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'Acute' Pallet Shortages Putting Fresh Produce Supply At Risk
The shortages are "acute," according to United Fresh Produce Association’s letter to the industry in a news release
A Pallet Shortage Is Affecting
The Produce Industry In Many Ways
By AMY SOWDER
May 19, 2021
Severe pallet shortages are inflicting a widespread effect on the produce industry — including the availability of produce to consumers.
The shortages are "acute," according to United Fresh Produce Association’s letter to the industry in a news release.
The association detailed a multitude of issues that are impacting pallet availability, including:
Efforts of wholesalers, distributors and retailers to ensure sufficient inventory of non-perishables given previous pandemic-related impacts;
Availability of lumber to repair and build new pallets;
The escalating price of lumber when it is available;
Nonperishable inventory dwell time increase; and
Lack of available trucks to relocate pallets.
“The lack of pallets is adding stress to a supply chain that is already facing significant challenges, which include a lack of available trucks and shipping containers, ongoing labor challenges, fluctuating fuel costs, pandemic-related challenges, and a pending shortage of resin used to make reusable containers and pallets,” according to the release. “At this time, expectations are that the pallet shortage will continue for months, perhaps for the balance of 2021 – all at a time when many North American produce items are just beginning seasonal harvests and shipments.”
Listen to United Fresh’s John Hollay discuss this pallet issue with retail and Produce Market Guide editor Ashley Nickle in our Tip of the Iceberg podcast episode.
The issue has a wide and deep scope of negative impacts, according to United Fresh:
The shortage of lumber and wood products has increased the cost of raw lumber 200% to 350% and is making the cost of wood pallets increase incrementally;
In one example, in the past few weeks, pallet costs have increased more than 400%, if the pallets are even available, and often they are not;
One farmer was told by one pallet supplier that they are not taking any new customers due to an inability to fill even existing customer demand;
Companies are forced to bring pallets from other jurisdictions, thereby incurring border and transportation costs; and
Pallets are being held in-house due to delayed and canceled orders from pallet services, leading to higher storage charges and increased congestion within operations.
Company leaders along the supply chain need to collaborate to balance organizational goals relative to overall availability of goods with availability of food.
“If there is not a concerted effort across the supply chain to ensure pallet availability for shipment of produce, there is little doubt that it will be very difficult, if not impossible, for the grower-shipper community to meet buyer, and ultimately consumer, demand for produce,” according to United Fresh.
Also, growers and shippers are trying to comply with pallet requirement specifications, but this is even more challenging.
United Fresh’s stance is that temporary modifications or exceptions to pallet requirements — as long as those exceptions don’t jeopardize safety — would help greatly until this pallet shortage is resolved.
All partners in the supply chain should have regular conversations with their pallet suppliers to understand the situation and pallet inventories and availability, according to the release.
“We welcome the opportunity to work collaboratively with all parties within the supply chain to mitigate the impacts of the current shortages and will reach out to stakeholders to identify a path forward that provides solutions to this increasingly disruptive threat and enables the continued flow of goods,” according to United Fresh.
Learn more details with this interview.
Lead Photo courtesy Michael Gaida/Pixabay
Indoor Farms Gaining Investors As Pandemic Disrupts Food Supplies
Seed money from investors is helping indoor farms to position themselves as one of the solutions to climate change and pandemic-induced disruptions to the harvesting, shipping, and sale of food
BY KAREN GRAHAM
BY KAREN GRAHAM | 02-19-21
IN TECHNOLOGY
Seed money from investors is helping indoor farms to position themselves as one of the solutions to climate change and pandemic-induced disruptions to the harvesting, shipping, and sale of food.
When the coronavirus pandemic hit, it also exposed major issues with our food supply chain, including some issues that have already been attributed to climate change-related impacts.
The COVID-19 pandemic created shipment delays, and with inadequate demand forecasting, store produce departments suffered. This is when local vertical farms and indoor growing operations were able to step in and "fill in the gaps in a way that was unprecedented," writes GreenBiz
Water scarcity has been exacerbated in recent years by growing urbanisation and increasing demand from agriculture and industry. Fethi Belaid, AFP/File
There is a whole list of companies that are planning to build on their newfound momentum in 2021. And indoor farming is expected to grow. In 2019, revenue from vertical farming alone was estimated at $212.4 million. Forecasts now call for the industry to hit $1.38 billion by 2027, a compound annual growth rate of 26.2 percent from 2021 to 2027.
