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Business model innovation: Shared risk can lead to reward

Market dynamics are driving players across the agriculture value chain to explore new pathways for innovation. With an increasingly challenging environment for novel product development, companies are considering other innovative ways to differentiate their offering and garner loyalty, including new business models. In this environment, a business model built around risk-sharing warrants a closer look. Christian Guffy, Partner with The Context Network, shares his point of view.

Many of the product innovations that shaped modern row crop production as we know it—such as traited seed and mechanizationare widely adopted and have largely become table stakes. Product-driven companies are also finding that it’s no longer realistic to solely rely on a new product pipeline to outpace the commoditization of legacy products or to work around go-to-market challenges. While there are pockets of tremendous innovation to the industry, many pipelines are generally not as robust as they once were. Rising regulatory costs and timelines have played a role in slowing the pace at which new products are approved for the market. The average cost to commercialize a new synthetic chemistry product now exceeds $350M, based on historical growth of development costs documented in one study.[i] Another study in 2022 showed that the average time to bring a new GM trait to commercialization increased 26% between 2012 and 2022.[ii]  As a result, legacy crop input providers find themselves vying in an increasingly crowded marketplace, making it challenging to maximize the value of their products.

With this confluence of factors challenging and shifting product innovation in long-standing product categories such as chemistry and traits, the concept of engaging differently with customers has elevated in importance. While business model innovation can come in many forms, one of the most compelling approaches today is one in which companies participate in the the upside (returns) and downside (risks) with their customers.

In this article—the first in a series on risk mitigation—I will discuss the historic compartmentalization of risk and the potential benefits of relationships which seek to engage in risk sharing. In January, I’ll share strategies and considerations for risk sharing specific to the upstream market, including product-driven/input companies, retailers, and cooperatives. In subsequent articles, I’ll collaborate with Context colleagues to explore the possibilities and benefits of risk sharing throughout other segments of the value chain, including processing, distribution, and food production.

From segmented risk to integrated risk

Risk management isn’t new to agriculture and food production. Elements of risk have always permeated the sector—from the continuous risk of inclement weather that growers face, to the risk of ingredient scarcity that food companies aim to address when they negotiate supply contracts.

Yet, while every player in each component of the value chain bears business risks (and some of those risks, such as capital risk, are universal), these risks have historically been highly compartmentalized. Equipment, crop protection, crop nutrition, and seed companies, for example, shoulder the risk of inventing new products and pricing them right for profitability and ROI with growers. Retailers and distributors bear the risk of building infrastructure and hiring the labor needed to be the boots-on-the-ground with growers. They also have to manage the right level of inventory to deliver product just in time. Growers assume the risk of choosing which products to use for the season, coupled with heaps of execution risk centered on in-season production factors. Processors and traders carry their own set of significant fixed asset risks, along with market and trading risks which largely hinge on macro-demand factors. The list of relatively siloed risks goes on throughout the value chain.

Historically, risk is siloed across the value chain:

A traditional value capture model reinforces fragmented risk, as it is predicated on companies setting a price that is passed along to the next value chain participant, and the price is based on expected return on investment (ROI), not actual ROI. Once a product is purchased, all risk and potential reward shifts to the buyer. Said differently, if a product performs well, the buyer enjoys great outcomes. If a product doesn’t perform as expected, the buyer bears the consequences of the poor outcome. Likewise, if a product performs extremely well, the seller doesn’t financially benefit from the upside of that performance, as the price (and risk) was already passed along.

In the traditional value capture model we’re all familiar with, the market naturally adjusts product pricing over the long term. Growers won’t keep using consistently poor performing inputs, food brands won’t keep purchasing subpar ingredients, etc. However, in the short term, players in different segments of the value chain bear the swings in “fortune” of a historically volatile system, as weather events decimate crops or global conflict hobbles the commodity supply chain, for instance.

What if this paradigm changed? What would it mean to adopt an innovative business model in which companies choose to engage in certain risks with their customers and/or other downstream value chain participants? What would it mean if you choose not to engage?

In a risk sharing model, players purposefully assume some of the risk they would traditionally pass on to another segment of the value chain—with the goal of also sharing profit or savings in the event of success. It’s worth noting that the practice of risk sharing already exists within certain segments of the value chain. The grower cooperative system, for example, is functionally designed to ensure that individual growers will be somewhat insulated in scenarios where they might otherwise be at risk due to their negotiation power. Warranties are a form of risk mitigation as well. Risk sharing models are also familiar in other industries, like performance-based programs in healthcare, in which doctors receive a portion of their payment based on quality of care.

