As coronavirus concerns lead a growing number of local governments to shut down restaurants and retail foodservice operations to everything but takeout orders, a sobering reality has emerged. Fifty percent of our country’s food supply has nowhere to go.
“It’s a very dangerous time in the foodservice sector,” Tom Stenzel, president and CEO of the United Fresh Produce Association told WGB. “We’re not quite as sexy as the airline industry or the hotel business, but the food supply chain is what’s getting squeezed right now, and we’ve got to focus on it. I would submit that it’s the most dynamic part of our economy.”
On March 18, Washington, D.C.-based United Fresh declared a national emergency for the fresh produce industry, restaurants and foodservice as a result of the coronavirus. In a letter submitted to President Donald Trump, Speaker Nancy Pelosi and Majority Leader Mitch McConnell, in conjunction with the International Foodservice Distributors Association and the National Restaurant Association, Stenzel wrote:
“Restaurants and other foodservice outlets account for as much as 40% of fresh fruit and vegetable sales. This economically vital segment of food production ensures fresh and perishable agriculture commodities are delivered from field to table. Right now, those tables are empty, these restaurants are closed, and our members are shouldering undue financial stress because they have paid farmers for produce that they cannot deliver and that restaurants cannot pay for.”
“We’ve been going hard and fast on this,” said Stenzel. “Fifty percent of all of our food—not just fresh produce—goes through restaurants, and we have just shut down half of our food delivery system. We now need to transfer 40% to 50% of our food supply from foodservice to the retail channel.”
While this presents an enormous logistical challenge, if left unresolved, “we are at risk of the entire foodservice side of the business collapsing. If we want restaurants and foodservice in the future, we need to act now. They’re not going to be able to turn this back on," Stenzel said.
“There’s hundreds of millions of dollars in receivables that are never going to get paid,” he continued. “Food distributors are hundreds of millions of dollars in debt to growers and other suppliers. Anybody in the supply chain selling to restaurants is now teetering on the edge.”
As restaurants in major cities around the country found out they needed to shut down within hours, warehouses full of products were left with no one to receive them.
Stenzel said produce suppliers have been giving produce away to food banks to the tune of $100 million in lost inventory for each single company.
“There has to be a national priority on supporting foodservice distribution,” Stenzel said. “We’re asking [the government] for some type of funding mechanism that would help offset the situation or growers aren’t going to get paid. The [U.S. Department of Agriculture] also has a role to play.
“We don’t know exactly what mechanism it is going to be, but there needs to be immediate loans for these distributors to stay in business,” he continued. “Foodservice distributors also serve schools and hospitals. They have an obligation to keep delivering to hospitals, but they’ve lost the other 95% of their business.”
To battle what Stenzel and others have identified as a “crisis in the foodservice sector,” United Fresh has partnered with FMI–the Food Industry Association to create networks across the country designed to match grocery retailers with foodservice suppliers that can provide much needed inventory.
“Foodservice produce suppliers would love to serve you with whatever you need,” said Stenzel. “There are foodservice delivery trucks that can deliver fresh produce to the back of the store. We can make that happen.
“Retail is kicking it—moving more produce and food than we’ve ever seen,” he added. “If the retail sector can appreciate that the foodservice guys are getting killed, and be supportive, we can move through this together.”