What is global is local. At press time, January 16-19, 2024, the Intergovernmental Panel on Climate Change (IPCC) is meeting in Istanbul, Turkey to decide on the roadmap ahead. The UN-sponsored group, with representatives of 195 countries, seems to move at glacial speed, unlike the climate changes they are studying.
For primary producers, climate change and the impact on their business is immediate. From wildfires in British Columbia to floods in Nova Scotia in 2023, the issue is relevant in terms of replacing infrastructure at higher insurance costs. On an ongoing basis, producers must mitigate these risks to maintain a sustainable business.
With this backdrop, producers must not only manage these weather events but communicate to retail customers how they will manage into the future. There are three things retailers focus on: quality, cost and continuity of supply. Certainly, there are others but most often, these are the big three. The changes to the climate are impacting all three of these factors.
Retailers prefer to work with suppliers who bring solutions to the table, not just more problems.
Explain the impact to their business
When talking to your customers, remember that they don’t want to live the roller coaster ride of primary production. They have their own problems to worry about.
When you can explain the impact of climate change on their business, in their terms, you will get a better response and a willingness to work on the solutions.
There is no doubt changes to the climate will have an impact on what you produce. Varieties that have been bred to perform in 2020 might not be performing the same in 2024. Retailers can get focused on varieties and not understand that the same variety does not perform as well in a different region or with climate change. You can explain this, but to deliver the message in their terms, you will need to show them. You might have a new variety or even an older one that tastes and performs better. If possible, get them samples of both and let them see and taste the difference.
Quality can also be impacted by climate change. Producers have to learn to grow and harvest differently. If you are experiencing these types of challenges, the sooner you can let your customers know the better.
Develop relationships with the Quality Assurance (QA) team so you can have informative discussions with them too. The category managers or merchandisers are your primary point of contact, but the QA group is important in the decision-making process. You might consider sending them some samples in advance to let them decide before you send a full load.
There are a number of impacts on product cost that climate change can affect. The biggest is likely marketable yield, as specific varieties do not produce at the same rate you expect. There are also new pests or diseases that appear which were not hurting your crop a few years ago. The changes in weather pattern might be changing how you harvest, adding to costs. Inputs are changing and it seems like the new ones are always more expensive than the old ones.
All of these factors will impact the cost of your product. We all know the tone of conversations about surging costs in our industry. Retailers have been in the media spotlight, blamed for food inflation. That means they are more defensive about their position and more aggressive with suppliers about increasing costs. Granted, perishable produce is different than the center of the store with packaged goods, but retailers are sensitive about prices.
To have the conversation in terms the retailer can appreciate, you might have to propose a new product size. If your marketable yield of their size spec has changed, you might get them to agree to a wider spec that allows you to keep the price constant.
Another discussion point should be input costs. You can explain that in a previous year, the input cost per packed pound was a certain number. This year with more expensive inputs, to ensure you have product for them, these inputs represent .25 per packed pound compared to .15 last year. Talking about chemical ABC that is $1,250 per hectare means nothing to them. When you explain to them what the impact is using a metric they understand, your communication is more effective.
Continuity of supply
Retailers need product to sell. They want to run inventory as tight as possible because too much inventory costs money and can lead to more shrink. They also get very upset when people do not have product for them. In other words, shorting orders is a bad thing!
A changing weather pattern can lead to issues with continuity of supply. You might not have as much, it might be at a different time or worst-case scenario, nothing at all. Sudden weather events can also lead to different sizes and a product with a different appearance. These last two issues might not impact the eating experience, but your products might look different.
The most important factor when communicating about these issues is how much you will have and when. The sooner you can let customers know if you will not have what they want, the better. Give them options as opposed to waiting until the last minute to tell them something you probably knew hours or days earlier. They want to buy from you so let them know in advance and they will probably come back to you. If you leave it too late and they are out of stock, they will be less likely to come back to you in the future.
This is a more challenging environment to work in but you still need good relationships with your customers. My experience, when I worked for a retailer, was that there were certain suppliers I would trust more than others. These were the people who were up-front and honest, but they also took the time to understand my business. They would explain current events to me in a language I could understand and they figured how the situation impacted what I was trying to do, not what they were trying to do.