There are a number of established key players in the indoor and vertical farming industry, including Amazon-backed BrightFarms, AeroFarms, and Plenty reports Reuters.
An acceleration in funding for this industry lies ahead, after pandemic food disruptions - such as infections among migrant workers that harvest North American produce - raised concerns about supply disruptions, said Joe Crotty, director of corporate finance at accounting firm KPMG, which advises vertical farms and provides investment banking services.“The real ramp-up is the next three to five years,” Crotty said.
First developed around a decade ago, vertical farms have taken off in Asia and the United StatesThibault Savary, AFP
Vertical farming saves space
Vertical farms are a type of controlled-environment agriculture, which aims to optimize plant growth using soilless farming techniques such as hydroponics, aquaponics, and aeroponics. Vertical farms grow leafy greens indoors in stacked layers or on walls of foliage inside of warehouses or shipping containers.
The main advantage of utilizing vertical farming technologies is the increased crop yield that comes with a smaller unit area of land requirement.
The U.S. Department of Agriculture (USDA), says urban farming increases food security at a time of rising inflation and limited global supplies. And the USDA is seeking members for a new urban agriculture advisory committee to encourage indoor and other emerging farm practices.
More about indoor farms, food supply, technology, food security
Read more:http://www.digitaljournal.com/tech-and-science/technology/indoor-farms-gaining-investors-as-pandemic-disrupts-feeo-supplies/article/585761#ixzz6mwBqwKxt
Singapore’s Giant Vertical Farm Grows 80 Tons of Vegetables Every Year
The farm was founded by Panasonic, and it uses LED lights to quickly and efficiently grow produce indoors without depending on unpredictable weather conditions. Panasonic believes indoor farming is a key to the future that could solve food supply issues worldwide
by Lacy Cooke
This vertical farm in Singapore grows a whopping 80 tons of veggies every single year. The farm was founded by Panasonic, and it uses LED lights to quickly and efficiently grow produce indoors without depending on unpredictable weather conditions. Panasonic believes indoor farming is a key to the future that could solve food supply issues worldwide.
Panasonic started their indoor farm in a 2,670 square foot space and initially produced 3.6 tons of vegetables per year. But the company’s Agriculture Business Division assistant manager Alfred Tham recently told Business Insider that the farm has quadrupled its square footage and food output.
Vertical farming allows Panasonic to make the most of the warehouse space, although they do grow their plants in soil in contrast to many vertical farms. They source their LED lights from a local company. Rather than depending on sunlight or rain showers, the farmers can control the indoor farm’s climate – including pH levels, temperature, and oxygen.
40 varieties of crops grow in the indoor farm – from mizuna to romaine lettuce, mini red radishes, and Swiss chard. But the goal is to start cultivating 30 additional varieties by March of this year. Right now the flourishing farm accounts for just 0.015 percent of produce grown in the country, but Panasonic hopes to boost that statistic up to five percent. As Singapore currently imports more than 90 percent of its food, indoor farms could enable the island nation to become more self-sufficient.
Panasonic is selling the indoor farm’s produce under the brand name Veggie Life, and a three-ounce bowl of greens goes for around $5 in grocery stores. They also sell their produce to local restaurants.
Via Business Insider
Lifestyle Food Sustainable Agriculture, Food, Gardening, News, Sustainable
California Fires: “I’m Not Sure Growers Can Prepare For Something Like This”
California’s wildfires continue to press on as growers in the region watch and try to assess potential damage
Falling Ash Has Blanketed Most of The Salinas Valley
California’s wildfires continue to press on as growers in the region watch and try to assess potential damage.
As of Sunday evening, the state has seen more than 560 fires, two of which are being called the largest in the state’s history according to California Governor Gavin Newsom. The fires have burned more than 1,205 square miles across California.
“The immediate effects have been poor air quality due to smoke and falling ash that has blanketed most of the Salinas Valley and all the crops that grow here,” says John Galvez of Salinas, CA-based Markon. “The smoke makes an already challenging job more difficult for farmworkers, and although grower/shippers are adjusting production hours to minimize exposure, they may be forced to curtail production if conditions become too hazardous.”
Ash covers a farm worker's gloves. Photo: Markon Cooperative
“Ash is everywhere”
He adds that the ash is everywhere and impossible to remove completely. “Leaf lettuce crops that grow open have more substantial amounts that get trapped in between the leaves. It is expected that most field-packed crops will have some ash on them and require thorough rinsing,” says Galvez.