In addition to the market forces described earlier, another key factor enabling business innovation through risk sharing is the increasing abundance of agricultural data. The ongoing proliferation of data collection and analysis tools make it more feasible to accurately capture and more accurately attribute the value of product performance, though significant progress is still needed to bring this fully to life. Value attribution will ultimately be the key to linking specific product or practices to intended outcomes. This means pricing can be assessed based on actual ROI, a win for both parties over the long term.

Business model innovation based around risk sharing will have an increasingly profound impact in the food and agriculture industry. Several companies are actively engaged in piloting risk participation programs. Consider how a risk sharing strategy (or not pursuing one) aligns with your business goals and how it might impact your customer and supplier relationships.

Ask yourself:
    1. Which risks and which value chain partners will be most meaningful to engage with? For example, a product company may choose to engage in and growers in their execution risk.
    2. What band(s) of risk are you willing to engage in, and how will it affect your own credit position and cash flows? For example, reconciling product performance at harvest could push cash flows three to six (or more) months later for many input companies.
    3. What kind of value exchange mechanisms need to be crafted or leveraged? There are many mechanisms, such as performance guarantees, value-based contracts, cash-back programs, contract production, bonus triggers, etc.

At The Context Network, we’re helping organizations explore new business models and other innovation pathways to help them succeed. Through our deep business knowledge and broad network of experts, we can help you evaluate opportunities and craft strategies. To discuss what risk sharing could look like for your business, reach out to me at


Christian Guffy, Partner, brings experience in consulting, strategy development, and financial analysis in a variety of industries including agribusiness, investment finance, and retail. He has helped clients develop long term strategic plans as well as annual go to market strategies rooted in fundamental market analysis and research. He has also advised companies on corporate financial planning including capital expenditures, business unit divestitures, and strategic acquisitions. As a result of these client engagements and his prior experiences, Christian is well suited to engage clients in pursuit of their overarching business objectives.

[i] Progressive Farmer. “The Price of New Chemistry.” April 14, 2016.
[ii] AgbioInvestor 2022/CropLife International Members. “Delayed Innovation. Why are overall timelines moving in the wrong direction?” AgbioInvestor 2022/CropLife International Members

The Context Network’s ESG Expert Jason Nickerson Promoted to Principal

The Context Network’s ESG Expert Jason Nickerson Promoted to Principal


WEST DES MOINES, IOWA (July 7, 2022): The Context Network (Context), an agribusiness consulting firm, broadened its leadership team with the promotion of Jason Nickerson to principal.

Nickerson most recently served as program director at Context with a focus on global strategy and sustainability. As a principal, he will bring 10 years of sustainability consulting experience to help companies throughout the food and agriculture value chain establish and achieve ambitious sustainability and social impact goals.

Context Partner Matt Sutton-Vermeulen said, “Jason can walk into a boardroom or a machine shed and bring the best out in everyone. He combines well-honed financial and analytical skills with an intuitive grasp of public-private dynamics in food and agriculture. Our clients—and increasingly, their shareholders and supply chain stakeholders—are more focused than ever on sustainability, and Jason can help them gain greater visibility and accountability around critical environmental and social impacts.”

Since joining Context in 2016, Nickerson’s advisory work has centered on combining market analytics, decision sciences, and marketing strategy to unlock financial and social value. He has helped global agribusinesses evaluate product-market fit, define go-to-market strategy, and hardwire ESG into their operations. Within the development realm at Context Global Development (Context’s not-for-profit sister organization), Nickerson has been instrumental in designing, implementing, and investing in transformative food systems initiatives via partnerships with donors, governments, and non-governmental organizations.

“There’s no challenge today more worthy—or more complex—than climate change,” Nickerson said. “Energy is galvanizing around solutions within the agricultural sector, and investors expect it. I’m thrilled to be part of the leadership team at Context that’s focused on helping our clients address this challenge head on.”

In addition to his background in ESG strategy and implementation and in global development, he brings depth in risk management, deal structuring, and transaction evaluation. Nickerson served as a Peace Corps volunteer in Central Asia and holds an MBA from Duke University. Beyond his work for Context, he currently sits on the board of Seed Programs International, an NGO that connects vulnerable communities with access to vegetable seed.

With the promotion of Nickerson, Context continues to grow its slate of leaders, with eight principals now working alongside the firm’s nine partners. Founded more than 30 years ago, the Context Network is committed to applying its consulting practice to advance agriculture to be more productive, efficient, and sustainable.


PRESS RELEASE: Longtime WIA Director Joy O’Shaughnessy Joins The Context Network’s Leadership Team

WEST DES MOINES, IOWA (June 2, 2022): The Context Network (Context), an agribusiness consulting firm, continues to grow its leadership team, with Joy O’Shaughnessy joining the firm on June 6 as a principal.

