COVID-19 restrictions force innovation by food industry
Stay-at-home and non-gathering mandates due to COVID-19 concerns have led to massive reductions in worldwide foodservice demand.
According to the U.S. Census Bureau, restaurant sales in the U.S. plunged a record 26.5% from February to March, when the restrictions started. Monthly sales averaged $65 billion from April 2019 through February 2020, but were just $48.6 billion in March. Numbers for April were not available at press date, but losses were expected to be even larger.
Supermarket frozen, canned, dehydrated and fresh produce sales have spiked during virus shutdowns, as people stocked up on supplies and ate at home more than they normally do. An American Frozen Food Institute (AFFI) study showed frozen food sales were up 30 to 35% during April, year-over-year.
The gains from retail have not been enough to offset the losses from foodservice, which includes not only restaurants, but schools, hotels and other tourist destinations that have been shuttered. The situation has led to backups in the perishable food supply chain, as processors don’t need as many fruits and vegetables as they expected. Dairy and livestock have been just as susceptible.
The potato industry is a prime example, as frozen french fries are a staple on restaurant menus around the globe. Millions of pounds of potatoes meant for processing facilities sit in storage sheds. In turn, processors have cut contracted acres with growers for 2020, as anticipated need is hard to calculate. McCain Foods, the world’s largest processor of frozen potato products, has laid off employees from several North American facilities.
Dozens of produce associations, including the United Fresh and the National Potato Council, have urged the U.S. government to assist food producers during the crisis in the form of surplus purchases to give to food banks and other charitable organizations. The Department of Agriculture responded with the $19 billion Coronavirus Food Assistance Program, announced April 17.
Kam Quarles, CEO of the National Potato Council, told Produce Processing that it was requested that the USDA buy some already-processed produce to help processors clean out their backed-up supplies and create some demand. The first round of assistance was mostly direct payments to growers to offset their losses and surplus purchases of fresh product still in storage.
“All the major players (including processors) in the (potato) industry really got together and locked arms on this in saying ‘this is what we need,’” Quarles said. “We lost our biggest customer (foodservice), and the government needs to become that customer.”
Quarles is optimistic that more assistance is on the way in the coming months as the situation unfolds.
Meeting challenges
Trade shows and seminars have long been a way to learn about the latest technology and insights, no matter the industry. With the COVID-19 restrictions, in-person events were postponed or canceled this spring. Some early-summer events also have been delayed or called off.
Instead of canceling its annual trade show and convention, like so many associations have done recently, the United Fresh Produce Association got creative.
United Fresh LIVE! is a new free virtual event that will connect produce suppliers, customers and other stakeholders and provide education in similar ways that an in-person trade show does. It will feature virtual booths for exhibitors, live chatting, presentations, discussions and programming that can be viewed live or after it happens, much like a webinar.
The trade show and convention had been planned for June 16-18 in San Diego. The new LIVE! online event will take place throughout the week of June 15-19.
“It’s going to look like you’re walking through a trade show,” United Fresh President and CEO Tom Stenzel said. “There is going to be educational content, meetings and discussions. We’re creating all those experiences online that we love and enjoy in person.”
RELATED: United Fresh LIVE! announces schedule
The event will take place on an existing platform that has been customized for United Fresh and its exhibitors. Each exhibitor will be able to change its online booth, so to speak, to fit its needs, just like an in-person booth. Exhibitor reps will be able to interact with attendees either live or through messaging.
Stenzel said having in-person events will remain a high priority for United Fresh moving forward, including this fall’s United Fresh Washington event.
Like United Fresh, TOMRA Food is bringing its in-person equipment demonstration experience to the homes and offices of food producers. In early April, the company announced the availability of virtual TOMRA Test and Demonstration Centers.
How the system works is an interactive session is booked with one of the regional TOMRA centers, which are in Leauven, Belgium, Xiamen, China and Sacramento, California. Participants can watch equipment operate and correspond with sales representatives via live video.
“We are going through a period of unprecedented disruption,” said Ashley Hunter, senior vice president and head of TOMRA Food. “Our foremost priority is to ensure that we support our customers’ ability to maintain a consistent supply of quality food, while keeping our employees and, by extension, our customers and suppliers … safe.”
COVID-19 has not only backed up some supply chains, it has caused a shortage in others. Medical-grade face masks and hand sanitizer, to name a couple.
Many distilleries used spirits no longer needed by bars and restaurants to make sanitizer. One was Michigrain, which uses excess potato starch from Better Made Snackfoods to produce potato vodka.
With face masks in short order, Massachusetts-based Lacerta Group, which makes plastic packaging for food and other industries, used its production capabilities to create medical-grade face shields for healthcare workers, as well as members of the food supply chain, like grocers.
Another challenge has been finding a home for the previously mentioned backlog of perishable produce meant for processing. That is why the Produce Marketing Association (PMA) and supply chain logistics firm iTradeNetwork partnered on the iTradeMarketplace.
The platform helps connect buyers and suppliers who may not usually do business together. The service, which was announced April 13, is free to PMA members for six months.
“Technology can be a powerful ally in times of crisis, and we are putting our platform to use in a different way that aims to help companies in the food supply chain navigate these uncertain times,” said Rhonda Bassett-Spiers, CEO of iTradeNetwork. “The agility of iTradeMarketplace empowers participants to move at the speed of the crisis and respond to local, as well as global, food supply chain needs.”
MORE: COVID-19 creates unprecedented times for food supply chain
