Harve Light Jr.’s Post

Great story in the WSJ about Rochester Michigan. Rochester is all about small business success! The lights are an amazing sight. Apologies to those that do not have a WSJ subscription. The Small Town That Turned Christmas Lights Into an Economic Miracle https://lnkd.in/ev2pdqPy

The PPI for June 2023 was released last week. This chart shows the PPI data for categories affecting the food industry. There's a lot of green due to decreases from the prior year. Looking at the change over the last two years, the picture is less rosy. Grocery and Restaurant revenue increases are the result of inflation. Real Growth is minimal or negative. The beef/dairy sector issues could have a long-term impact. Packaging costs remain elevated. Finally, labor market concerns continue due to the low participation rate. The ratio of Job Openings to the number of Unemployed remains stubbornly high. This ratio needs to be near or below 1.0. More to follow when we issue our full commentary shortly.

A good article describing the impact of the low water levels on the Mississippi River. This is another supply chain disruption.

In our 3rd quarter release of The Food Chain Report, Jim Byrum and I provide insights into the inputs affecting the Food Manufacturing and Agribusiness sectors. We see the gap between the “Haves” and the “Have Nots” growing. Grocery sales growth has been driven almost entirely by inflation for most of 2022. We also see weakness in real growth for restaurants. Labor markets are undergoing a fundamental shift that started before COVID. (Hint: those missing workers probably aren’t coming back.) There was some relief in the month-over-month numbers, but costs increased dramatically from a year ago. It’s an early sign that there may be some easing of inflation on the horizon. We hope this report is helpful to you. Give us a “Like” if it does. If there is a specific situation that you’d like to discuss, please reach out. #agribusiness #foodmanufacturing

For those in the Food Chain, this is a must-read. Sustainability ratings will be required by your major customers regardless of formal regulations. Our ESG team can help make sense of the confusion. Clermont Partners is now part of Riveron. If you have a situation you'd like to discuss, please let me know. #sustainability #food

As if we did not have enough economic worries, now there may be a railroad strike. The effects are already being felt as safety protocols dictate that the railroad companies stop shipping hazardous material now. (Think fertilizer) We are also coming into harvest season in many parts of the country. For perspective, agriculture and energy products constitute 52% of rail freight volume. Contingency plans are a must. At Riveron, we assist management teams in performing critical financial and operational analyses to improve performance and implement change. Our Food and Agriculture team can help with pricing model improvements, SKU and asset rationalization, price increase requests, production planning, and sustainability benchmarking. If you have a situation that you would like to discuss, please get in touch with me. #agriculture #supplychain #foodprocessing

Makes sense to me.

Unfortunately, Lamb Weston's Q1 earnings call is a prime example of what the food industry is going through. They cite a poor potato harvest, increasing transport and packaging costs, and labor inefficiency due to illness as the major causes for margin compression. These are significant issues for the food industry that started long before the Ukraine-Russia conflict. Raising interest rates to reduce demand will not fix this part of the economy. For reference, Lamb Weston serves 80 million french fry portions worldwide daily. At Riveron, we assist management teams in performing critical financial and operational analyses to improve performance and assist in implementing those changes. Our Food and Agriculture team can help in areas such as pricing model improvements, SKU rationalization, price increase requests, and production planning. If you have a situation that you would like to discuss, please get in touch with me. #food #agriculture #foodindustry #foodmanufacturers #foodprocessor