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Three challenges facing produce companies in 2023
June 16, 2023
Edwin P. Reilly, CPA, CA shared this article
ARTICLE | June 16, 2023
Produce companies face numerous challenges in today’s ever-changing business environment. From unpredictable weather patterns to the labor shortage, the cost of production continues to rise, which leads to margin pressure in an already low-margin business. As costs increase, producers must either accept lower profits or pass higher costs on to consumers, which could mean potentially losing market share. This article will examine three key challenges facing produce companies in relation to rising costs and explore how technology can help address them.
Challenge No. 1: Climate change
Climate change has disrupted traditional growing patterns and created a new set of issues for produce companies. Extreme weather events, such as droughts and floods, can devastate crops and lead to higher production costs. Additionally, changing weather patterns may lead to new pests and diseases that producers continuously must manage with additional investments. The challenge for producers is to adapt to these new conditions while maintaining profitability.
Precision agriculture is one area that continues to become more relevant as sensors, satellites and data analytics are used to monitor soil conditions, weather patterns and crop growth. However, this technology can be further enhanced with the use of artificial intelligence and machine learning algorithms, which can be deployed on Microsoft's Azure cloud platform. By analyzing vast amounts of data from across the supply chain, AI and ML algorithms can identify patterns and predict potential disruptions.
For example, Azure-based AI and ML algorithms can analyze weather patterns and predict potential crop damage. This enables producers to take preventative measures such as adjusting irrigation or fertilization, applying pesticides or fungicides, or even selecting alternative crops. By making more informed decisions about planting, watering and harvesting, you can reduce waste and increase yields, leading to lower production costs and higher profits.
Additionally, Azure-based AI and ML algorithms can be used to optimize product quality. By analyzing data from sensors on produce and packaging, these algorithms can identify potential quality issues such as temperature fluctuations or damage during transportation. This enables you to take corrective action before the product reaches the consumer, reducing the risk of product spoilage and waste.
Challenge No. 2: Labor shortages
Produce companies rely heavily on manual labor for planting, harvesting and packing crops. However, labor shortages have become a significant challenge in recent years, leading to higher labor costs and decreased productivity. Additionally, the COVID-19 pandemic has made it more difficult for companies to recruit and retain workers.
Robotics and automation technology can help address labor shortages by performing tasks that would otherwise require human labor. For example, robots can harvest crops, sort produce and even pack boxes. The Microsoft Power Platform, which includes Power Automate, Power Apps and Power BI, can build custom automation solutions that integrate with existing systems and processes. This technology can increase productivity, reduce labor costs and improve product quality.
Challenge No. 3: Supply chain disruptions
Produce companies must navigate complex supply chains, including transportation, storage and distribution. Disruptions in any of these areas can lead to higher costs and lower profits. Additionally, the COVID-19 pandemic has highlighted the vulnerability of global supply chains to disruptions.
Internet of Things sensors can be placed on products and packaging to monitor temperature, humidity and other factors that can affect product quality during transportation and storage. By providing real-time data on product conditions, you can quickly identify any issues and take corrective action, reducing the risk of product spoilage and waste. This technology can be further enhanced by using Azure IoT, which provides a secure and scalable platform for managing IoT devices and processing data.
Taking advantage of technology
Produce companies face significant challenges related to rising costs and margin pressure. Climate change, labor shortages and supply chain disruptions all create additional costs that can eat into profits. However, as we described above, there are a broad set of emerging technology solutions that can help address these challenges. By adopting these technologies, producers can increase productivity, reduce waste and improve supply chain management, leading to lower costs and higher profits.
Contact the RSM team for more insight into how Microsoft technologies can transform your critical processes and address threats to your business.
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Source: RSM Canada
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