Most countries are in different stages of the Corona virus pandemic’s progression, and their governments, banks, and industries have taken different steps to address the same. Regardless of the spread of Covid-19 across the globe, threatening livelihoods of millions, one thing remains constant: the life saving role of food supply chains and the constant need to keep them from being disrupted.
Covid disrupts global agriculture
The pandemic adversely impacted the pricing of agro-commodities. Farmers stalled significant investments, preferring to manage their spending tightly in anticipation of further price declines and uncertain market developments. Direct impact was on postponed machinery replacements and purchase of advanced seeds. Farmers turned to generic crop protection products rather than newer, more innovative offerings.
Additionally, during the past few months, share prices for agriculture companies fell across the board, with fertiliser producers and crop processors taking the biggest hit. Likewise, planting and harvest for this year’s crop has been interrupted due to various issues, ranging from labour issues to availability of machinery and price volatility.
People shifted to using lower or value-for-money ingredients while cooking at home, the consumption of animal proteins as well as fruit and vegetables went significantly low. Adding to the impact of shutdown of restaurants, hotels, and catering, the food already circulating within the system continues to be at risk, caused by lack of labour, disruption of logistics, border closures, restrictive transport, and operational shutdowns. The scarcity of workers needed to harvest produce has been addressed by countries and their governments with campaigns to attract workers and fill the gap, yet the overall impact remains insufficient.
This extremely unprecedented situation triggered vicious cycles of food wastages and fear and response phenomenon. For example, Kazakhstan and Serbia ceased exports of staples as sugar, potatoes, onions, buckwheat and sunflower oil. The disrupted and erratic logistics caused complications in the supply chain of the agri-food value chain and significant loss in revenue.
Supply Chains and Demand Shocks
Global supply chains geared up to supply the hotel, restaurant, institutional trade are probably not equipped or are ill-suited to supplying the food retailing sector, owing to disparity in package sizes, distribution infrastructure, created an unavoidable time lag in repurposing these supply chains.
We also expect consumers to become increasingly price-sensitive combined with loss of jobs will also influence retailer-buyer behaviour with respect to product category management and contractual relationships with suppliers. With these trends rose the importance of building robust buyer–supplier relationships. Strong and collaborative relationships help cushion supply chain resilience. Suppliers are more likely to “go the extra mile” (e.g., priority restocking) in times of crisis for a retail buyer that has developed a mutual, understanding relationship with its suppliers.
Growing awareness of ‘What you eat’
Considering the Corona virus, consumers all over the world are becoming even more cautious about making their food choices. Despite the community differences, consumers majorly appear to worry about in-store safety and hygiene, preferring healthy and locally sourced options than they did before Covid-19.
In a survey conducted by McKinsey & Company, data represents that three-fourth consumers are focussing on boosting their immunity through more exercise and healthy eating. In most countries, an increase in consumption perceivably healthy food (for example, fresh foods, eggs, dairy and bottled water) was observed and a huge dip in purchases of alcoholic beverages and snacks.
To address these consumer shifts in consumption, food retailers have a definitive role. Possibly, rethinking their offerings and provide healthier, more locally sourced products (including ready-to-eat and ready-to-cook items) with least environmental footprint and integrating digital technology, would be the way forward.
Food businesses are exploring new and different ways to scale up their e-commerce channels, upping their capacity for home delivery, partnering with last-mile payment integrators and warehouses among others.
Also expanding shifts in existing warehouses, using hybrid picking models, monitoring the stock using technology and traceability from origin to retailer and further to customer doorstep is inevitable. Many food retailers are increasingly looking at tracking end-to-end food value chain and considering how technology can make things safer for customers.
Shifting focus on traceability & real-time data
A report suggests that the Canadian Food Inspection Agency (CFIA) has prioritised a number of services, including inspection services, export certification, import inspection services, food safety investigations and recalls, animal disease investigations and emergency management. The global need for real-time traceability in each step of food processing and production are at an all-time high.
Most food retailers must focus on using data to measure on-shelf availability in real-time. As far as supply chain goes, they are looking at adopting technology sufficiently in warehousing and transportation to reduce labour dependencies. Enabling machine learning forecasting would help spot abnormalities fast and adjust immediately.
Active e-commerce usage indicates, accelerated investments in a seamless online-to-offline experience. As food-agri businesses proactively shift spending to online channels, a model that serves the customer better and is sustainable over the long-term will be preferred.
Digitally Sustainable Agriculture
The current agricultural practices raise growing concerns about the effect of high-intensity agriculture the increasing carbon footprint, the external costs such as fertiliser overspill into water bodies like lakes and rivers, and its immediate negative impact on biodiversity and more. BCG report said, almost 80% of consumers in the EU view environmental issues surrounding agriculture and the production of healthy and sustainable food as key point in their decision-making.
Clearly, all agriculture and allied companies must make sustainability a strategic priority, across their innovative products and services and in their own business and operations. Solutions that reduce costs for farmers, safeguard their current cost structure while increasing sustainability, would gain immediate market share.
For crop farmers, these products include organic fertilisers and biostimulants, crop protection products and digitally enabled tools for better agronomic decision-making.
Farmer-Centric Agri-Tech Solutions
Many traditional farmers have adopted digitalisation and are seeing results in improved crop, cycle, market linkages and access to information. Some of transformational farming technologies underway testing and implementation include weeding and harvesting robots, ultra-precision-spraying drones, high-efficiency vertical-farming facilities that use minimal water and avoids loss of nutrients.
Having said that, these crucial solutions yet may not deliver a value proposition to the farmers. We put primary emphasis on creating ‘digital proximity’ with the farmers, enable them with data driven go-to-market tools that make available timely, customised recommendations and prescriptions to them at the convenience of their hands, made possible by both web and mobile applications.
Conclusion: Let us make hay while the sun shines
As bleak as things look for the global economy in the midst of the Covid-19 pandemic, the global agriculture industry is primed for recovery. Considering positive factors like the commodity prices are stable, farmers appear to be boosting investment, and in most countries their government plans to push sustainable local agriculture simultaneously increasing food security.
(The author is CEO, SourceTrace)