Huddle Notes from January 4th, 2021

    By
    Zacary Smucker-Bryan
    -

    Happy New Year! The huddle this month focused on current and potential future trends for food and farm businesses, including restaurants and food hubs, due to the impacts of COVID-19 as well as climate change. Listen to and watch the recording here.

    Talking Points

    • Climate Change
      • Chicago Mercantile Exchange started trading a water futures contract, which provides a mechanism for hedging for areas of the country where you have to pay for water if you are a farmer. Contract is trading at $496/ac/ft.
      • Conservation financing: learning about mechanisms and how they can be practically implemented as more markets emerge over the next decade.
        • Stay tuned! The Food Finance Institute will be doing curriculum development on this in some way as part of our LFPP grant work.
      • Example: rbGH hormone in dairy – as consumers started to say they didn’t want this growth hormone in their products, they forced producers to change.
        • Is this how we will change agriculture and move toward more regenerative practices?
        • What kind of transparency are your food clients offering their customers and what could they be doing to encourage farmers to change practices?
      • Restaurant Business Model Changes: Require Technical Assistance
        • Due to COVID, many people have moved out of cities and into the suburbs. Restaurants will have to reconsider their locations to accommodate where people are living.
        • 25% of office jobs won’t return to the office post-COVID. Restaurants should be taking this into account.
        • Potential for lease rate reductions in cities which would help restaurants in the city become financially viable even with reduction of customer base.
      • Notable Movements
        • Black Owned – many brands are leading with this differentiation now. Is this positioning going to get traction for these businesses? Perhaps!
        • Food Hub: lots of pivoting to food access work (ex: schools to USDA Farm Box Program).
          • In non-COVID times it was too inconvenient and expensive to source food from farmers and give it to food pantries. However, we’ve overcome this inconvenience due to COVID.
          • Will this disrupt the food system going forward? Will more of the efficient initiatives have enough to persist and open up another distribution source for farmers? We hope so.
        • How can you incorporate more diversity into your programming through who you work with, etc.?

    Trends

    • Supply Chain: Processing Facilities (grain, fruit, nuts, meat, etc.)
      • Processing Facilities are difficult to finance because they’re difficult to make money at, yet we need them!
      • Emerging solutions to climate change include more fruit and nut farming, which sequester carbon, however, supply chain is weak due to a lack of processing facilities.
      • Technical assistance can help tremendously to provide what it is these facilities need to do to make them financially viable. This is a gift you can give to see local processing succeed.
    • Macroeconomics
      • Degree of government intervention and spending in the economy during COVID: The budget deficient is at historic highs – US is at 20% GDP which is the highest in the world, UK 17%, China 13%, Japan 13%, India 13%, and EU 12%.
        • Normally this would crowd out the private economy by driving up interest rates, stocking resources away from the private sector, and we should see inflation, but we haven’t seen this yet!
      • Corporate debt has gone up because interest rates are so low. Right now, farm rates are under 1%!

    Tips & Next Steps

    • 2021 Digital Migration
      • There are channels of distribution within digital, beyond your own website. Having a strategy across platforms is crucial. Just being on Amazon is major!
      • How do we get digital skills to companies and farms as fast as possible? This should be the theme for our work this year!
      • Check out and share our free Getting Your Food Products Online On-Demand Course
      • Sari is another great resource for this! Contact her: Sari@foodbizsuccess.com
    • Stay Tuned! FFI has a new Consultant 2.0 training coming soon!
    • Raising Money for Your Farm Through Value-Added Producer Grants Webinar hosted by FFI | January 19th 10am – 11:30am CST | FREE! | Learn more and register here

    Contact Us: info@foodfinanceinstitute.com
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