As the former director of the Women in Agribusiness (WIA) Summit and COO of the agribusiness division of HighQuest Partners, O’Shaughnessy brings extensive executive leadership experience to Context. During her 11 years at HighQuest, she grew the WIA Summit fivefold, increased strategic partnerships with sponsoring clients, and oversaw planning and production of events in the U.S. and Europe. She is known and valued in the industry for her collaborative relationships and exceptional communication skills.

“Joy has a zest for building relationships by listening to people and asking the right questions,” said Context Senior Ag Industry Advisor Gloria Basse, who serves on WIA’s advisory board and has known O’Shaughnessy for nearly a decade. “The growth of the WIA Summit is testament to her commitment to truly connecting with people up and down the agricultural value chain. People want to be around her because of her energy and ideas.”

Context Partner Christian Guffy observed, “As one of three new principals who have joined our leadership team in recent months, Joy brings a refreshing and invigorating lens to the strategic consulting work we do. Her experiences in deploying people and resources to the most relevant agricultural topics will continue to be applied by helping our clients address their challenges and opportunities in new ways.”

Prior to joining HighQuest, O’Shaughnessy worked in television production and received national recognition for educational programming, including two Emmy nominations. She holds a Bachelor of Arts degree in Communications/Media from the State University of New York Fredonia.

O’Shaughnessy is eager to bring her passion for agribusiness and her creative problem solving to Context. “I’m a strong believer in tapping my network to help others in the industry grow and thrive,” she said. “Rather than come into Context with an agenda, I plan to listen and connect with people so that I can uncover trends and turn them into business opportunities for our clients.”

With the addition of O’Shaughnessy, Context further expands its slate of leaders, with seven principals now working alongside the firm’s nine partners. Founded more than 30 years ago, The Context Network is committed to applying its consulting practice to advance agriculture to be more productive, efficient, and sustainable.

The Context Network Gets Precise about Environmental Benefits of Precision Agriculture

The Context Network Partner Doug Griffin, who was recently named to the Association of Equipment Manufacturers (AEM) Ag Sector Board, led a Context team that helped AEM and other industry associations quantify the environmental benefits of precision agriculture. Griffin shares what they learned here:

The name says it all. Precision agriculture is about applying the right amount of the right thing (e.g., seed, nutrients, fertilizer, water) in the right place. But until recently, there was little precision in the data about the environmental benefits of these technologies.

The Association of Equipment Manufacturers (AEM) recognized that void. While there was plenty of good information about the economic benefits of precision agriculture, there were only bits and pieces that quantified its impact on the environment. With arguably no topic in agriculture more pressing today than sustainability, AEM envisioned a cohesive study that multiple organizations could stand behind. It partnered with the American Soybean Association, CropLife America, and the National Corn Growers Association to take a close look at the environmental benefits of precision agriculture through five lenses: productivity, fertilizer reduction, pesticide reduction, fuel savings, and water savings.

The study focused on five prominent areas of precision agriculture technology:


Auto steer, also known as auto-guidance, uses GPS to automatically control the tractor’s path during seeding, spraying, and harvesting. This improves efficiency and reduces soil compaction because it avoids overlapping and missed spots in the field.


Machine section control can turn planter, fertilizer, or sprayer sections on or off in rows that have already been seeded or sprayed. It also senses shorter rows (i.e., point rows) and turnrows and adjust treatment automatically, based on field data in GPS.


Variable rate technology determines the right applicable rate for seed, fertilizer, and crop protection products. It often uses supporting technologies such as crop and soil sensors, yield monitors, and preprogrammed maps.


Fleet analytics and telematics enables famers to monitor their equipment in real time and from a distance, including GPS location tracking, equipment idling, and route suggestions.


Precision irrigation technologies (specifically, sensor-driven center pivots) can apply different amounts of water to different parts of a field to reduce overall water consumption, without jeopardizing crop performance.

What Context Learned

The AEM study found that precision agriculture—at its current adoption level—quantifiably enhances sustainability through more efficient use of land, water, fuel, fertilizer, and pesticides.


4% current increase in yield

To put it in tangible terms, this adds up to 10.2 million acres of cropland avoided due to more efficient use of existing land. That’s the size of 4½ Yellowstone National Parks!


Fertilizer use:

7% current increase in fertilizer efficiency

For one farm in central Illinois, variable rate precision agriculture technologies, in combination with other climate-smart practices, lowered the farm’s costs by $67 an acre, and reduced CO2-equivalent greenhouse gas emissions by more than 15%.


Herbicide use:

9% current reduction in herbicide use

In practical terms, this adds up to an astonishing 30 million fewer pounds of herbicide.


Fossil fuels:

6% current reduction in fossil fuel use

This equates to 100 million fewer gallons of fuel—or taking 193,000 cars off the road each year.


Water use:

4% less water usage currently

Variable application of water is conserving enough water to fill 750,000 Olympic swimming pools.

