The Van Trump Report

How Some Food Startups are Helping Fill Supply Chain Gaps

How Some Food Startups are Helping Fill Supply Chain Gaps

Farmers across the country have watched helplessly as untold tons of food has literally been thrown out, left to rot, and worse for livestock producers. The domino effect of upended supply chains due to the Covid-19 pandemic has delivered a financially and emotionally devastating blow to so many in the ag community. A lot of programs and groups and just everyday individuals are providing some supports but longer-term solutions are needed. I recently came across a few interesting startups that appear to be helping some producers find a home for their stranded goods, which was actually a natural extension of their pre-pandemic business model – reducing food waste.    

Food waste in America was an issue well before Covid-19 came along and had already helped spur an entire industry built around “sustainability.” Three startups that began with a focus primarily on cutting waste in the produce industry have seen their business grow exponentially since the pandemic hit – Hungry Harvest, Imperfect Foods, and Misfits Market. All three buy produce from producers that otherwise might not have made it to the grocery store due to cosmetic flaws. They consider themselves part of the “ugly-food movement” that aims to put perfectly edible food on people’s plates rather than landfills.

By the most cited estimates, about one-third of all food produced globally goes to waste and most of that is fresh produce. Some of the waste begins early in the supply chain at the grocery store level. Consumers in wealthy, developed countries in particular are used to seeing uniform produce in stores. It’s the way the system has evolved as part marketing tool (our store has the “best” produce) and part necessity in order to appeal to a more urban customer that is far removed from the realities of food production and simply won’t buy a lopsided tomato.  

Some of that less-than-perfect produce ends up being used in processed foods, like canned and frozen fruits and vegetables, or prepared things like pre-packaged salads, smoothies, etc. There are really a lot of places to utilize these less attractive fruits and veggies. Still, our food system can be inefficient in using it all, and that efficiency varies greatly between types of foods and even different areas of the country. Small- and mid-sized producers in particular can struggle to gain market access. Many of these obstacles have only intensified as the foodservice industry is hobbled by the pandemic.            

These three startups all say they’ve added a substantial number of new suppliers as they scoop up the excess from farms, processors, and wholesalers and deliver it to consumers’ doorsteps. It’s a perfect pandemic business model. So perfect, in fact, that the companies are also struggling to keep up with demand as they are rapidly expanding into new markets across the country. Imperfect Foods and Hungry Harvest seem to limit delivery to more urban areas, while Misfits Market has made a commitment to serve the entirety of any state in which it starts operating.

Misfits Market is strictly organic produce, while the other two appear to offer both organic and non. You might have seen the founders of Hungry Harvest on Shark Tank where they won backing from Robert Herjavec in 2015. Imperfect Foods was actually Imperfect Produce until last year when it branched out into other categories like dairy, meat, and even some pantry items. Hungry Harvest also offers dairy and eggs but Imperfect by far is the most diversified.

From a business perspective, these startups and others like them seem to be in the right spot at the right time. A recent Future Market Insights study found food waste is a growing business worth $46.7 billion in 2019 with an expected annual growth rate of 5% for the next 10 years. Those numbers may be even higher now with the new consumer trends and complications from coronavirus that could continue indefinitely.

As with most things, the ugly-food movement has its critics, with some saying these for-profit companies are robbing food banks of supplies. Others take issue with their concentration in higher-income urban areas, saying they are bypassing so-called “food deserts” and other underserved communities. To be fair, I know Hungry Harvest does work with numerous anti-hunger and community groups and creating greater access to fresh food is part of their mission statement. I also know there are a lot of producers looking for a way to stay afloat and feed their own families and if these places are able to help, we always 100% support that. Imperfect Foods says 80% of its suppliers are family farms and another 15% are co-ops or other hubs that represent small farmers. (Sources: The Spoon, FoodDive, Business Insider, The Atlantic)

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