As Galvez says, while wildfires have impacted the Salinas Valley before, this River fire is the closest they’ve seen in proximity to farmland and may end up having the most impact compared to events of the past. “I’m not sure there’s anything growers can do to prepare for something like this,” he says. “But as these events unfold, communication to customers is critical to understand the challenges and how the supply and quality of fresh produce may be affected.”
Over at G.W. Palmer & Co. Inc. in Salinas, CA, Steve Johnston says he hasn’t yet heard of any crops that have been damaged and nor have there been any customer complaints over product that has gone out in the last week. (The situation has been building up following the first lightning strikes that began a week ago Sunday.) “I just don’t know how the poor workers were able to handle it. They had the masks on to help them so that’s a good thing. But the heat and the ash and the air quality have been unbelievable,” says Johnston.
Ash lands on field-packed lettuce. Photo: Markon Cooperative
Smoke and heat
He adds that while the heat is an issue, the smoke has actually helped somewhat. “The smoke has kept down the temperatures. It could have been a lot warmer had it not been for all the smoke in the sky,” says Johnston.
So for now, growers will continue to watch and wait. As Jeannie Smith of E Foods notes, fire firefighters in the region are acutely aware of stopping the fires prior to hitting the fields. “They know the financial damage a fire-ravaged field would cost. Not only the loss of product but the loss of jobs,” says Smith, noting that this is another challenge on top of COVID-19 related circumstances. “The fire crews are literally moving mountains to protect life and property,” adds Galvez.
That said, the impact could be wide. “Many people who work in the agriculture community live in the neighborhoods with evacuation orders or warnings so there probably isn’t a produce company in the area that hasn’t had at least a couple of people directly impacted,” says Galvez. “It’s made for an extremely stressful and disruptive week.”
For more information:
John Galvez
Markon
Tel: +1 (831) 757-9737
johng@markon.com
www.markon.com
Steve Johnston
G.W. Palmer & Co., Inc.
Tel: +1 (831) 753-6578
sjohnston@gwpalmer.net
http://www.gwpalmer.net/
Jeannie Smith
E Foods
Tel : +1 (407) 830-9498
jsmith@efoodsinc.com
http://efoodsinc.com/
Publication date: Mon 24 Aug 2020
Author: Astrid Van Den Broek
© FreshPlaza.com
Pandemic Proof: S2G Ventures on Why Resilient, Sustainable And Healthy Food Systems Are More Important Than Ever
The COVID-19 pandemic has caused a global health and economic crisis like none we have seen in our lifetime
by guest 18 May 2020
Sanjeev Krishnan
This is a guest post by Sanjeev Krishnan, Chief Investment Officer and Managing Director at S2G Ventures
The COVID-19 pandemic has caused a global health and economic crisis like none we have seen in our lifetime. In the food supply chain, this has impacted employees that ensure that food is planted, harvested, and processed, grocery shelves are stocked and food is available to all people. It takes a global village to feed the world, and we have seen selfless sacrifice and silent grit to ensure the continuity of our food system. Because, if our food supply breaks down, this pandemic may move from a crisis to a catastrophe.
Over the past several month’s several cracks have shown up in the food supply chain. The pandemic is challenging the nature of our global supply chain, stressing logistics networks, and reinforcing the importance of labor. There are concerns about food nationalism, continued access to labor, and redefining the nature of food security from global to national systems. While now is the time for urgent action – from government and private sector – there is a need for longer-term investments required for building a more innovative and resilient future food system.
Our team at S2G Ventures spent several months researching and monitoring COVID-19 and its implications to better understand these questions, keeping a close eye on the news cycle, conducting extensive desktop research, and speaking with various experts across many fields. We spoke to epidemiologists, healthcare professionals, farmers, entrepreneurs, philanthropists, and other investors to gather insights and develop our perspective on the implications of COVID-19 on the world of food and agriculture. We have compiled our findings into a report that explores the implications of the COVID-19 pandemic to the food and agriculture industry and identifies the areas of innovation critical to building a healthier and more sustainable food system.
As an investor in companies across all stages of the food system, we believe our role in the recovery is to ensure we build a more stable, resilient, sustainable, and healthy system. We will continue to invest in entrepreneurs and innovations that are the catalysts for meaningful progress. Below, we offer a summary of our report, which can also be downloaded in full here.
