Staying profitable in 2024 could be a challenge for the agribusiness and food/beverage industries due to increases in insurance, labor and farm input costs. The labor shortage will also continue to be a factor. Proactively addressing risks and shoring up the right insurance coverage can help organizations address these challenges. Here’s how:
Offer Personalized Benefits
The labor shortage in the U.S. will continue in 2024 across the food, beverage and agriculture industry. Many organizations are struggling to hire new employees and maintain necessary staffing levels, which is impacting their ability to keep operations running smoothly.
The answer for many has been to harness automation, but this solution is not a cure-all. Some organizations have gone back to using traditional labor to address automation issues and reduce product defects, costs and issues with lower overall production.
Creative benefits solutions are one way to address the industry’s labor gap. Businesses that offer personalized benefits informed by data analytics are more likely to see better results in employee recruitment and retention. Personalized benefits programs are designed to provide quality employee experiences to attract workers and increase employee loyalty. These benefits can help improve employee safety, well-being and health while enhancing retention and hiring efforts.
Re-evaluate Insurance Coverage
Catastrophic weather events, high interest rates, increased insurance premiums and input costs, along with the lack of available labor will continue to impact businesses across the industry.
Interest rates, weather-related events and input costs are difficult to combat since organizations cannot control those factors. However, those that take on more risk and harness alternative risk transfer vehicles should be able to lower insurance costs and address lack of coverage to better protect profit margins.
Options to consider include:
- Modifying limits, deductibles and retentions in existing policies
- Carefully evaluating your business interruption coverages to ensure they meet your continuity objectives
- Analyzing your layered insurance program for avoidable costs
- Looking into captives or self-funded programs
Emerging risk transfer solutions can help the food and agribusiness sectors stay resilient. For example, parametric insurance policies are designed to compensate organizations after a qualified weather event, whether or not the insured actually sustains damage.
There is an array of risks to contend with in the food industry, including product recalls, work safety, supply chain woes, manufacturing plant maintenance, cybercrime and, of course, weather-related risks. Taking a thoughtful approach to implementing risk management practices can help those in the food, beverage and agribusiness mitigate these challenges in 2024.
For example, to better develop business continuity and risk management plans, agribusinesses should undergo catastrophe modeling to simulate the impacts of possible catastrophic events that could occur in one’s geographic area. Factoring in the types of weather-related events by region to better determine how to address them also can help. Consider organizations impacted by drought: Establishing improved resource management plans can curb the impact of this type of weather event. For facilities and employees in geographic areas prone to wildfires, implementing improved safety measures can protect both.
For those in food production, contamination-related recalls and product withdrawal events are an ever-present threat. Take the issue of allergens in food, for example. Organizations that implement strong product oversight measures that include periodic audits can reduce the threat of recalls.
With the increased dependence on technology to improve production, particularly in the food and beverage industries, combating the threat of cybercrime has become particularly important. Training and educating employees on cyber threats can make them more aware of this potential crime and help to better maintain a safe work environment. In addition, implementing protective measures such as multi-factor authentication and endpoint detection and response systems can reduce the risk of cyberattacks.
The issues that the food, beverage and agriculture industries must contend with in 2024 do not differ greatly from what they’ve been dealing with the past three years. But those organizations that implement better risk management practices, analyze their insurance coverage and look at alternative risk transfer vehicles to reduce costs and improve employee well-being with enhanced benefits can remain profitable going forward.