It’s been exciting to help bring these findings to light and to see the way they’re resonating with a diverse audience. Equipment manufacturers are embracing the study—and sharing its findings to help farmers make important decisions. Investors are reading the study—and it’s buoyed their confidence in the sector’s commitment to sustainability. Politicians are reading it—and it’s shaping the policies they are putting forward.


What’s Next?

While the environmental impact of precision ag is significant today, the reality is that adoption rates are still quite low, creating potential for more positive impact with broader adoption. Auto guidance/autosteering is the most widely embraced by U.S. farmers, but even its adoption rates are uneven today—at 25% to 80% of potential. Adoption of machine section control and variable rate technologies hovers between 5% to 45% and 2% to 54% of potential, respectively. And adoption of machine/fleet analytics and precision center pivot irrigation is currently at less than 12% and 22% of potential, respectively.

The potential for additional water savings is especially meaningful. Full adoption of technologies such as variable rate precision irrigation and soil moisture sensors could trim another 21% in water usage. The potential to reduce the use of fossil fuels through broader adoption of precise agriculture is profound too. By leveraging auto guidance and machine telematics, fossil fuel use could decrease another 16%. With full adoption of precision agriculture in other areas, the study estimates an additional 6% productivity gain is possible. The gains already achieved in fertilizer and herbicide efficiency could be increased by 14% and 15%, respectively, through full adoption in the future.

With this study in hand, AEM can now share compelling, factual findings with all kinds of stakeholders, from farmers to state directors of agriculture to consumers. The association is focusing on four pathways to help accelerate adoption: government policies that reward innovation; increased farm income to help foster investment; improved wireless infrastructure; and consumer communications that build trust in the science.

The Context Network is currently working with AEM on an extension of this study that quantifies the environmental benefits of modern dairy technologies. Context’s know-how in the agricultural equipment sector, our dedication to sustainability, and our broad network of experts allow us to tackle big questions like these. For more than three decades, we’ve been helping organizations all across agriculture identify trends and plan for opportunities. To discuss or learn more about the environmental sustainability of today’s cutting-edge technologies and equipment—reach out to me at

Thank you to the Association of Equipment Manufacturers (AEM) for allowing The Context Network to share the full study:

Doug Griffin is a high-energy executive with wide-scope senior-level leadership experience including commercial P&L management, global strategy development, branding, sales, marketing, channel development, and product management. He is experienced with driving culture change, process management, and execution of strategic plans.

Griffin joined Context in 2015 after a 27-year career in ag equipment, including 13 years with AGCO Corporation and 14 years with Caterpillar. He holds a BS in agricultural engineering from Purdue University. He resides in Atlanta with his wife.

Press Release: The Context Network Expands Leadership Team

WEST DES MOINES, IOWA (April 29, 2022): The Context Network (Context), an agribusiness consulting firm, has expanded its leadership team, naming Kellie Gypin and Kris Pauna as new Principals.

Context Chairman of the Board James Mann said, “Both Kellie and Kris are already driving change within Context. They bring incredible insights that have not only earned the trust and respect of their colleagues but have delighted our clients. Kellie leverages extensive experience leading large complex initiatives across multiple industries, and Kris combines his deep industry knowledge in seed and crop protection with a zeal for seeing new approaches. They are both strong additions to our leadership team who will help drive Context’s growth across the agricultural, food, bioscience value chain.”

Collectively, Gypin and Pauna have more than 40 years of impactful agribusiness experience. Gypin joined Context in 2012 and has led key business development and program initiatives. She is known for her ability to lead teams and balance strategic planning with tactical actions to achieve results. She has been instrumental in complex due diligence initiatives and leading key integration efforts following mergers and acquisitions.

Gypin said, “It’s exciting to see Context evolve, keeping pace with accelerating technological innovation and the entry of new companies in the food and ag space. I look forward to building on the firm’s three decades of deep industry support as we grow into the next iteration of who we are.”

Prior to joining Context, Gypin worked for 17 years at MeadWestvaco, a Fortune 500 pulp and paper company and then at ArborGen, a leading provider of advanced genetics for the forest industry. She holds a Bachelor of Science degree in mathematics from the College of Charleston. In addition to her expertise in leading large-scale initiatives, Gypin provides depth in data management, product pipeline management, process development, and product/solution evaluation.

Pauna came to Context in 2017 as an expert on seed treatment, drawing on his experience in crop protection and seed with Syngenta. Shortly after joining Context, he took ownership on key project management initiatives, where he helped drive powerful results for clients, demonstrating his mettle in strategy development, marketing, finance, and operations. “The power of Context’s network was apparent to me very early on,” Pauna said. “We’re able to uncover issues and identify solutions that give our clients a competitive advantage in the market because we walk in with real, grounded knowledge about their industries. I’m thrilled to be part of a team that’s not only committed to doing what’s best for our clients, but also finding unique ways to do that.”