Pandemics 101: A History of Recovery & Innovation
Taking a look back in time, the world suffered a deadly pandemic in 1918. The Spanish flu, whose origin is believed to be a farm outside of Kansas City, spread quickly across the globe. Although the world was not as connected, World War I was still ongoing, and troops were being shuttled between the United States and Europe. Between 1918 and 1919, the Spanish flu is believed to have infected nearly a third of the global population and killed between three and 20 percent of those who were infected. In the end it killed between 40 and 50 million people. In the years following the Spanish flu, there was a bright period of innovation that included the adoption of the Bell telephone and modern medicine. It was an event that helped shape the future.
Between the Spanish flu and today’s pandemic, there have been seven major epidemics or pandemics. Each varies in mortality, duration, and contagion, but ultimately all come to an end. The economic recovery period that follows a pandemic-induced recession is generally different from traditional economic recessions. Pandemic-induced recession recoveries have generally seen a V-shaped recovery, while traditional recessions have varied between V-, U-, W-, and L-shaped recoveries. The global financial crisis of 2008 saw an L-shaped recovery. Typically, economic recessions have a longer duration and deeper economic consequences.
The coronavirus pandemic is unique among prior events. While many events have temporarily shut down regions, none have had the same global shutdown that we are currently facing today. So, despite being able to draw comparison and insights to learn from pandemic economics, the situation is different due to a staggering rise in globalization, digitalization across many sectors, and the rise of fiat currencies. Pandemic economic history teaches us that one of the hallmarks is that innovation plays a critical role in the future normal that emerges. As Professor Katherine A. Foss notes, “disease can permanently alter society, and often for the best by creating better practices and habits. Crisis sparks action and response.”
While the direct effect of COVID-19 is on the population – with infection rates, social distancing, and shelter-in-place restrictions and continued operations of only essential businesses – there are significant implications across many industries. The second-order consequences of coronavirus are reshaping industries, catalyzing innovation, and encouraging resilience in business planning. Although the lasting impact on many industries is unknown, we see exciting innovation accelerating across automation, telemedicine, virtual reality, and transparency systems (i.e., blockchain or similar technologies).
Everyone Eats – Pandemic Proof Demand, but Supply?
While the food and agriculture sectors are generally more resilient in bad economic situations, there are several sub-sectors that rely heavily on in-person labor and are currently strained due to the unique social distancing pressures placed on businesses. One significant pressure point is meat processors. Several large meat companies have been forced to shutter processing facilities due to COVID-19 outbreaks. Smithfield had to shut down one of its pork processing facilities that supplied roughly 5 percent of the U.S. pork supply, while JBS had to close a Pennsylvania facility that processed beef. The second-order consequence of these closures is the farmer, who may be forced now to cull their herds of cattle and hogs. The strain on this pressure point affects not only the farmer but also the consumer. Wendy’s felt the effects of this during this past week when nearly one-fifth of all 1,043 locations ran out of beef.
While it will take an extended period of time to fully understand the implications of consumer purchasing data coming out of the pandemic – more specifically if the duration of the consumer behavior shift will be a ‘fad’ or ‘trend’ – certain areas of the market are seeing a quick adoption of trends that were previously accelerating. As slaughter-house closures have increased, plant-based meats sales have jumped 200 percent. Plant-based meats remain a small portion of the market, but this is a significant and notable demand signal from consumers.
Coronavirus is notably changing how consumers shop, prepare and consume food. Between 2009 and 2018, out-of-home eating rose from 50.1 percent to 54.4 percent of the market. Now, with social distancing limited the ability to eat at restaurants, many are turning to preparing food at home or ordering delivery or takeout. And, despite food being a resilient sector, the bifurcation between grocery and foodservice has become clear.
In the grocery store, private label market-share gains are poised to accelerate, as consumers tighten spending and look for value-focused alternatives. However, we expect consumers to prioritize a balance of value and better-for-you brands instead of a complete tradeoff to value, consistent with the consumer megatrend towards better-for-you products.
Taking a step back, and observing the broader food value chain, we observed three primary delivery vulnerabilities in the food system:
1. Agricultural inputs to farms (e.g., seeds, animal feed, fertilizer, et al.)
2. Farm products to processors, packagers, spot markets and export markets
3. Food to retail distribution
This is important because the global food system relies on a just-in-time economy, where inventory levels are intentionally kept low. Meaning, that regardless if there is enough supply in existence, it may not be able to reach its proper destination if the supply chain is disrupted.
