Views on Supply Chain, Food Supply in COVID-19 world

Vonnie Estes, Vice President of Technology for the Produce Marketing Association, interviewed TechAccel President and CEO Michael Helmstetter for a recent episode of PMA Takes on Tech podcast. The following is a lightly edited transcript of the discussion. See PMA Takes on Tech to listen to the podcast. 


Vonnie Estes:
If you could talk a little bit about just what you're seeing happening now around supply chain and food supply, that'd be helpful.

Michael Helmstetter:
I'm seeing kind of two pieces to what's going on today.

There's sort of the social side of things, the food safety side of things and concerns. Then that second piece is the sustainability of the food systems. We were watching the tussle right now as to whether the Tyson plants are going to be closed or open from the poultry side of things. I mean, prior to this push from the administration in Washington, something like 20 plants were being shut down between Tyson and Cargill and Smithfield.  The president's pulling the Defense Production Act and trying to get them up and running to continue to kind of maintain that food system side of things. But I don't think the general consumer realizes that when you produce a hog for food or you produce a broiler chicken for food, you cannot maintain them for very long after they're at a stage where you would normally put them into the production pipeline.

Dairy farmers are saying something like four million gallons of milk are being dumped down the drain a day because they're not being consumed. So that's really that sustainability sort of the food system and that balance of wasting food versus getting it into the supply chain and making sure the consumer side of things are there I think is really important. I think it's not just that processor side of things. I mean, you think about the folks that are supplying the grain, the feed to feed those hogs and feed those chickens. And now the orders of those things aren't being placed, it really has that kind of effect downstream. Then I think ultimately, consumers start getting hit with higher prices and empty shelves and those kinds of things that really stress sort of our societal system.

So there's a push and pull on food. People worried about contaminated food, but also having enough food, the sustainability of the food system to satisfy our expectations because US consumers are not going to not have food. Our country will not be in that situation, but we're very used to having a glut of food and we're not seeing that. I don't think people realize that sort of chain back to farmers and ranchers who are getting grain, etc., and people who are normally storing it and now it's going to waste. Consumers don't realize a lot of the stuff happening behind the scenes.

I do think a lot of really good stories are coming out of this, Vonnie. For example, Publix, the grocery store chain in the Southeast: They're buying up tons of meat and dairy and donating it to those in need and various charities. Seaboard, a local firm, one of their major products is pork. They've donated hundreds of thousands of servings of pork that otherwise would just, in the stage of the environment today, be food waste. And so I think there is that positive of what this country is all about occurring at the same time. But yeah, it's a tough time and it's a shock to our system. And it's having an effect on a lot of people.  I don't think we've really seen the true impact of it yet. I think that's still to come.

The farmers are constantly working to maintain a resilient food supply chain. They're doing things all the time to get us clean, good, healthy food, and not always in the easiest environment. The most dramatic impact is climate disasters and associated stress on crops. Agriculture requires weather, climate, water, all those kinds of good things, but we're seeing more extreme weather events, more powerful storms and greater droughts sometimes back to back to back to back.

We saw that in the Midwest last year, where you just had massive rainfall that dumped water on these crops, just destroying acres and acres of crops or delaying plantings. Then months later, that's followed by a massive heat wave and drought. So trying to tackle those kinds of stresses at the farm level is not particularly easy. And again, in the Midwest last year, we really saw the impact of that. It doesn't just destroy crops. It lowers production volume. You end up with food shortages, prices go up, as you and I have talked before, disrupt supply chains in a significant way. And then you end up with spoilage because of the fact that you've got this chain of events. Natural disaster and the frequency increasing in those disasters and that climate is, to me, top of mind.

Another one is biosecurity. Your listeners may not be totally familiar with that, but that's really about keeping diseases, pathogens, bacteria, funguses, viruses, parasites away from crops, food and people. Behind the scenes, biosecurity is a major aspect of a farmer's life. They've got to take measures to vaccinate animals. They've got to produce fresh feed for their animals, dispose of waste properly.

We've been pretty lucky as a society that we go to the grocery store and kind of take it for granted that our fruit looks good. It's usually not contaminated. And occasionally we have a contamination event in this country, but we tend to have things that are well grown and protected. Modern tools are used to fight pests, but a slip up, a change in climate, a movement in a certain direction can cause massive disruption. Last year, African swine fever hit China and they lost 50% of their pork herd, of their hogs. And that's 30% of the world's supply and that's a single disease that occurred.

I think right now, one of the reasons to talk about biosecurity is it's exactly what all of us are dealing with at home. The fact that we're doing social isolation, we're washing our hands, we're keeping our six feet distance -- that's biosecurity for us as people. And that's a major challenge down at the farm and the rancher level to make sure that your crops are virus free, to make sure that your animals are disease free. It's just a really sophisticated, ongoing battle that requires innovation and requires costs. And it requires the farmers to implement that kind of change. So that's a second one that's big.

Two more that are just kind of behind the scenes is vector-borne diseases. So just like with biosecurity, you've got diseases that are brought in by vectors, like mosquitoes and ticks and fleas and lice and those kinds of things.  If there is an impact at that ranch or at that farm level, it can be absolutely devastating. And so again, farmers have to be in a situation where they're protecting and that they don't have the budgets to do it. If the innovation isn't there to have the vaccine or have the treatment yet, all those things can add up to real significant issues in the production and supply chain of kind of what we take for granted and the stores.

The last one is sort of the social pressure, the consumer preference side of things: the anti-GMOs, the traceability, I want longer shelf life, I don't want to eat a brown piece of fruit. Keeping pricing logical. So you're trying to do all of those other things I listed earlier and provide this perfect product at the right price point for society because society is growing increasingly worried about food security.

