In an era of waning government subsidies and immense supply chain disruption due to Covid-19, the effects felt by the agricultural business are far from over, forcing a reckoning in a business model that has persisted for decades. In the face of the craziness, the industry has a unique opportunity to triumph, using Covid as a lesson to create a more agile business model primed for success and protection from future disturbances. Distributors, processors, marketers and farmers alike all feel the pressure, with a need to be more innovative and agile amounting before the reliance on traditional safeguards is much too little, too late.
More than ever, fostering and maintaining a connection with your core consumer is critical, to not only withstand short-term disturbances in the marketplace, but also prime for enduring brand loyalty and preference in years to come. This spans not only retail consumers, but all customers across various channels—from foodservice operators and buyers to retailers and distributors. At the core, each of these customer groups are consumers by nature, and by providing not only confidence in the value of your product, but also an emotional connection to your brand, creating buy-in and ultimately driving enduring preference.
With the grocery model on the decline and disturbances to the foodservice distribution model, seeking out innovative solutions to get product to consumers is a crucial pivot point, solving for the immediate surplus of foodservice goods as well as contributing to the future of the food supply—through delivery, commissaries, direct-to-consumer models, and even drones. A Denver, Co. distributor is leading the charge in this area, completely pivoting their foodservice model to a direct-to-consumer delivery-based business following restaurant closures due to Covid. At first, they offered foodservice-sized packaging to consumers at wholesale prices, and due to scale and demand, have now optimized to offer smaller pack sizes, delivering goods directly to consumers’ doors without the retailer middleman.
Through technologies ranging from blockchain to Artificial Intelligence and beyond, agribusiness can take heed from consumer goods and financial industries and their integration of advanced technology to create a more efficient and transparent operating model. At the ground level, the eye toward Smart Agriculture employs data learning and algorithms to optimize crop production in real time—through sensors, drones, and even early forms of AI and robotics, also known as the FaaS (Farming as a Service) model. In addition to optimizing production, the IoT is driving responsiveness and efficiency in trade settings as well due to the hyper-transparency and responsiveness of blockchain integration. This technology not only helps optimize the supply chain from end to end, but also delivers on the values that consumers now have come to expect from their food sources. With increased pressure on production in the coming decades due to an exponentially rising population, adoption of advanced technologies will be a crucial step in the future of agriculture.
The extremely fragmented and diversified global marketplace is facing a reckoning, with countless mass retailers across categories shuttering multiple locations and, in some cases, filing for bankruptcy. In times of need, humans band together, pooling resources and taking care of their loved ones and communities, and to thrive into the future, corporations and agribusiness must do just the same. The long-championed public-private partnership (PPP) model is becoming a distinct reality allowing the agricultural sector to partner with private ventures (e.g., grocery, R&D kitchens in foodservice and CPG operations), achieving short-term goals like keeping prices down and sheltering the burden on consumers, as well as long-term opportunities for growth, contract security and efficiency.
Food insecurity is a harrowing reality for many across the globe—and even in our own backyard—and has only been heightened by the global crisis and ever-widening disparity. In such a pivotal time of action and change, agribusiness has an opportunity to be a force of good in communities, finding ways to boost the bottom line as well as solve real problems in the food system in local communities. Through alternative distribution channels such as food banks, below grade and excess produce can go to communities in need while solving for food waste and surplus, creating a new, synergistic model to inspire the future of agricultural production.