In addition to his background in the global seed treatment and global biologicals markets, Pauna brings know-how in brand management, market analysis, pricing, revenue modeling, financial modeling, and business valuation. He holds an MBA from the Carlson School of Management at the University of Minnesota and a Bachelor of Arts degree in business economics from Moorhead State University.

Founded more than 30 years ago, The Context Network is committed to advancing agriculture to be more productive, efficient, and sustainable.

The Unintended Consequences: Enhancing Resiliency in the Egg Supply Chain: Consumers, Part 4

COVID-19 has challenged numerous global and U.S. supply chains, shedding light on weaknesses in the systems.  The food supply chain certainly was not immune. While bare shelves and empty coolers are eye-opening and may seem temporary to consumers, the impacts on the disruption will have long-lasting implications from an economic, environmental, and social standpoint.

In this fourth and final installment of our Unintended Consequences series, we explore the implications and future outlooks for consumers as it relates to the egg supply chain.

Consumers have seen several scenarios play out due to COVID-19. With the egg industry, first came the shortage on retail shelves and a temporary increase in cost. As dominoes fell around them, consumers got a sneak peek into how their food system operates, but few were able to completely grasp the complexities of getting food from farms to new end-users, in this case, the grocery store.

As we mentioned previously, two-thirds of the egg industry grows eggs for shell eggs or retail use. The other one-third of the industry grows eggs for egg products. Unfortunately, there is little overlap between the production systems and therefore transitions from egg product to shell eggs for retail use were not as easily attained, causing a shortage on one end while the other side had a surplus. While the shortage of eggs in a retail market was temporary, there have been some long-term economic, environmental, and social impacts that will benefit bottom lines moving forward.

 Long-Term Economic Impacts:

Product Availability at Restaurants, Cafeterias, Schools: As restrictions of shelter-in-place orders lift, and consumers return to a new “normal”, there may be an impending shortage of eggs available at food service entities. While there are supplies to meet demands now, we must be cognizant of the volume of birds temporarily taken out of production through molting and permanently through euthanasia, a number that is still not readily available, but it is likely to be significant. Building up production to pre-COVID-19 levels will take time. Between rebuilding flocks, there are only so many chicks available annually, and while growing them to egg-producing maturity, a 16-20 week process, supplies will be limited within the egg product sector. The length of time and financial impact are areas that need to be examined further.

Production Losses: Rural communities may also be impacted economically from these shifts in consumer spending. The Midwest is the epicenter of egg product production and thus will see scenarios play across the Heartland. There will be some farms with significant debt loads that cannot weather this storm. Losses of jobs, local tax revenue, and more will add up for these individuals and communities at-large, adding more burden on already financially strapped rural America.

Environmental Impacts:

Resources– Food waste is an environmental concern. Dumping liquid egg products and hen carcasses can be viewed as just that – food waste. While we’ve explored the reasons whythis happened, we still cannot ignore the implications of throwing away food. There is more to dumping than just the economic impacts to the producers. There are also wasted resources: those needed to produce the feed and also grow the flocks. What is the environmental cost of having those resources wasted? What sort of resources will it take for the industry to get back to “normal”?         

Landfill Waste – Another thing to consider is the additional landfill waste brought from these changes. Rotting, wasted food produces methane gas – something climate scientists are already watching closely. What is the overall egg industry environmental impact when a percentage of products goes to landfills?

Social Impacts 

Food Shortages/Security– The U.S. prides itself as an efficient, modern food system. For consumers, are their impacts on perception of our food security with shortages that will span for months to years? Are there impacts or movements to push for more ease in food pantry donations or local points of sale? What can the industry do to proactively manage changes or needs of the consumer?

Visuals of Euthanasia – While the egg industry has done a good job to date of managing the crisis of having to depopulate flocks, other parts of the food production industry have not faired so well – with visuals of mass euthanization and dead animals. What are the repercussions to workforce members whose day-to-day responsibility and self-actualization are centered on being caregivers when having to end the life of the flock prematurely? And the impacts on consumer’s from these visuals? Granted, we are leveraging experiences from depopulations due to diseases like high pathogenic avian influenza (HPAI), but depopulations triggered by economics may be different. And, are there lessons the egg industry can be learned from this experience to prepare for future crises?

This series has certainly laid out a broad range of perspectives for the egg industry and identified gaps for the industry consider further. At this point, there is still a lot of unknowns. But, that is the significance of bringing the industry together, sharing perspectives, borrowing from adjacent industries, and developing a plan of action moving forward.

Throughout this series, The Context Network has performed a deep dive into the intricacies of the egg industry by including perspectives spanning the supply chain. We’d like to thank United Egg Producers, Egg Industry Center, and Oskaloosa Foods for their contributions to this series.