There's almost a food insecurity these days that people want to know the traceability of "Where did this come from? I want to see how it made its way through the system so I know pesticides weren't on it, or I know it wasn't touched a certain way, or I know it's not a genetically modified crop." So they have that side of things, and then they have the expectation of a perfect product on the shelf when they go to the grocery store, and that it be nutritious food. So that would be four that really they were there before COVID-19, they're going to be there after COVID-19 and the financial challenges of COVID-19 on farmers are just going to put more stress on their ability to be able to mitigate these kinds of things and be able to satisfy consumers at the same time.

Vonnie Estes:
I think all those things are really true. I think COVID-19 has really exacerbated a lot of these issues and, like you said, really put the pressure on. What I'm trying to do with this podcast -- and there's always plenty of problems to talk about, but -- is to really shine a light on what are the issues that producers are facing, which we've done. Then look at what are some of the solutions that are coming that have either a silver lining, maybe we found some solutions that we wouldn't have looked for because of COVID-19, but that there are a lot of really smart people out there continuing to look for solutions to some of these issues. And I think you're, with TechAccel, in a great position to see a lot of the solutions that are starting to come along. And so I'd love to hear your thoughts on that.

Michael Helmstetter:
Sure. Yes. As you said, that's what TechAccel is all about:  identifying that next generation of innovation that can really have a positive impact on all of these food, crop, animal, and even companion animal challenges and find those early. So we're willing to take really high risk on very early, discovery-based technology and work at getting those to the marketplace to consumers as fast as we can. So we do, Vonnie, as you said, see thousands of technologies every year. We have a very significant deal flow pipeline and really see some innovative and creative things that we feel and we invest in that are going to be able to address some of these kinds of challenges and such.

So here are some of the areas to discuss. So I talked about this sort of perfect product in the grocery store, and I think one of the most significant emerging areas right now is that food waste reduction side of things and trying to ensure that we have a longer shelf life associated with fruit. We have much less waste that occurs. And so there's a lot of companies that are emerging with technologies that are coatings or an additive to a shipping box to be able to really drastically slow ripening and spoilage in foods and have that increased lifespan on the shelf. One example company is Apeel. They've actually come up with an edible coating that's a bunch of natural materials that they've figured out how to  put this powder over a vegetable or crop and be able to provide that barrier that doubles the lifespan without refrigeration, which is obviously really significant.

There's another company similar to Apeel called Mori, where they actually are using silk-based coatings, so natural silk. And again, they look at water evaporation, they look at cell respiration, all these things that occur within the crops that they're dealing with. Their focus is on really slowing ripening and spoilage of those products. So there's a number of companies that are really trying to figure out that post-harvest side of things -- that when we get these apples, when we get these pears, how do we maintain them in an environment when they end up on the shelf, they look like what the consumer expects, but to be able to do that at a longer period of time, to have more shelf life where they're not becoming waste in the grocery store. So that's a big area we're focused on.

I think a lot of great companies are out there and there's dozens that I could talk about. Another area that is probably our greatest focus  of effort is in crop breeding and genetics. So developing crops that will be resistant or resilient to the kind of things that I talked about earlier, and our focus is on not genetically modified organisms -- not that we're opposed to investing in those because I think they're important -- but we really focus on what's called gene editing. I know that's something you're extremely familiar with in your background and some of the discoveries you've had in that area, where you're not dealing with a genetically modified crop, but you're starting to do just sort of fundamental gene editing within that crop species itself. And so we've invested in a number of companies.

One of them is called Epicrop. They have what's called an epigenetics platform. It's instead of going in and dealing with genes inside the crop, you're actually changing the way they express themselves, how the genes talk to what they want to do. And so we're working with them on canola and on berries. They're very focused on soy and tomatoes, and it's just another way to produce a more resilient crop, higher crop amounts. So per unit seed, you get more biomass on the backend. So there are more crops that are there and more value that's there and doing it in a non-GMO sort of way.

Another company in California, that's Sound Agriculture, that's relatively new, that we recently invested in, and they're focused in that epigenetics area as well.  We're working with them on that, but they've also got some other sort of sprayable in the field for crops, on seeds, and others that give real protection to those seeds and also enhance sort of that germination life of the plant.

So there are a number of companies. Benson Hill is another one we're invested in that's very focused on corn and moving in some other areas. So lots of companies that are trying to figure out, these farmers are dealing with drought, these farmers are dealing with viruses, they're dealing with all these other things. How can we give them seeds for their crops that when those plants mature, they're resistant to that drought, they're resistant to the excess water, they're resistant to the viruses? All of those pieces that can be there just by creating a better and stronger seed.

A third area I think is really important is this sort of indoor farming. Because again, I'm not trying to say that's great in terms of directly competing with the natural traditional farmer out on the field, but you've just got a lot that's going on indoors that allows you to use less water, not use pesticides. It's not genetically modified. You have really superior food safety because you're in this controlled environment. Less environmental impact because again, you have this internal indoor controlled environment. So lot of people probably that are listening to this podcast are familiar with Plenty, which is one of the largest, if not the largest, indoor vertical farm, or there's AeroFarms, another big one that's out there. They've gone to not only these controlled indoor environments, but they have gone to robotics where they can have robots that go around and get evaluations of good plants, bad plants, make sure everything's going the way it's supposed to be going. So it's very automated as well. And that can tend to kind of drive the backend price of sort of this perfect indoor crop down to something that can be accepted by the consumers. So those are probably three areas where we're thinking about things.

Our biggest focus really is on that plant trait improvement, that ability to produce more resilient and robust plants that can deal with some of these things that just aren't going to go away. The diseases will not go away. The climate change challenges and the disasters are not going to go away. So the only real outcome of that is that you've got to develop some crops that can be more tolerant and some animals that can be more tolerant to some of these diseases as well.



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