The huddles this week focused on how food and farm businesses can prepare now for a prolonged pandemic and economic recession. Watch the recording here.

Talking Points

• Conversations with business leaders in the food industry
  • COVID threat expected to get worse, so food companies preparing now; next surge will be trickier because they haven’t totally recovered from onset of pandemic
  • Current state of affairs
    • Still shortages, especially in core products
    • IRI, data provider for the food industry:o As of July 10, 10% of packaged food, beverages and household goods still out of stock in grocery stores; out-of- stocks usually at 5%
      • Manufacturers spreading workers out for safety, slowing the processing lines and decreasing throughput—this is the bottleneck
      • Retailers struggling to keep prepackaged easy-to-eat foods (pasta, soup, etc.) stocked
      • Retailers fear next surge because no inventory stocked up
      • Small producers struggling to get meetings with retail buyers
      • Retailers still focusing on core items, reducing SKUs because manufacturers are
      • Festival Foods: stores getting only 80% of orders, eliminating some paper products besides toilet paper
• Financial help for agriculture
  • PPP expanded to include specialty crops
  • SBA’s Economic Injury Disaster Loan (EIDL) program cancels advanced payment
• Farms continually losing money
  • Subsidies oriented heavily to commodity crop production and large farms
  • Subsidy checks often go to absentee landowners, not farmers working the land
  • Crop insurance expanded to include more specialty crops but still favors commodities
  • Ongoing trade issues, especially with China, also impact farmers
• Food Assistance Industrial Complex
  • Food pantries typically 100% volunteers run
  • Executive director of Second Harvest, part of Wisconsin’s food bank industry,made $600K last year with zero-paid employees
    • COVID – older volunteers can no longer help, asking community members and nonprofit Livingston Food Resource Center to step in
    • Livingston model great for addressing food insecurity, connecting local food production with people who need healthy food, elevating community with job training and reducing shame around receiving food pantry assistance—but organizations need infrastructure, such as shared- use kitchen, in place to do this
  • Same systematic issues likely occurring elsewhere in the nation, so help clients investigate and look for opportunities
  • Food hubs struggling: many didn’t have solid business models pre-pandemic, so problems now magnified; perhaps some hubs could transition to nonprofits to help food pantries, education, etc.
    Trends
• Economic indicators look bad, especially in Florida, Arizona, Texas and other states thatdidn’t shut down, according to Bloomberg
• Recession likely to worsen this fall and linger for years
• Majority of consultants’ clients likely haven’t managed a business through a recession before
  • Startup mentality of go, go, go may be good for pivoting during a recession, but many entrepreneurs start out financially naïve and/or undercapitalized
  • In a good economy, business weaknesses and lack of financial acumen can be covered up by increasing sales, but these issues magnified during a recession
  • Keep encouraging clients to do 13-week rolling cash flow forecast and prepare them to build capacity to understand financial numbers
  • Some clients may lack the chops to manage finances alone, should hire or contract help
  • Recession also narrows investors’ interest and makes banks more conservative
• Mortgage payments
  • June: 10% of mortgages not paid; July: predicted 16% of mortgages not paid
  • Predicted to become even bigger issue in August and beyond as PPP ends and economy still slow, hindering investment
    Tips & Next Steps
• Food waste
  • Glaring issue when COVID hit: people in line for food while farmers dumped milk
  • Although less obvious, food waste already a huge issue pre-pandemic
  • Average American tosses 1 pound of food a day, 50% higher than in France
  • Manufacturers and retailers afraid of liability issues with past-its-date food
  • Proposed legislative solutions include relaxing expiration dates and offering tax credits (versus deduction) for donating food
  • Nonprofit ReFED aggregating businesses, organizations and entities working toward solutions
  • Companies like ReGrained upcycling otherwise-wasted food
• Pivot success: Sun & Swell Foods
  • Main business pre-COVID was selling healthy grab-and-go snacks to corporate accounts—COVID decimated business
  • Pivoted to selling farm-sourced ingredients in bulk via e-commerce
  • Switched to composable packaging for newer larger snack sizes
• Curated pitch events in the works
  • FaB Wisconsin Accelerator moving under FFI umbrella, will include a pitch event
  • Edible-Alpha® Live!, which includes pitch event, canceled in March; virtual event to happen in 2020
• Share with Us!
  • Contact information to facilitate networking within our huddle group
    • Complete this quick form
  • Pivot successes – If you see a really good business pivot example, share it with us so we can share it widely to advance our food system in a meaningful positive way and develop some insight into what the patterns are.
    • Use the contact form to share both contact information and pivot successes or send just pivot stories to Shelbie at