If you’re interested in working with Context to work through these or any other issues, please contact me at 

The Unintended Consequences: Enhancing Resiliency in the Egg Supply Chain: Food Service, Part 3

Consumer eating habits have changed in the past 10 weeks. Technomic projected in late March that the foodservice industry – those charged with preparing meals outside the home – could be facing as much as a 27 percent revenue decrease for 2020 compared year over year to 2019. These changes in consumer eating led those in the foodservice industry to reduce and cancel purchases of egg products resulting in significant social, economic and environmental (triple-bottom-line) impacts on our local communities and around the country.

Canceled events and conferences led to fewer meals being served by the Food & Beverage part of the hospitality industry. Less dining guests led to menu adjustments across the board from your everyday fast food to sit down dining. School closures led to breakfast no longer being served in districts across the country. While McDonald’s dropping all-day breakfast or a local restaurant not offering a favorite dish during this period may be a minor inconvenience to many, it has created significant triple-bottom-line impacts on the egg industry.

Recipe Searches Increase with Home Food Consumption

As we’ve mentioned in the first two articles in this four-part series, the egg industry is divided into two sectors: shell eggs and egg products. Shell eggs have had their share of challenges, with home consumption growing 220 percent. However, this article will focus more on the foodservice and egg product challenges in the marketplace today.

The wholesale market for egg products looks considerably different than shell eggs. Egg products are pasteurized and sold in a variety of refrigerated, frozen and dried forms to meet the needs of quick-service restaurants, institutions, hospitality services and food manufacturing. To understand the scope, we must recognize that eggs aren’t just used by these customers as “eggs” for breakfast or salads, but rather they are also regular ingredients in sauces, dressings, pasta, baked goods and more.

Some in egg product production serve only one or two of these segments, while others offer a variety of products, helping to insulate their business when unforeseen circumstances arise.

For many in the egg product sector, the market may not have evaporated over the last several months, but rather shifted end-use purpose. For example: where restaurant-style individual servings of sauces, dressings and mayonnaises once drove production, retail demand has found a way to fill some of the voids with many consumers stocking their pantries with sauces, salad dressings and mayonnaises. A temporary market shift but one welcomed by those filling those needs.

Those who serve both the liquid and dried egg markets were also able to shift some product to meet changing demands. Spring and Summer are normally a transition period for dried eggs, as food manufacturing demand traditionally falls during these months. The dried egg product, which is used in products such as pasta, soups and cake mixes, has remained steady in demand during COVID-19 as manufacturers attempt to meet the new consumer grocery demands of products in the middle of the store.

Those unable to shift production into differing segments or products were faced with tough decisions, keep feeding birds with no end market, or … the alternative? One choice was continuing to feed the hens and deliver truckloads of liquid egg products to landfills. Another choice was molting.  A process that takes the birds out of production for 8 weeks. This option allows producers to “wait and see” how the market plays out over two months and then choose to re-enter production or depopulate the flock. For others, the financial implications of feeding birds with no market delivered severe economic impacts to their balance sheet and led to early euthanasia and mass depopulation for millions of hens.

How many birds have been taken out of production? At this point, we do not know. USDA reports can provide a clearer picture, but still not a crystal ball.

What we do know is this: the recovery time frame will not be a flip of a switch. As restaurants come back online, egg product producers are seeing an uptick in demand from their loyal customer base. However, the requests are much less than pre-COVID-19 numbers. At this point, the market demands can be met. But, that can only last so long. Delays from bringing a bird back from molting, as well as the delays in replenishing flocks – shortage of pullets (immature hens), plus 16-20 weeks until egg production, will impact the foodservice industry in months to years ahead.

Throughout this series, The Context Network will continue to dive deeper into perspectives found on these issues throughout the supply chain[1]. As we build the story, we continue to identify additional needs from the industry as a whole. If you’re interested in working with Context to work through those issues, please contact me at 

[1]United Egg Producers, Egg Industry Center and Oskaloosa Foods contributed to this series.

The Unintended Consequences: Finding Resiliency in the Egg Supply Chain: Egg Production, Part 2

Supply chain integration and scaled production have afforded the U.S. egg industry many efficiencies. When everything works as designed, the industry runs smoothly, anticipating and addressing known threats and supplying market demands consistently with little to no disruption. However, the impacts of COVID-19 on the egg industry have been nothing less than catastrophic to many players within the system.

To understand the impacts on the industry, you must first understand the industry as it functions today. We mapped out the two different production systems, shell egg and egg products, in the first article in this series. You can find that here. As things played out in mid-March, these sectors found themselves in verydifferent, yet stressful situations:

Shell Eggs

Shelter-in-place guidance caused a skyrocket for demand in retail locations with unavoidable shortages driving temporary price increases as retailers competed for the precious commodity. Today, prices are back to similar levels seen before COVID-19’s shift in consumer spending.