China, which provides a good example because it is further along in the lifecycle of the pandemic, has been suffering from this problem in the last several months. Upstream and downstream logistics are a major challenge; at the ports, there are thousands of frozen meat containers piling up because the trucking has effectively collapsed. Meanwhile, ports are running out of power, stoking fears that much of the food currently stored there will go bad. There is also an American company that makes immunization equipment for chicken that said their containers had been docked at Chinese ports for four weeks. Although China is doing its best to ensure that the grain planting season is not missed, the logistics of this supply chain are making it increasingly difficult.
The Future of Food – COVID-19 and Calories
While we continue to watch the situation and the strain it is placing on the food system, we view the common threat that could bridge the existing system to the future as technology. Consumer purchasing behavior coupled with innovation may drive changes in market share and pressure existing players in the market. Although we have not seen COVID-19 create a new trend, we have seen several trends that were in motion pre-coronavirus further accelerated by the pandemic, including alternative protein, indoor agriculture, digitalization of agriculture, and grocery and food as medicine.
Although animal agriculture remains a large and growing market, the pandemic has exposed challenges with the industries long production cycles, centralized production and limited processing facilities. It has allowed for faster consumer adoption of alternative proteins, including plant-based protein, fungi, algae and other biomass concepts including cellular meat. Notably, some of these technologies are further along than other, for example plant-based protein has been a trend for several years, while cellular meat remains in a research and development phase. We continue to believe that whatever the next generation of protein is, it will be driven by production speed, price and taste.
A second trend we believe is accelerating is food as an immunity. The convergence of food, science and technology may unlock this sector and usher in a new era in microbiome, functional ingredients, precision and personalized nutrition and medical foods. Prior to COVID-19, this was largely driven by nutrition-related disease, but the pandemic has exposed at-risk populations, with approximately 90 percent of hospitalized patients having one or more underlying condition, with the most common underlying condition being obesity.
Beyond specific trend acceleration, several themes emerge throughout this research that we believe may be catalyzed and emerge in a post-COVID-19 world. Digitalization will likely be driven by dis-intermediation to allow for new relationships with the consumer and to reduce risk throughout the supply chain. Decentralized food systems allow for the automation of local (alternative protein and produce) and the reshaping of complex perishable supply chains to reduce shrink and waste. They are also more omnichannel congruent as e-commerce, specifically online grocery, adoption accelerates. De-commoditization in the food supply chain, coupled with technologies that place deflationary pressure on the industry, may help catalyze breeding for attributes beyond yield (taste, protein content, et al), a return to polyculture farming and a shift from a strict focus on yield to profit per acre. Lastly, food as an immunity has the potential to bridge healthcare and food production and consumption for the treatment of specific nutrition-related chronic lifestyle diseases, as well as change the future of brands to focus on unique, functional ingredients. a
Our full report, The Future of Food in the Age of COVID, is available online.
_____________________________
Sanjeev Krishnan, Chief Investment Officer and Managing Director at S2G Ventures
Sanjeev has nearly 20 years of experience in sourcing, executing, managing, and exiting venture and private equity investments, including a focus in agriculture and food companies. As Managing Director, Sanjeev is active in developing investments and managing portfolio companies including, serving on many portfolio company boards. His portfolio work ranges from genetics, crop protection, soil health, digital/IoT, crop insurance, merchandising, indoor agriculture, novel flavor, and ingredients, new protein development, unique processors, and brands that will feed this changing consumer.
He is passionate about the role of innovation, entrepreneurship, markets, and system investing as a theory of change. Sanjeev has worked in the intersection of sustainability, technology, and health in many regions, including Europe, Africa, Asia, and North America. He has invested over $500 mm in venture and growth-stage firms throughout his career.
Sanjeev began investing as a co-founder of the life sciences practice of the IFC, the $99 billion private investment arm of the World Bank. His previous investment roles include CLSA Capital Partners, Global Environment Fund, World Bank Group’s IFC, and JPMorgan. Sanjeev is a graduate of the London School of Economics and Political Science.
About S2G Ventures:
S2G Ventures (Seed to Growth) is a multi-stage venture fund investing in food and agriculture. The fund’s mission is to catalyze innovation to meet consumer demands for healthy and sustainable food. S2G has identified sectors across the food system that are ripe for change and is building a multi-stage portfolio including seed, venture, and growth-stage investments. Core areas of interest for S2G are agriculture, ingredients, infrastructure and logistics, IT and hardware, food safety and technology, retail and restaurants, and consumer brands.
For more information about S2G, visit www.s2gventures.com or connect with us on Twitter and LinkedIn.