sensor and a humidity sensor. So that's telling you about the status of the colony, the queen, and that just clips over the top of the frame like that, sits at the top, and that's it. No wires. You literally just push it on, and once it's in, it sends its data to what we call a gateway unit. It's effectively a mobile phone inside a box. So basically it collects data from the sensor, and then sends it by the cellphone network to a Cloud company. So then the beekeeper, whoever's interested in the data, logs into an account and they can see what's going on with their bees.

Audrey Choi:

The application is also gathering data from a slim, plastic, rectangular bee counter that sits at the entrance to the hive. It keeps track of bees going in and out, and can help a beekeeper see if a hive is strong and finding a lot of food in the field.

George Clouston :

I think we have a high scale that sits under the hive. It weighs it, and that really tells you about how much honey and food they've got inside the hive and how much they're bringing back and how much they're eating.

Audrey Choi:

The app is trained to recognize patterns in the data, the sounds, temperature, and weight changes that indicate all is well or not well with a hive. So that if something is off, a beekeeper gets an alert, and they can quickly act when their bees are in trouble. For example, if the computer recognizes this sound, which is the sound of worker bees fanning their wings, it cross references the scale and the sensor to determine what's happening, because it could mean the bees are in distress or a new queen bee has emerged and left on a mating flight. The beekeeper gets an alert, because that's a vulnerable time for a hive.

George Clouston:

While she's out, the whole future of the colony hangs in the balance, and the bees fan while she's out on her flights. They push pheromones out from the hive to attract her back to the hive, so she can help find her way home.

Audrey Choi:

This technology gives beekeepers a few key things. Reduced labor costs because you don't have to physically check in on your hives regularly, and real time insight without having to disturb the bees. After all, think about a hive inspection from the honey bee's perspective.

George Clouston:

It's like if you're at home and a giant comes along, takes the roof off your house, pulls the furniture out, let's all the heat out, shakes you about a bit, and then puts you all back together and walks off. You think, "Whoa, what was all that about?" It's sort of quite disruptive. You still need to do inspections. There's no replacing that completely, but if you can actually do that when you need to do it, as opposed to just doing it to have a look, see what's going on, it can actually, can save time and actually can save disturbing the bees.

Audrey Choi:

George says hive monitoring technology helps us understand the best conditions for healthier, happier, and more stable bees, which translates into optimal pollination. But there's more. The bees also act as sensors themselves, telling us a lot about the health of the local ecosystems.

George Clouston:

So they like centrals of the environment. By understanding what the health and the status of the colony, you understand the health and the status of the environment in which they're living. So the bees can actually inform us about what's going on. We can actually learn stuff from bees without a doubt. So if you get a loss of habitat, you get fallen bees, and so on. And if you improve the habitat, you'll get more bees and then you'll get more seeds, nuts, fruits. You can actually take specific actions to improve the biodiversity by listening to the bees.

Audrey Choi:

George and BeeHero are working to make their monitoring technology available on an even larger scale by partnering with The World Bee Project, a community interest company that's collecting data on 2.5 billion bees[23] in 50,000 intelligent hives in the U.K. and Europe. They're working on expanding that network in developing economies.

Sabiha Malik:

Our main focus is on enabling small holder farmers and beekeepers to improve their crop yields and incomes, and basically to build more resilient food systems. But, in all these areas, we see that women farmers make critical contributions to farming, but they don't often have a voice in their communities.

Audrey Choi:

That's Sabiha Malik, the founder of The World Bee Project. They're using some of those smart hives on a project in east Jerusalem in Israel.

Sabiha Malik:

We partnered with a established Israeli and Palestinian NGO's, and we trained 16 women in sustainable beekeeping to learn new skills, to develop an additional livelihood option, and to generate cash income for themselves from the sale of honey. In these societies, it's really important that women have incomes of their own because it empowers them. It announces their status in their families and in their communities.

Audrey Choi:

Sabiha recalls one of the participants who expanded her rooftop beekeeping setup to include a garden where she grew vegetables, pollinated by the bees. She started inviting people to tour her space.

Sabiha Malik:

So it became a kind of domestic bee tourism, which was very lovely because she was inviting people to tea and telling them about the life of the bees and how her own personal life had been affected by it. And there's a very amusing aspect to this as well, that there were men in the community who began to look at the women with great respect as very brave people. They thought, "These women are really brave that they are going so close to the hives, that they're not afraid of being stung." So in addition to everything else, the women are now seen as heroic persons.

Audrey Choi:

The World Bee Project wants to enable more women and small scale farmers to become bee heroes. With the help of BeeHero technology, they aim to get a global picture of bee and ecosystem health, and thereby a holistic approach to addressing sustainability and food security.

Sabiha Malik:

When you are working with farmers, we're really helping them to learn about the role of maintaining healthy ecosystem services. Pollinating plants, maintaining healthy soil, controlling pest, providing habitat for wildlife. All of this is vital to food production and the livelihood of these farmers. But it is also important for mitigating climate change.

Audrey Choi:

Back in North Dakota, beekeeper John Miller is taking a similar, but lower tech approach to fighting bee declines. He's working with a non-profit, the Bee Informed Partnership, to create more pollinator friendly environments on farms, in people's gardens, and in some surprising places like commercial distribution and fulfillment centers.

John Miller:

There's one opening in Fargo late next month. Why don't we take the area beyond the pavement and just seed it into some flowers, and these hundreds of distribution centers could operate as nutrition islands. And it wouldn't cost anything. This is my dream. I would just like to see us think as a society. I'd like us to think a little more about the planet we occupy and how we're taking care of it. This is not rocket science. I'm getting a little wound up.

Audrey Choi:

Maybe we should all be getting a little wound up. Next time you see a honey bee buzzing around your garden, stop for a moment. Consider the critical role honey bees play in growing your food, how they add trillions of dollars to the economy, and help us maintain biodiversity and ecological balance. And then consider the challenges that bee is facing. Climate change, industrial forming, and loss of habitat. To create a more sustainable world, we need to help our pollinator partners survive and thrive. There's no magic bullet solution. Solving these problems requires many approaches tailored to different settings. But if we bank on bees, finance and support beekeepers make innovative monitoring technology more accessible, and plant more flowers. Honey bees will fare better, and we will too.

Audrey Choi:

Next time on At Scale, from bees to trees. What happens when we go beyond the popular planted tree campaigns, and tap into the power of trees as infrastructure.

Audrey Choi:

I'm Audrey Choi, Chief Sustainability Officer at Morgan Stanley and CEO of the Institute for Sustainable Investing. Thanks for listening.

Who would have thought the wing of a tiny honeybee drives a trillion dollar economy, global food security, and economic resilience for women. Host Audrey Choi explores the impact of these essential workers on our global food supply, and why protecting them is so essential to our own survival.

In this episode, we meet John Miller, a beekeeper who each year sends millions of bees on a road trip to California where they participate in the biggest pollination event on earth. Then we meet Dawn Musil of Bee Bank and Brokerage who's helping small scale beekeepers tap into the billion dollar pollination industry. George Clouston of Bee Hero shares how high-tech tools are helping monitor and protect bees globally. Sabiha Rumani Malik of the World Bee Project explains how these tiny creatures are creating livelihoods and economic independence for women in the Middle East.

Morgan Stanley's Institute for Sustainable Investing