Egg Products

Many in the egg product market serve only foodservice customers. A blessing when the major restaurant chains, schools and institutional cafeterias are running normally, a hindrance when their customers took a significant hit as consumers, students and office workers sheltered at home. The demand slump caused prices for the liquid egg to plummet, dropping roughly 80 percent in a matter of days. While the price has rebounded slightly as some states and regions begin slowly reopening, the future remains very much up in the air.

These situations led to some serious implications for the egg industry. Egg producers leaned on the Food and Drug Administration to grant temporary changes to protocols required to sell into the shell egg market, hoping to alleviate the shortages on one end of the supply chain and the over-production on the other.

FDA granted these waivers on April 6, 2020, with some restrictions. While appreciated, the delay in the decision caused significant economic, social and environmental implications.

Because eggs are a relatively small market, they do not see futures traded on platforms like other raw materials. Rather, they rely on independent market reporting through Urner-Barry, an industry-leading market specialist in egg, meat, seafood and other related food industry segments.

As the dust settled in March and April, shell egg market producers found themselves as the target of price-gouging accusations and lawsuits from several state attorney generals. Liquid egg producers began seeing the impacts, which ultimately have only just begun. They’ve seen contracts ended through force majeure, causing them to dump inventory into landfills, and halt production through either molting or pre-mature euthanasia and depopulation of millions of hens.

For those in production, this left many asking for changes and flexibility in the system. Could this have been avoided? Possibly. Are there things that can be done to prevent it from happening again in the future? Quite likely.

Like with any challenge, there are often insights industries can pull from other’s experiences. The egg industry doesn’t need to look hard to find these insights within their history and other adjacent agriculture sectors.

National Poultry Improvement Plan

First, we must look at the National Poultry Improvement Program (NPIP), which dates back to the Great Depression. The voluntary program has set a precedence in public/private programs for the poultry industry and has helped curb threats to the industry in the past, including expanding to assist in managing more recent disease outbreaks. With an elevated need for innovation due to COVID-19, could the NPIP once again evolve and continue bringing the industry together with state and national regulators to find common ground? Could such innovations have an opportunity to improve resiliency in the poultry industry and further food security in the United States?

Federal Crop Insurance Program

As we talk about food security, another area to garner insights from is the Federal Crop Insurance Program. A public-private partnership that allows each private, authorized company control in writing and reinsuring policies, marketing the products, adjusting and processing claims, training, and record-keeping. The program is a means to keep crop insurance affordable to producers, providing the efficiencies of the private industry and the regulatory and financial support of the federal government. The program certainly has evolved over the years, including additions like the Dairy Revenue Protection program in 2019. In this example, dairy producers are protected against unexpected declines in the quarterly revenue for milk sales. Could the egg sector benefit from a public/private insurance program that provides risk mitigation and disaster relief?

Risk Mitigation

Risk mitigation can also come in the form of financial decision-making. For many in agriculture and raw material sectors, price transparency from the futures market provides an expectation-setting experience for everyone involved. The producers rely on the futures market to make production decisions, end-use customers rely on it to make purchasing decisions. Could market transparency lead to more informed decision making across the entire supply chain? Could it assist all parties including consumers in the long-term?

There are certainly more avenues to explore and questions to answer in a post-COVID-19 egg sector. What does the new industry look like? How do we protect against major disruptions in the value chain again? If the flexibility to meet consumer demand for a safe, wholesome, nutritious product is the ultimate goal, how do we get there in a way that makes economic, social and environmental sense?

Throughout this series The Context Network will continue to dive deeper into perspectives found on these issues throughout the supply chain[1]. As we build the story, we continue to identify additional needs from the industry as a whole. If you’re interested in working with Context to work through those issues, please contact me at

[1]United Egg Producers, Egg Industry Center and Oskaloosa Foods contributed to this series.

The Unintended Consequences: Enhancing Resiliency in the Egg Supply Chain, Part 1

While other protein production sectors may be making headlines during COVID-19, those along the egg supply chain are not immune to disruption. Members throughout egg’s supply chain are working through challenges presented to their triple bottom lines during this unprecedented time.

Eggs, you see, are not just produced for supermarket shelves. No. They serve a purpose for those in the foodservice and hospitality industry, often in their liquid form.  A role left in the void as demand from those food sectors all but dried up, while consumers shifted their attention to in-home dining.

The unintended consequences of a shortage of shell eggs and a surplus of liquid eggs have led many in the egg sector wondering if there is an opportunity for changes in risk mitigation strategies moving into the future. This situation also shines a light on several lessons to be learned by the agriculture industry at-large.

