Farmers seek help from startups after food supply chain disruption

When the coronavirus outbreak forced many restaurants and their food supply channels to suddenly shut down, it left farmers who provide much of the produce to that industry scratching their heads as to what to do next.

"A few months ago, I suddenly felt like everything was a question mark," said Sean Hagan, founder of Maine-based Left Field Farm, which grows organic vegetables, fruits and seedlings. "We did not know who we were going to be able to sell to."

As heaps of produce sat with nowhere to go, local farmers were in need of technical support and a robust network to pivot their produce from restaurants and other low-demand sectors to the retail industry. Some realized their old business models were not sustainable and needed to immediately connect with new customers if they were to remain solvent amid and through the pandemic.

Online sign-up systems with startups like Forager helped Hagan and his farm communicate their produce availability to retailers and local grocery stores in the past few months. And local consumer-supported agriculture programs also significantly helped keep the farm afloat, he said.

Other startups such as Big Wheelbarrow and Codify have provided farmers access to a digitized food supply network and allow them to track demand cycles in real time.

Founded in 2016, Forager developed a digital procurement and payment platform designed to simplify the sourcing process for wholesale buyers and local food suppliers. Based in Portland, Maine, its B2B software connects independent suppliers to a single system and allows them to list available products, prices and delivery dates.

In recent months, there has been an explosion of small ideas that focus on virtual grocery stores and direct-to-consumer solutions, said Joe Blunda, CEO of Forager. But even as online shopping increases, many of these local farmers are not in a good position to build a competitive offering to what brick-and-mortar stores and grocery leaders already have in place.

"Most of the ongoing conversations have been focused on industrial-scale farming ... people who were doing hundreds of acres of tomatoes for McDonald's and suddenly no one was going to McDonald's," Blunda said. "But the problem looks different on the local level; it's much more dangerous to their businesses and livelihood."

Online grocery sales in the US reached a record $7.2 billion in June and have risen steadily since March, according to a survey conducted by Brick Meets Click and Mercatus. The number of customers using online grocery and pickup services has also jumped 15% since March, the survey found.

But it was tough for many farmers to switch gears in such a short period and take advantage of this drastic rise in online grocery demand, Blunda said.

"Milk distributors have been dumping milk down the drain because they didn't have the packing capacity or the ability to comply with nutritional requirements needed to switch to retail sales channels," said Alexandria Coari, director of capital and innovation at ReFED, a nonprofit organization focused on reducing food waste.

Now, some startups are looking at solutions to redirect much of the wasted produce.

Big Wheelbarrow, the Austin-based developer of a food market platform, recently teamed with supply chain startup Trackter to launch an emergency food network that helps buyers source food from a bigger pool of suppliers and monitor logistics from field to delivery.

Matthew Walker, managing director at S2G Ventures, said more people are now aware that food supply chains are essential infrastructure and the pandemic has resulted in a tailwind for interest in adopting these technologies. The Chicago-based firm has backed foodtech startups including Apeel Sciences and Beyond Meat.

"The amount of VC dollars in this sector pales in comparison to healthcare and information technologies," he said. "The crisis is a massive opportunity for venture capitalists to create an impact environmentally and socially."

Walker said that waste and supply chain optimization are more relevant now than they were before the pandemic. S2G Ventures is currently interested in harvesting, packaging and supply chain technologies that eliminate waste and provide fresher products to consumers, including software solutions that enhance the efficiency of physically shipping large volumes of goods.

As the economy reopens, farmers want to leverage this momentum and create a more sustainable business model to meet consumer demand for local produce.

"Building a resilient supply chain and a backbone technology for local farmers is fundamentally the only way to do that," Blunda said.

Featured image via graphixchon/Getty Images