Unlike storable commodities that rely on futures contracts and long-term warehousing to buffer market shocks, fresh produce operates without a safety net. With shelf lives measured in days rather than years, specialty crops transmit cost, weather and trade disruptions directly to the retail floor in real time.
In a conversation with The Packer, Phil Kafarakis, president and CEO of IFMA, The Food Away from Home Association, and author of the Food System Volatility Newsletter, explains why “weather whiplash” and upstream input pressures are creating a state of permanent, structural volatility for fresh produce.
Kafarakis breaks down how retail produce executives must shift from lagging price metrics to upstream signals, rethink rigid calendar-based contracts and design supply chain flexibility directly into their supplier relationships before the next shock hits the shelf.
The Packer: Grain markets have storage and commodity futures to cushion trade or weather shocks, but fresh produce operates on tight shelf-life windows. How does your concept of ‘structural volatility’ manifest uniquely in specialty crops and fresh produce compared to storable commodities?
Kafarakis: Grain markets have three shock absorbers specialty crops don’t: storage (you can hold corn for years), futures/hedging (you can lock in price exposure months out) and fungibility (a bushel of corn from Iowa is interchangeable with one from Illinois). Fresh produce has none of these. A strawberry has a shelf life measured in days; there’s no meaningful futures market for most specialty crops, and product from one region often isn’t a true substitute for another — different flavor, size, growing practices or even just what the buyer’s spec calls for.
That means when a shock hits — a freeze, a labor disruption, a trade policy shift — grain markets absorb it over months through storage drawdowns and price discovery. Produce absorbs it in real time, on the shelf, with no buffer. You can’t warehouse your way through a bad week of romaine.
As a result, produce volatility is not just more frequent, but structurally undampened because the system has no built-in mechanism to smooth it out. This is the core of structural volatility. Produce markets are not necessarily more volatile by nature, but the industry built around them simply lacks the tools to absorb the shocks that happen.
You’ve noted that erratic “weather whiplash” makes even good crop years hard to plan around. How should retail produce buyers adjust their contract strategies and supply commitments when traditional regional growing calendars become unpredictable?
The old model, a fixed calendar of regional windows (California in spring, then shifting to Mexico, then back), assumed the weather within each window was roughly consistent. That assumption is breaking down. Buyers need to shift from calendar-based sourcing to signal-based sourcing: building contracts around triggers and ranges rather than fixed dates and fixed volumes.
Practically, that means shorter-duration commitments with built-in volume flexibility (ranges/bands, not fixed numbers); dual- or tri-sourcing agreements across regions that don’t share the same weather risk, so a freeze in one doesn’t take out the whole supply plan; and pre-negotiated pricing mechanisms for weather-triggered gaps, so you’re not renegotiating from scratch in a panic when a region underperforms.
It also means buyers need to get comfortable paying a small premium for optionality — flexibility has a cost, but it’s cheaper than a stockout or a spot-market scramble.
In your Forbes column, you write that the next food shock forms long before it reaches menus or shelves. What early-warning signals or commodity intelligence metrics should retail produce executives track to spot input and logistics shocks before they hit the produce department?
Think in sequential stages, upstream of the shelf: input costs (fertilizer, diesel, labor availability) as leading indicators of grower economics and planting decisions; weather and soil-moisture data in key growing regions, not just “is it raining” but multi-week pattern shifts; logistics capacity — trucking availability, port congestion, container costs — since produce is uniquely exposed to transportation bottlenecks given its perishability; and grower sentiment and planting intentions, which often shift before the data does.
The mistake most retail buyers make is watching price. Price is a lagging indicator. By the time it moves, the shock has already happened. The useful signals are the ones two or three stages upstream: are growers planting less of a crop because input costs are squeezing margins? Is there a labor shortage building in a key harvest region? Those show up weeks or months before they hit your shelf price.
Restaurants are struggling to absorb new input shocks, and retail grocers face similar consumer pushback against food inflation. What does “building in supply chain flexibility” look like in practice for fresh produce suppliers and retail buyers working together?
Supply chain flexibility starts with information-sharing that goes both directions, not just buyers auditing suppliers. Growers and retail buyers need shared visibility into planting decisions, input cost pressure and weather risk well before harvest — not a phone call after a shortfall.
It also means restructuring the relationship away from pure lowest-cost-per-unit toward resilience-adjusted value: a slightly higher-cost supplier with diversified growing regions or better logistics redundancy is often cheaper in the long run than the lowest bidder who leaves you exposed to a single point of failure.
In practice, this means:
- Building multi-region supplier portfolios rather than relying on single-source relationships.
- Adopting flexible spec agreements (accepting a range of sizes or grades rather than one rigid requirement) so a weather-stressed crop isn’t a total loss for the partnership.
- Creating joint contingency plans by sitting down with key suppliers before the season to map out “Plan B” if a region underperforms, rather than improvising on the fly.
The underlying shift is treating flexibility as a designed-in feature of the supply chain, not an emergency response you improvise when something breaks.