At The Context Network, we wanted to dive a little deeper into this industry, exploring the known and the unknown in various sectors along this chain and areas that need to be explored further. This article is part of a 4-part series that takes a big-picture look into the impacts of COVID-19 on the industry and identifies a growing need for something more.

For those not intimately familiar with the egg industry: shell eggs and eggs produced for egg products serve distinct purposes. Due to modern production efficiencies and streamlined on-site market preparations, those systems do not overlap. While a surplus of shell eggs could end up in liquid egg or dried egg form, the inverse is not easily attained. Eggs used in liquid products are not required to follow the same FDA standards and thus, when a colossal shift happens in demand, the industry is not as flexible as many would hope.

It’s important to examine each shift in the egg sector through the lens of various players to have a more robust dialogue moving forward. When you examine the biggest impacts in the sector over the last several months, several key themes rise to the top. One area that remained flat and therefore was not discussed here is the dry egg market. Unfortunately, the others have not been this lucky.

Increased Demand for Shell Eggs

As consumers shifted from eating in foodservice and hospitality settings to eating at home, grocery stores saw an increased demand for shell eggs. This sudden increase in demand was followed by a short-term shortage on the back end. As a result of these supply and demand shifts, egg prices rose sharply causing push back from many states with price manipulation accusations.

Decreased Demand for Liquid Eggs

While shell eggs saw sky-rocketing growth, liquid eggs plummeted in demand and price. In fact, between March 25 and April 22 prices fell from 55 cents to 8 cents, a price that has rebounded somewhat over the last month.

Liquid eggs depend primarily on the foodservice, hospitality and baking industries for demand. The unfamiliarity of cooking with liquid eggs combined with the standard packaging sizes made liquid eggs’ transition to the retail market difficult.  While some operations were able to meet standards for shell eggs or donate products to local food pantries, others were left dumping valuable nutrition and euthanizing animals prematurely.

Euthanasia, Waste

As demand dwindled, egg producers serving the liquid egg market were met with a flurry of economic, social and environmental implications. Price was the first shoe to fall, adding even more stress to an already financially challenged industry. But, finances weren’t the only trade-off here. As excess liquid egg was on the market, producers were left with the responsibility of its removal, with a significant volume of product ending up in landfills. With no timetable on the demand’s turnaround, many farmers made the difficult decision to begin euthanizing flocks, a decision that has long-term implications for their operations and the supply chain as a whole.

Throughout this series Context will continue to dive deeper into perspectives found on these issues throughout the supply chain. As we build the story, we continue to identify additional needs from the industry[1] as a whole. If you’re interested in working with Context to work through those issues, please contact me at

[1]United Egg Producers, Egg Industry Center and Oskaloosa Foods contributed to the development of this series.


Photo credit:
(Top Left) AndreaGantz, WATT AG


Context joins Ag Industry’s Role in Youth Career Development

As the agriculture industry continues to expand, so does the growing demand for a diverse and well-prepared workforce. The National FFA Organization is playing an active role addressing modern agriculture industry challenges in several ways. With an ever-growing, diverse membership, FFA develops tomorrow’s workforce through skill-building career development events (CDE) centered in agriculture education for high school students across the United States.

These CDEs provide those in the ag industry a glimpse at the promise of what’s next from up and coming, talented young business people. One example of the active, modern workforce development FFA brings to the table can be found in the Marketing Plan CDE, sponsored by The Context Network.

“FFA challenges teams to market an actual product, supply or service in their community and solve a problem for a real, operating business,” says Josh St. Peters, executive vice president for Context. “These students are learning everything from market research to data analysis and strategic planning – all things that are incredibly relevant to the projects we deliver for our clients.”

Regardless of the industry, customer engagement is essential to a successful business. For those in agriculture, having a marketer that understands your business and your customer’s business can be critical.  That’s where FFA’s Marketing Plan CDE comes into play and why Context supports the national competition each year.

Teams of three students each compete by preparing a complete marketing plan and presenting it. While preparing the plan, they take into considering current market status, industry trends, competitors, targeted audience and audience behavior. These insights drive their development of budgets, as well as goals and the strategies to reach them. Measurement is also essential to the development of the plan and students identify key performance indicators that signal whether their marketing plan, once implemented, is successful.

“The quality of our students and their marketing plans is pretty incredible,” says Donn Randall, who leads up the competition for National FFA. “It is truly a very realistic process of working with a business to identify opportunities and shape a strategic plan for growing business.”

By teaching the essentials required to reach success in marketing and providing students a platform for learning to do and doing to learn, the Marketing Plan CDE prepares students for careers in business, marketing, advertising, association management and more. This year’s competition features 34 teams from across the country, and takes place during the National FFA Convention in Indianapolis.