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Greetings!
I hope your summer is proving to bounteous in many ways. It's been quite an unusual six months. Some of the farmers I work with saw surges in sales and demand (I've heard comments like, "I wish it didn't take a horrible pandemic to get people to buy more local food"); while others (for instance, those focused on restaurants and flowers) have had a heart-stopping few months of re-imagining their entire business from the ground up (one farmer quipped, "Now I know what the word, 'pivot' really means."). While many of the folks I'm touch with are coming through this stronger, (and sometimes leaner-in-a-good-way too), there's a lot of uncertainty and anxiety about what the future holds.
The market chaos of the last few months underscores the reason I'm writing today. Many of the most vexing problems I work on with clients involve the mismatch between production and market. Often, it's a farm who is left with way too much of something when their intended market evaporates; or a buyer is left short of supply on something just when they're starting to build a market for it. These problems are costly and often avoidable - which is what makes them so frustrating.
I've often wondered if a forward contract is the solution to this problem. A simple forward contract is a commitment a customer makes to a supplier to purchase something at a future date in time, at a set price. If the producer has the product ready at the agreed upon time, and it meets the quality standards set forth in the contract, the buyer is obligated to buy it. This stabilizes the problem of mismatched production to supply.
Forward contracts are used all the time by the very large scale producers and distributors, but not so much by the smaller scale parts of the food system - usually because the risks are too great for single companies to bear alone. That's why I 'm excited to be teaming up with Coastal Enterprises, Inc to see if we can develop a model of forward contracting where the Maine investment community shares some of the risk and return.
I'm starting with a 10 minute survey of Maine food producers, distributors, retailers, processors, foodservice companies, and investors, to gauge interest in a forward contracting arrangement. I'll be looking at the results of this survey to see if what common ground there might be between these different components; and to write a feasibility report to be shared this fall. With any luck, we'll find something that can be turned into a business model that will start to do some good by this coming winter.
Your responses will be kept confidential. The survey data will be aggregated and reported on in such a way as to prevent the identity of any one respondent from being known.
Know someone who might be interested in this project? Please feel free to forward this message along!
For those of you who are in the busiest part of your season, I apologize for the horrible timing - it's great timing for a project that hopes to produce results by this winter. Your time and feedback will be very much appreciated and valued, I can promise that.
Please reach out to me if you have any questions.
Thank you very much,
Jed Beach
FarmSmart
Jed@Farmsmartmaine.com
207-370-9238
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