How our food production industry has been affected by COVID-19
- July 31, 2020
- Food News
Overall, Australia’s food production industry is still thriving. Our export trade remains stable, with some notable exceptions like seafood and some meat exports — and essential food items are still readily available with the retail sector booming.
However there are affects on our food producers that you should be aware of.
The bigger picture
For some local agricultural producers, this is the first time in recent years that markets are experiencing big shifts, which have been driven by falling demand rather than the usual production induced supply changes (due to drought or floods for example).
Generally speaking, the food industry just doesn’t have enough end users (demand) to meet the output (supply) for hospitality quality food products for restaurants, clubs, pubs and cafes.
And there’s now the added threat of an abundance of cheap food imports hitting our shores too. So competition is tougher than ever for our local food producers.
Our FoodieBuy team have been talking to our awesome network of local food producers and distributors about how food production has been affected them due to COVID-19. And importantly, what the trending changes are for them to survive these challenging times.
Pivot to retail sales
With the decreased demand from hospo buyers, suppliers are opting to shift their food produce into the retail sector and packaging it for retail purchase.
While this pivot does incur extra expenses for them, due to packaging and marketing, the costs are necessary so as to move their product and avoid waste.
Retail growth is set to continue. And hospitality venues can get on the bandwagon too. Adding retail lines to your offering can help distributors find a market for these products, and diversify your business with a new revenue stream.
Production forecasts based on demand drop
With demand in decline, some producers are forecasting a drop in their production outputs accordingly. Meaning in some cases, farmers are planning to not plant as much, while factories are reducing work hours. Some abattoirs have reduced hours and stopped working round the clock.
But at the end of the day, we’re not seeing any difficulties whatsoever in hospo venues getting their produce with supply more than adequate. Producers have only dropped production to match the demand levels, and will pick right back up again as hospo does too.
COVID related shortages aren’t the norm
Our FoodieBuy team have only heard about COVID related shortages when there was panic buying by consumers. Or most notably when there has been an outbreak in an abattoir leading to closures of meat works.
Otherwise, market fluctuations are generally down to seasonality or natural causes, not COVID related. And not something hospo needs to worry about.
Storing is favoured over price cuts
There’s been a real shift in the abundance of cheap imported food that is hitting our shores and undermining local food producers.
To cope with the abundance of product, the market has favoured storing or clearing items, rather than offering price decreases that would only make it hard for them to reset when things return to normal. In fact, you’ll have noticed that prices are the lowest they’ve ever been.
It’s likely we’ll see more and more clearance platforms, like Yume Food, pop up to make it easier for people to support local producers. Using a virtual marketplace where people can buy and sell high quality, surplus foods.
Support local product over cheap imports
Hospo supporting our local food production industry is now more important than ever — and crucial to keeping our factory and farms alive and thriving.
We’re happy to see a strengthened push to support local producers, with Aussie consumers also in strong support of the movement too. A good way to get behind it is to promote your local ingredients to patrons. More on this in a later blog article to come!
WE’RE HERE TO HELP
Our Foodie team are here to serve. Whether that’s sourcing new products, helping to re-cost your recipes to reduce your COGs or planning a whole, profitable condensed menu to reduce food wastage and boost your bottom line.
Get in touch to see how we can help you.