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How is the Produce Supply Chain Interacting with Food Technology Startups?

July 3, 2018

The needs and concerns of the two far ends of the food supply chain — farmers and consumers — are fairly well trodden. But what about the crucial players who sit between the farm and the grocery store or restaurant? How are their needs being addressed by new technologies and are they adopting technology faster than their field-tending, kale-munching counterparts?

We caught up with three foodtech startups targeting the middle of the fresh produce supply chain at the United Fresh Show in Chicago to find out how produce distributors, packers, and shippers are reacting to and adopting new technology.

Labor Pains

“No matter what your product is, no matter where in the value chain, everyone will listen to how they can potentially save on labor costs. It’s common sense,” said Hazel Technologies CMO and cofounder Pat Flynn.

Chicago-based Hazel Technologies develops small packets that release an anti-fungal shelf-life extending vapor to insert into fresh produce packaging. Hazel claims that its technology can extend the shelf life of fresh produce by 300%. To date, the company has focused on melons, berries, stone fruits, and tropical fruits. 

Though the labor savings that can result from Hazel’s technology may not be obvious to the layman, longer-lasting fruit can eliminate the need to repack items, which is normally required when some items go bad and need to be removed from a pack and repurposed or thrown out. 

Flynn explained that the labor-saving aspect of his tech has been an even more compelling argument for customers than preventing the product loss that comes with food spoilage. That’s because the post-harvest supply chain tends to deal with food waste by reducing the amount of produce it works with, not by trying to stop food from spoiling, according to Flynn.

“A lot of people will tell you that they don’t have a lot of product loss and the reason is that they’ve modified their practices in a limiting way to eliminate waste,” said Flynn. Packers and shippers will give up accounts or stop shipping to specific areas if the losses are simply too high, without necessarily digging in to find out why. Flynn indicated that supply chain players may start to reconsider those decisions as new technologies emerge. 

Weighing Waste

Ricky Ashenfelter of Boston-based Spoiler Alert, a software and professional services startup that helps food businesses manage unsold inventory, said that the level of awareness and concern about food waste varies greatly among post-harvest players.

“Some organizations, when you ask for their waste data have it readily available and aren’t afraid to admit that there is an opportunity for improvement. Others refuse to acknowledge that there is any area for improvement,” said the CEO.

Even though Spoiler Alert has high profile customers like meal kit leader HelloFresh and food service giant Sysco putting technological resources and energy into food waste, this isn’t yet common practice downstream from the consumer. In the end, it often comes down to internal capacity — sometimes even above capital — when agreeing to try a new digital solution like Spoiler Alert.

“How strong of an appetite does a company have for new technology and piloting? The ones that are embracing that and have more of a willingness to experiment without knowing all the answers before we start, tend to move a lot faster. There is still some entrenched anxiety around change and technology in general,” said Ashenfelter. 

Chasing a Premium

For California-based startup ImpactVision, selling new tech to the post-harvest supply chain is all about creating and verifying qualities that could allow operators to charge a premium — usually for consistent, high quality.

ImpactVision applies machine learning to hyperspectral imagery in food processing to measure freshness, quality, and detect foreign objects in a rapid and non-invasive way. Initial pilots include foreign object detection in packing facilities (to avoid recalls) and testing the dry matter of avocados in order to create a foolproof method for determining ripeness.

“If you identify these higher margin products like avocados and enable them to automate their quality control, that’s where you can drive value post-harvest,” said Abi Ramanan, ImpactVision CEO.

Though automation is often introduced into processes with the aim of saving on labor, Ramanan said that in the case of some specialty crops with high margins and high rates of loss, driving a premium is potentially more valuable in the near term. Suppliers can charge more, for example, if they can guarantee when avocados will ripen. But foreign object detection can support premium pricing as well, Ramanan added. 

“For these businesses, it’s less about savings and more about enabling a premium, which we found even for foreign object detection. Of course, it’s preventing product recalls, which can cost millions, but the reason why they want to [use this technology] long term is to position themselves as a premium brand,” she said. 

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