By Growcom CEO David Thomson
A small number of food service businesses, providores and producers have responded to the COVID-19 disruption by pivoting their business to supply fresh produce directly to the consumer.
This pivot has been informed by consumer preferences for buying online, receiving goods at home, and for sourcing their produce locally.
While some small businesses have pivoted successfully, the overwhelming beneficiaries to date of the disruption has been existing retailers, who have established systems and assets to deliver fresh foods direct to consumers at home.
Revenue in online grocery sales industry has been forecast to increase by over 50% in the current financial year.
This increase in market share enjoyed by the supermarkets comes with two associated risks in terms of our immediate economic recovery and long term economic resilience.
Firstly, the supply chains upon which supermarkets rely are relatively long, and are more susceptible to disruption. This is especially the case here in Queensland where fresh produce grown in North Queensland is often trucked in bulk to Brisbane before being redistributed back north again.
So we’re increasing our reliance on a supply chain where more can go wrong.
And secondly, increasing our reliance on current supply chains makes them weaker.
Greater market share for supermarkets leads to reduced bargaining power all the way down the supply chain, and particularly for growers at the very end of the chain.
As we know, this loss of bargaining power translates to even narrower margins for growers, and so less capacity to take on risk including innovation and new business opportunities, and reduced capacity to respond to disruption and disaster.
And unfortunately in some cases ever narrowing margins also translate to attempts at externalising costs onto the environment, and a higher likelihood of worker exploitation.
These however aren’t new risks unknown, or without likely solutions.
Resilient Queensland, the blueprint in this state for building resilience recognises the importance of community and regional leadership, and commits to deliver more resilient infrastructure and transport systems.
The National Strategy for Disaster Resilience also emphasises the critical role of strong communities and the importance of building local self-reliance as part of becoming more resilient.
COVID-19 presents a rare opportunity for us as a society to reassess our supply chains and build for future resilience.
One option we clearly must consider is enabling supply chains that are shorter and decentralised, connecting more directly regional grower communities with local consumers.