Supply chains snap

Oct 18, 2021 | Emerging business models | 0 comments

Home » Blog » Supply chains snap

COVID-19 has exposed supply chain shortcomings in the US where the rise in unemployment and sudden shuttering of foodservice caused a spike in demand for US food banks. But of filling the supply gap, US farmers were left with food rotting in the fields.

In the first three weeks of April, 265,000 Californians applied for government food assistance under the state’s CalFresh program, doubling the number of applicants for food assistance year-on-year. Food banks were experiencing shortages as usual donors shuttered or sold out, leaving little if no food donations at all. The American Farm Bureau Federation and Feeding America penned a letter to the USDA with recommendations on how to redirect supply and allow farmers to work directly with food banks to secure farm-fresh products quickly to families in need. After restaurants closed as part of lockdown measures in March, producer groups estimated US$1bn of fresh food was stuck in the supply chain. Farmers from Florida to California left crops unharvested with nowhere to send it as the USDA undid red tape to send help.

Last week, the USDA outlined some US$1.2bn in federal contacts for its food program, fast-tracked due to the pressure from producers. The program buys up a variety of excess perishable food items, distributed to food banks and other non-profits where Americans in need can pick up the boxes. However, several industry leaders were not among the names of the companies selected for the program with contracts awarded to small businesses and those that support local and regional farmers. The US ag secretary Sonny Perdue said the program was a new innovative approach to provide critical support to American farmers and families.

Industry participants have called it ‘puzzling’ and said it was clear some of the companies applied without understanding what’s required to purchase, pack and distribute fresh food at the scale the program requires. A US$39m contract was awarded to a Texas-based event marketing agency with prior experience in planning weddings and executive entertainment and travel. The company is rising to the challenge by hiring 125 workers, including chefs, project coordinators and safety specialists to distribute the boxes.

The USDA’s Farmers to Families Food Box Program is slated to purchase US$300m each month of US produce, dairy and meat with meat giants Cargill and Tyson and Borden Dairy also awarded contracts. Food distribution is scheduled to begin mid-May and run till the end of June. The USDA’s audit of the program will tell if the “innovative approach to critical support” will effectively distribute food to where it’s needed.  Given the chaotic and disjointed wider COVID-19 response from the Trump Administration, there’s every chance the program budget will be eaten up in packaging and distribution costs.

This article was tagged: