Queensland, Australia

Creating more resilient supply chains for fresh produce

A small number of food service businesses, providers 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 have 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 per cent 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 in the region, where fresh produce grown in North Queensland is often trucked in bulk to Brisbane before being redistributed back north again.

So the region increases its reliance on a supply chain where more can go wrong. And secondly, increasing this reliance on current supply chains makes it 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.

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