The fresh produce industry offers a tightly knit global network that fosters both competition and support among farmers worldwide. While it is often heard that much of the business has traditionally been done on trust and a handshake, growers are starting to reconsider their selling methods in light of the pandemic.
Although selling direct has been popular for many years, it causes the grower/producer to carry the bulk of the risk, including the costs of producing a crop, harvesting and packing a crop, and marketing and shipping a crop, and of course credit risk. These concerns are compounded by external factors such as weather and the availability of water, let alone labor. The pandemic has taught us that supply chain dynamics and their costs are often beyond the control of producers, adding another layer of complexity to the industry.
Over the past decade, producers have learned that selling directly to the retailer/wholesaler/importer or foodservice distributor does not guarantee a better return to the farm, as things often go sideways when dealing with perishable products.
There can be an abundance of challenges when collecting money from customers who might be a world away and not necessarily proficient in your language. Margins are also typically extremely thin in the produce industry, causing cash flow delays to be a big deciding factor when choosing which orders to fill. Furthermore, USA PACA protection does not apply to export-dependent areas such as Peru, Chile, or Canada.
As such, producers are left to wonder if they should consider returning to more familiar paths to market such as partnering with companies that are experts in exports, allowing them to demand transparency of the costs along the supply chain and ensure the protection of cash flows.
In an industry where weather events and disasters create both challenges and opportunities, players must be capable of pivoting to survive. Going forward, this industry built on trust may see producers choose a more protected path to market.