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Small food suppliers are hurting. Which corporations are helping?

Fresh produce handled by someone wearing disposable gloves.

Fresh produce handled by someone wearing disposable gloves.

Yesim Sahin

Large companies in certain industries are doing fine during the pandemic — entertainment streaming services, general merchandisers and grocers are enjoying a boost in sales, at least for the short term. But many small and midsize businesses are shrinking in their shadows.

This is painfully relevant in food and agriculture. Millions of pounds of potatoes and onions rot in the fields where they grew, slaughtered hogs are buried by the tens of thousands and milk has been intentionally spilled at rates that would shock John Steinbeck. Just compare nearly any grocery chain with a family farm or a mom-and-pop cafe picked at random.

"Time is not on our side," said Mary Coppola, a vice president at the United Fresh Produce Association, a trade group of fruit and vegetable growers and processors. "We are not coming up with the supply-chain logistical solutions as quickly as produce is growing."

Growers have been losing $1 billion each week after foot traffic to restaurants and hotels collapsed overnight in March, the Produce Marketing Association said. The companies it represents are not only suffering from disappearing direct sales but from the higher costs related to worker shortages and new government-recommended safety practices.

Scrambling stakeholders

Many new alliances and initiatives have formed to address the pains of smaller supply chain players, such as distributors racing to find new takers for perishables normally sold to restaurants and schools. 

For example, the United Fresh Produce Association created a coronavirus resource group on LinkedIn for companies to connect, such as helping distributors find growers or shippers who need their refrigerated trucks. The group's philanthropic arm also has issued 25 grants of $1,000 each to growers and distributors around the nation, from AeroFarms to Zafar Produce. The goal was to provide financial assistance as well as "an emotional lifeline in a time of crisis," Coppola added.

ReFed's qualitative survey ranked challenges caused by COVID-19.

This graphic from ReFed's COVID-19 U.S. Food System in Review illustrates some challenges caused by COVID-19.

What is the role for big business in all of this?

Only 19 percent of the world’s 100 largest companies are disclosing the pandemic’s impacts on their supply chains, according to JUST Capital.

Yet companies should examine how they’re engaging with non-investor stakeholders including suppliers, employees, customers and the greater society, according to Morgan Stanley Research. Its April COVID-19 Corporate ESG Tracker report also called suppliers the least protected group.

"There is a need at every juncture along the supply chain," Coppola said. "The business community can help by evaluating what resources they have on hand or in excess, and then offering those resources to the industry."

Retailers and brands are recognizing that if they don’t step in to help their producers and distributors, the links holding together those supply chains may crack in ways that aren’t easily repaired when (and if) the COVID-19 threat finally passes.

Some corporate Goliaths are helping David-size supply partners with early payments, including Walmart, L’Oréal, Vodaphone, BHP Group, Novozymes and Iberdrola. Others offer assistance with favorable loans, some of them prioritizing local sellers. Those efforts are less visible than donations of cash to food banks or face masks to field workers. But it's an advance on future resilience, a way to help supply chain partners stay afloat or even make capital investments while sales are down. 

"If COVID-19 teaches us anything, it is that we must address the inadequacies and inequities in our food system," author and New York University Professor Marion Nestle said. "This means forging relationships with workers and suppliers based on social values as well as profit."

Here’s a sampling of the evolving actions by prominent players in food and agriculture.

Unilever

As the world’s largest ice cream maker and the brand behind Lipton tea and Dove soap, Unilever has a uniquely vast supply chain. The London-based company recognizes that protecting livelihoods and working "hand in hand" with suppliers is key to ensuring a stable supply of products to consumers for the short and long term, which is a longstanding position.

To that end, in March Unilever pledged 500 million euros in early payments or credit to small and midsize suppliers around the world, determining recipients by need. Some of those companies at risk during the pandemic produce raw materials used in a variety of brands and include smallholder farmers, who either sell directly to the company or through middlemen. But it also includes professional services providers.

It’s been 10 years since the consumer giant launched its Sustainable Living plan striving to become a force for social good and "the world’s most sustainable business," which includes sourcing all raw agricultural materials sustainably.

"It’s never been clearer how important it is to have clear sight of entire value chains," a Unilever spokesperson said. "Our commitment to traceability and transparency, and close partnerships with our suppliers, is what helps us to mitigate the impact of any number of issues, such as climate change, and is also helping us during the current crisis. When businesses understand where materials are coming from and have strong partnerships, they can respond quickly to challenges, and ensure supply."

Walmart

The company rolled out a supply chain financing program in March to help some of its 18,000 suppliers, noting that two-thirds are small or midsize businesses — including those in food and agriculture. 

Like other grocers, Walmart has grappled with an oversupply of fresh food as shoppers stocked up on canned and boxed pantry items. In April it sent 85 trucks' worth of food to food banks. Walmart China in February purchased and helped to sell 500 tons of vegetables from farmer communities and cooperatives challenged in getting to market.

Danone

Yogurt giant Danone set out in May to become the first company to follow France’s new "Entreprise à Mission" business model, embedding purpose within its articles of association. The Paris-based company already planned to use $278 million to extend payments and offer credit to help 15,000 farmers and other suppliers. It also directed $11 million in relief for Danone Manifesto Ventures-backed startups and $22 million toward the Danone Ecosystem Fund, which supports locally led projects supporting the U.N. Sustainable Development Goals around the world.

"We made an unequivocal choice to protect our whole business ecosystem during the current entry phase into what will be a radically new operating environment," Chairman and CEO Emmanuel Faber said in a statement. "Our people have been our No. 1 priority. We moved quickly to ensure their safety and took unprecedented measures to protect their incomes. We’ve also used our scale and our brands beyond the norm in how we have supported our ecosystem in radically new ways."

Heineken

The Amsterdam-based beer maker is paying its vulnerable small suppliers ahead of schedule, and committing to continue paying others "at agreed payment terms."

Publix, Carrefour and other grocers

Publix supermarket in April was buying food from nearby Florida growers to donate to a food bank. French grocer Carrefour is pledging to buy large amounts of 10 species of fish including mackerel and sardines, hoping to assist suppliers that have lost all sales to now-shuttered catering companies. It’s also buying strawberries, tomatoes, cucumbers and asparagus from French farmers only. English grocery brands Sainsbury's, Morrisons and Tesco as well as Germany's Aldi are also committing to earlier payments to suppliers.

A call for more

Supply chain vulnerabilities have been laid bare during the rise of the coronavirus. Some supply and logistics networks may emerge in shapes that were mostly unseen pre-2020. Sustainability advocates are calling for a shift toward shorter, circular supply chains and hoping that corporations will make a special effort to reward the smaller businesses that already focus on positive environmental and social outcomes. 

Yet many companies remain in crisis response mode, and few are sharing more information about their efforts to help their suppliers, processors and distributors at this time. We would love to hear from more businesses about meaningful efforts they're making. You can send ideas and updates here.

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