How fresh produce businesses stepped up during the pandemic

 

As Covid-19 began to bite, many compared the demand supermarkets faced to that of the Christmas period. During the peak of consumer panic, grocery sales rose by over 20% in the UK, according to Kantar. But despite doomsday predictions of food shortages and collapsing supply chains, the shelves remained stocked and, on the whole, disruption to available food options was manageable.

And while serious thought needs to be given to how the challenges that lie ahead will be negotiated, fresh produce businesses can be broadly proud of how they stepped up to meet this fluctuation in demand. This article will try to uncover the exact challenges they faced, and how they overcame them.

 

How did demand change?

It’s difficult to accurately say yet how fresh produce demand shifted as a result of coronavirus, but we have been able to observe a number of trends:

 

Fresh produce retail sales rose

A study in the United States showed that retail sales of fresh produce retail were significantly higher than normal in March 2020. By the end of that month, volumes of fresh produce in retail channels were 23% higher than at the same point in 2019.

Another report published at the end of May found this trend had begun to reverse, but sales were still around 13% higher year-on-year. Joe Watson of the Produce Marketing Association (PMA) declared in June that the industry had sold an additional $2.7 billion worth of produce at retail in 2020. 

The reasons for this are manifold and yet to be fully understood - but the biggest is likely to be a significant transition to home-cooking and eating, which leads into the next big trend of the pandemic so far.

 

Supplies dramatically shifted from hospitality and foodservice sectors to retail

The pandemic has been a unique crisis in the way that it severely limited the fresh produce industry’s access to the enormous foodservice sector. With a range of “lockdown” and quarantining measures implemented in most countries, the closure of cafes, restaurants, bars and even schools have impacted the way businesses sell their produce.

This, combined with a prolonged period of quarantine and home working for many people, has led to around a 25% volume shift directly from foodservice to retail. The biggest impact this has had on fresh produce businesses is the major changes they’ve had to make to their operations in a short period of time.

 

The vast majority of industry businesses and workers experienced day-to-day changes to their operations

A survey from The Packer in March revealed 86% of US fresh produce industry members had experienced an impact on their operations. This is hardly surprising given the truly global disruption caused by the pandemic, but it’s worth looking exactly at what shape that disruption has taken:

  • 66% of respondents reported they’d had to change travel plans
  • 56% reported they’d either cancelled events or were considering doing so
  • Only 16% of businesses have asked staff to work from home, but 40% say this is being discussed

strawberries

What was the response from the industry?

The best and shortest answer to this question is probably to say that businesses worked extremely hard to cope with the higher workload now required of them. But to meet a challenge of this scale, more than hard work was needed. Businesses had to adapt through embracing new and refined practices, by working together and with help from industry regulators and governments. As ever, those with the best handle on their operations through technology were the best prepared.

 

Help from above

From the outset of the pandemic, it was clear that external financial support and guidance was going to be important for keeping the food industry on track. The European Commission clearly sets out a number of actions that they took on behalf of the EU agribusiness sector, including:

  • ‘Green lanes’ to keep supply chains moving quickly
  • Seasonal workers given ‘critical worker’ status
  • Loans or guarantees of up to €200,000 for farmers
  • Higher maximum state aid for farmers and food processing firms
  • Amnesty on selected EU competition laws

Governments around the world have implemented their own measures (including a $19 billion package for farmers in the US), while food bodies have released advice bespoke for the industry. In the UK, the Food Standards Agency (FSA) published guidance addressing a range of concerns including accommodation, transport and warehouse hygiene. This final point seems especially pertinent given a spate of Covid-19 outbreaks in meat packing plants.

 

Operational and logistical changes

To continue supplying the supermarkets with food, fresh produce businesses need to remain open and operating - and this means doing everything to prevent staff falling ill. As with every company returning to physical workspaces, a great deal of work and new health protocols were required. The problem for fresh produce businesses was that due to the hands-on physical nature of their work, working from home was never an option. This meant these sweeping changes had to be introduced essentially overnight.

Social distancing between workers where possible became mandatory, as did the rearrangement of working spaces needed to facilitate it. Face masks, visors and other vital PPE were sourced quickly and often at great cost given initial shortages. Staff, especially those in senior positions, received fast-track training to organise the response and ensure the regulations were adhered to. 

Meanwhile, risk assessments became part and parcel of everyday life, especially in packhouses and warehouses. Judgements had to be made quickly regarding the most essential operations, the minimum staff required to carry them out effectively, and how best to streamline practices to maintain efficiency while remaining safe.

Stock management also became even more vital, as the FSA points out. They advise extra checks on ingredients and materials to spot those past their sell-by date, and quick disposal of those that are. This also applies to cleaning products, which the FSA advises keeping larger stocks of. Businesses also needed to make sure they had as tight control as possible over production and purchase schedules. With the chances of delays in supply chains increased and the necessity of switching produce volume from foodservice to retail, logistical organisation is as crucial as ever.

 

Building local networks and the fresh produce model of the future

The pandemic has also spurred innovation on a local level in the food sector. Local food unions have been set up in communities to support small fresh producers, especially those more heavily reliant on trade with the restaurant sector. These unions allow businesses to reach consumers more easily, while simultaneously serving a real social purpose by helping vulnerable people and key workers during the pandemic. 

Meanwhile, direct-to-consumer has become a more viable model for both producers and consumers in the face of more limited choice in supermarkets, and there is real hope that this will remain a significant portion of a fresh produce business’ income once the pandemic is over. 

There is also a sense that the reaction of the industry to the crisis has reaffirmed its value in the eyes of the public. A study by the NFU found 75% of people now had a positive view of UK farming - the highest figure since they began polling this question in 2012.

A recent report from Fruitnet Media impresses the importance of more integrated supply chains and systems of production through automation in the wake of the pandemic. And as we have previously touched upon, advanced technology like Enterprise Resource Planning (ERP) will be absolutely crucial going forward in building these better, more efficient, more integrated systems. With an uncertain future ahead for the industry post-pandemic, one of the only certain things is the need for businesses to invest in such technology.

White Paper  What can ERP offer to agribusiness? Download