The need is facing consumers, farmers and small businesses as the US economy grapples with 40-year highs with inflation and pandemic-induced supply chain shortages emerging again with China imposing COVID shutdowns. -19.
US sanctions against Russia and its ally Belarus over the invasion of Ukraine have also pushed up the prices of gasoline, farm products and fertilizers further and raised concerns about shortages of corn, wheat and other foods.
But those same supply chain and inflation issues are also spawning business spins, innovative gimmicks and entrepreneurial ideas across the country to help navigate the economic landscape. It’s the proverbial make lemonade from lemons.
the whole pig
In Idaho, a new group was born during the pandemic aimed at better linking area farmers and food producers with restaurants, bars and stores. Boise-based group FARE Idaho seeks to go beyond networking meetings and marketing campaigns in its effort to boost local businesses and farmers.
“There is a huge demand for locally sourced produce right now,” said Katie Baker, executive director of FARE Idaho.
The group is holding classes to teach chefs how to slaughter animals so restaurants can buy more meat in bulk.
“We teach chefs how to shred animals at home,” Baker said of the whole hog approach.
FARE is also looking for better ways to connect local food sources with restaurants, including through technology platforms. The Idaho group was established in March 2020 and has 300 members. It works with farmers on water conservation and regenerative agriculture that is healthier for the earth. It helps them explore new crops and changes in their production and marketing plans.
Baker sees promise in better connecting local farmers, chefs and food artisans to help them with cross-marketing.
“People want to know where their food comes from,” said Baker, who will start hosting larger events to connect constituents in the group.
Many restaurants are on the brink of extinction after all the closures and restrictions of the pandemic and now inflation, product shortages and labor shortages, Baker said.
“A lot of them are facing closure,” he said. “They barely survive. There is a labor shortage.”
Local businesses and farmers have opportunities to support each other and find new lines of income with supply chains facing ongoing delays and shortages, he said.
“It may be easier to source locally right now,” said Baker, whose group is looking at how technology platforms and apps can better link food producers and commercial customers.
More supply chain problems could be on the way with the Chinese government imposing strict COVID lockdowns on Shanghai, home to the world’s largest port. The manufacturing centers are closed with the 25 million residents of Shanghai sequestered in apartments.
The port closure will be felt throughout global supply chains for some time, said John Rosen, a finance professor at the University of New Haven in Connecticut and chief executive officer of global marketing firm MCAWorks.
“It will be at least a year,” Rosen said of the logistical impacts of Chinese COVID shutdowns on some products and industries.
That could affect industrial components needed for infrastructure and construction projects, as well as consumer goods, he said. The current wave of lockdowns in China affects up to 40% of the world’s second largest economy.
in the wagon
Nick Carter is a farmer from Indiana who founded Market Wagon Inc. in 2016.
Carter designs his business model as an online farmers market aimed at bringing more last-mile deliveries from local food artisans and farms to local consumers. The Indianapolis-based company links local farmers with local consumers in 33 markets across the country through an online platform and logistics system.
Market Wagon serves larger metropolitan areas such as Chicago, Atlanta, Minneapolis, Washington, DC, and Baltimore, as well as outlying and mid-sized regions such as southern Wisconsin, southern Maryland, and southeastern Ohio.
The online farmers market is open year-round. The company also offers a larger footprint for local farmers and food producers, Carter said. For example, the company says it can connect Maryland farmers with a market audience of 5.7 million in the DC/Baltimore region.
“We dramatically expanded our geographic footprint during the pandemic,” said Watson, who grew up on his family’s farm. “We went from six cities to 33 in 18 months.”
Carter said inflation is driving up prices at grocery stores, and that’s closing the price gap for traditionally more expensive locally produced foods.
“While supermarket prices are going up, our prices don’t seem that premium,” Carter said.
Consumers feel the wave of inflation more through higher gas and grocery prices. Food prices rose 8.8% in March compared to a year ago, while the cost of gasoline increased 18% in one month and 48% in the year, according to the consumer price index of the US Bureau of Labor Statistics
Empty shelves and higher prices for staples like eggs, produce and meats combine with consumer preferences for organic and locally produced items to help drive demand, Carter said. Some major supermarket chains, including Publix Supermarkets Inc., Albertsons Safeway and Kroger, have posted monster profits and sales growth during the pandemic and wave of inflation.
