The coronavirus pandemic shutdown of restaurants, schools and other institutional foodservice operators in March sent shock waves throughout the agriculture community, particularly among growers of fresh produce crops, dairy farmers and ranchers, because over the last decade the foodservice channel has become as important to agriculture as the retail channel traditionally has been.
Before the shutdown, foodservice (food consumed away-from-home) accounted for a little over 50 percent of all food consumed in America, with food consumed-at-home (food sold in retail stores) accounting for roughly the other half. Over the last decade the growth has been in food consumed away-from-home.
The foodservice and retail channels in the U.S. are very separate and distinct (so much so in fact that even some of the produce grown for restaurants and other institutional venues is different in size and shape than identical crops grown for sale in grocery markets), which is why in most cases it’s been nearly impossible to simply divert fresh produce, dairy products, meats and processed goods that were destined for the foodservice market to retail distributors and stores.
This is the primary overall reason farmers have had to destroy crops and dump milk — the cost of harvesting and storing crops is just too prohibitive, and in the case of dairy farmers, their processors told them to dump the milk because of lack of demand — which is something they hate to do and have done only as a last resort.
New government initiatives like the USDA’s multi-billion dollar Farmers to Families Food Box Program, which was launched in late May, are now helping to divert some of these crops, meats and dairy products to food banks throughout the country.
Additionally, many more restaurants have opened for food delivery and pick up since March, and at the end of May dine-in service began to resume in restaurants in some parts of the country.
Demand in foodservice remains low though. Schools and other institutional venues remain closed as well. As such, farmers and ranchers are not out of the woods yet — and the summer harvest season is on the way.
Nobody — neither in government nor the best and the brightest in the food and agriculture industries — had a contingency plan in place in the event 50 percent of America’s food distribution and sales infrastructure was shut down. We don’t strategically plan that way for worst-case scenarios in the U.S. Going forward though we should. For example, many respected scientists and epidemiologists are saying we could experience an even more serious outbreak of the coronavirus in the fall, which likely would result in another shutdown. We need to be prepared in the near-term and down the road. Additionally, coronavirus won’t be our only pandemic. We need to plan for others that likely will come our way in the future.
We’ve already learned a few important things in the three months since the shutdown. Chief among them is that the supply chains for produce, meats, dairy and other goods are too long and too distinctly separate. This is the key reason why it’s been so difficult for big foodservice distributors like Sysco and U.S. Foods, which buy and distribute the majority of produce, dairy and meats produced by farmers and ranchers for foodservice, to pivot and get these goods into the retail channel — grocery markets and big box stores like Walmart, Costco, Target and others. It’s also why grocery store shelves were empty for so long during the consumer stock up phase of the pandemic in March and April. The respective supply chains — retail and foodservice — are just too distinctly separate, too complicated and too long. We need to shorten these supply chains and make them more resilient.
We’ve also learned a second important lesson, which is that farmers operate in a silo when it comes to communicating with the major players – distributors, packing houses, dairy processors, retailers and others — that make the supply chain work.
For example, most farmers I’ve talked with over the last few months weren’t aware of how separate the retail and foodservice supply chains are, nor how long and complicated they are. This isn’t their fault. Rather, it’s the result of how little communication there is between the people who grow our food and those who process, distribute and retail it. We all live in our own silos even though we’re all part of the same supply chain from the farm to the fork.
The third important thing we’ve learned to date is that we need to make food and farming a greater priority in our country. Agriculture is a national and domestic security priority, yet up until March of this year both the government and the public have taken it for granted. Case in point: The terms critical and essential aimed at farmers, farm workers and all the other people who work throughout the food supply chain only entered the lexicon in March. All were critical and essential prior to that but basically taken for granted, by both our political leaders and average Americans. Abundance can do that to a nation and its people.
There are three big things I suggest we need to focus on in food and agriculture in the wake of the coronavirus pandemic.
First, we need to make real efforts to shorten the supply chain. This is key for farmers and ranchers in times like this. In order to do so, I suggest USDA allocate a substantial sum of money in the form of grants and loans to family farmers and ranchers so those that it makes sense for can set up programs to sell some of their crops, dairy products and meats directly to consumers.
These would be online direct-to-consumer programs. Many innovative agriculturists have been doing this for years and many farmers have rushed to do so over the last three months. But I see a role for USDA to institutionalize this sales channel and to help farmers and ranchers get online. Direct-to-consumer has become one of the hottest sales channels in recent years for food companies — a way to bypass distributors and retailers to sell some of the products they manufacture — and it has the potential to become the same for many growers and producers, in this case selling directly from the farm to the fork. Doing this in a big way will also take some of the pressure off the traditional supply chain when future crises occur, making it shorter and more resilient.
The food and agribusiness industries, with the assistance of the federal government, also should devise a way to better integrate the retail and foodservice supply chains for future crises. With a solid contingency plan in place the ability to divert crops, milk and meats from one channel to the other if needed will be much easier and faster. It also will save money because there will be less need for federal programs like the multi-billion dollar Farmers to Families Food Box Program, which was created on the fly as much to save rotting crops as it was to provide food to food banks. It is a good and needed program, although full of controversy, but we need more from an industry perspective next time around. Having a solid contingency plan in place also will result in speeding up and shortening the supply chain, thereby getting more food to more people where it’s needed rather than having to plow crops under and pour milk down the drain.
Second, it’s imperative that all participants, from farmers to grocers, in the supply chain communicate better and regularly with each other. Few if any farmers, for example, attend food industry conventions, and virtually no grocers attend agribusiness conferences. This needs to change. I suggest agriculture industry groups like the Farm Bureau (and others) and food-grocery industry trade groups like the Food Marketing Institute, Consumer Brands Association (and others), create a joint- initiative together which has as its express purpose the mission of increasing communication, networking and information-sharing among farmers and the food industry. We’re all part of the supply chain and need to act like it. The connections made in such an effort will prove themselves in times like we’re living in now.
Lastly, we need to institutionalize the current recognition of farmers and farm workers as critical and essential to American society and the economy. Congress and the president should formally designate agriculture as a national and domestic security priority and do much more going forward to insure domestic food production. Doing so will signal to Americans that the federal government is walking the talk of critical and essential. The fact is that in an ever-increasing urban and suburban society like ours, farmers are becoming an endangered species and need more attention and better protections. The average farmer in the U.S. is 60 years old, for example. We need to ensure that there will be a new generation of farmers to grow our food.
We need to get back to real priorities — food, shelter and health — in our country. If the coronavirus pandemic has shown us anything, it’s that we can’t take the on-demand availability of food for granted, nor should we. The food we eat comes from farms, not the supermarket — although without supermarkets it would be much more difficult for consumers to obtain it — which is why shortening and improving the supply chain, along with the other related suggestions I make, is so important.
My Job Depends on Ag columnist and contributing editor Victor Martino is a writer and founder-CEO of Third Wave Strategies, a strategic marketing and business development firm specializing in the food and agribusiness industries. You can contact him at: victormartino415@gmail.com