That is upsetting some consumers and sending them looking for alternatives. Consumers pay a flat rate of $6.95 per Market Wagon delivery. Market Wagon gets 25% of sales compared to 50% for many traditional wholesalers. The company also seeks to bring fresh, organic food to so-called food deserts, whether they are in rural or urban areas.
“We don’t rig our delivery areas,” said Carter, who is focusing on growing market shares in existing markets before entering new regions.
Challenges of change
Getting farmers to adapt to new platforms, technology, and supply chains can be challenging.
Many farmers are resistant to changing crops or farming strategies, said Ron Rabou, president and CEO of Rabou Farms, an 8,000-acre organic farm in Wyoming.
“People are very, very slow to change. Most of the guys are what I would call very much wedded to a system,” said Rabou, who grows organic wheat and other crops.
Multigenerational inheritances keep some farmers focused on certain crops, but there are other drivers as well, Rabou said. Some other farm operators focus on commodity prices and growth through acquisition rather than market demand and innovative production practices.
Rabou said his farm has planted crops other than wheat after projecting high demand. These include chickpeas, lentils, hemp, and buckwheat.
It is not always as easy as planting different seeds. Many farms are major commercial operations with significant investments in certain crops.
Different crops may require different equipment, machinery, and processing systems, as well as different fertilizers and soil treatments. Those costs, along with the risks and uncertainty of planting new crops, can discourage agricultural changes.
Some changes may be forced on the market, including building better relationships with customers and distributors, especially with supply chain issues.
“When you’re chasing price, you can’t build loyalty,” said Rabou, who also pointed to ongoing supply chain issues.
“We have a very good relationship with the trucking companies we work with. We never have a problem shipping our products. If you don’t have them, I don’t know what to do,” Rabou said.
Farmers, nurseries and growers are also facing rising prices for fertilizers and other products, as well as drought conditions in some parts of the country, especially the West and Pacific Northwest.
The price of fertilizer, a vital element of agriculture, growing seasons and food production, has soared after the United States imposed bans on imports from Russia and Belarus. Prices were already high before the war and the resulting sanctions. Now they have doubled, tripled or more.
“Fertilizer is the big deal right now,” said Sean Ellis, spokesman and publications editor for the Idaho Farm Bureau.
Russia is the world’s leading fertilizer exporter with a $9 billion industry. Belarus is another leading exporter of fertilizers with an industry close to $3 billion.
That’s just the tip of the iceberg, said Ellis, who points to higher energy and other costs.
“Farmers’ costs have increased by 20% to 30% minimum,” he said.
Fuel oil prices, for example, rose 70.1% between March 2021 and March 2022, according to the BLS. Energy prices rose 32% overall, with staggering impacts on transportation and logistics companies, as well as food supply chains.
Rising fertilizer costs and concerns about shortages are at the wheel of HomeBiogas, an Israeli company based in the US in New York. HomeBiogas develops and sells digestive systems for homes, farmers, and businesses that convert manure and waste into biofuels and fertilizers.
“You introduce organic waste into the systems,” said Mira Marcus, a company spokeswoman.
The units create biofuels for heating oil, as well as organic and homegrown fertilizers. Marcus said the company has sold 15,000 units in 107 countries. He is also seeing increased demand from farmers with a global focus on fertilizer prices and supplies.
“We have a lot of farmers using this,” he said.
Home units can cost between $800 and $1,500. The company is focusing this year on larger industrial systems.
“It’s aimed at industrial kitchens, hotels, military bases, schools, corporate campuses, restaurants, anything that has a large kitchen,” Marcus said.
That can help commercial customers grow their own food through their own fertilizers. DIY systems help reduce methane emissions by converting animal and other waste into biofuels and fertilizers, she said.
That may appeal to customers who are weather-conscious and want more control to get needed supplies like fertilizer.
“We are giving a solution to two problems: waste and fertilizer management,” said Marcus.