Agricultural Commodity Processing: From Harvest to Table

Agricultural Commodity Processing: From Harvest to Table

Agricultural commodity processing is the bridge between the farm and the consumer, transforming raw harvests into the products that stock store shelves and feed communities. Having worked alongside food processing companies, we have seen firsthand the complexity behind what might seem like a simple supply chain. From post-harvest handling and storage to grading, food safety, and new advances with AI, each step requires careful consideration, precision, and adaptability.

What is Commodity Processing?

Commodity processing is the primary and secondary processing of commodities such as wheat, corn, berries, nuts and greens to name a few. The process starts of course with planting and tending then onwards to harvesting. In this article we will focus on the harvest process onwards through primary and secondary processing.

Processing of commodities is often divided into 2 steps, often but not exclusively by separate companies. Primary processing involves the initial grading, cleaning, drying, or sorting steps to create a more stable usable intermediary product.  Secondary processing takes that intermediary product and transforms it into a product that can be sold directly to a consumer. There can be overlap in this process where a primary processor cleans and packs the commodity into a retail package ready for immediate consumption.

Initial quality assessments and grading may be done at the farm to determine who the item can be sold to. Since many processors have strict requirements and often pay based attributes such as size, moisture content, damage, brix, pH, or color grading. Some secondary processing channels only take the top-grade product for retail chains, some take secondary grades that might be further milled or turned into juice stock by the processor. These grades and standards can be set by the USDA, or industry councils who negotiate agreements between farmers and processors. These agreements can stipulate grading parameters, prices and also payment terms.

How can storage affect grading?

If products are not stored properly on the way to the facility the grade can change quickly. Produce sitting in the sun or exposed to rain can grow mold, ripen rapidly or pick up moisture (weight) from rain. An additional grading or quality check is done on arrival at the facility to ensure there are no changes. Changes in quality can reflect back to the grower in the form of dockage. Pest mitigation, closed transport vehicles, temperature control, gas elimination, and decreasing transit time can all ensure that the quality of the commodity when the processor receives it is the same as when it was harvested.

Where does an ERP or manufacturing execution system come in?

Modern business solutions tie together commodity receiving through consumption and output to sale, allowing for full traceability of lots and costs. Systems such as Microsoft Dynamics Business Central combine supply chain, costing, manufacturing execution, lot tracking and warehouse management in one system.  This enables quick access to tracking products from the moment they are received, through how they are used, and to exactly who they are sold to.

How are rules and regulations impacting growers and producers?

The FDA Food Safety and Modernization Act is the most important topic of discussion for producers and growers right now. This act requires fast and electronic traceability back to the source. The act sets strict standards on timing and electronic reporting. Gone are the days of filing cabinets full of quality sheets and production data, and allowances for several days to be able to produce results.

How is AI influencing growers and processors?

Farming has long been at the forefront of using systems and data to drive better decisions. Real-world examples include field mapping for water usage, yield tracking, pest control, and fertilizer application. Many of the latest equipment is equipped with technology to measure yields and suggest where water and fertilizer need to be adjusted. Drones have been used for some time to identify and treat pests before an outbreak happens.  AI can process through these vast amounts of collected data and make informed suggestions.

On the processing side, AI can assist by highlighting trends in product quality, machine downtime and wear, customer payment issues, inventory reordering, bank reconciliations, and invoice matching to name a few. Microsoft is making significant investments in AI agents for Business Central to work autonomously or alongside users to process and collate these vast amounts of data points.

What are some of the challenges that producers and growers are currently facing?

Keeping up with the latest regulations either from customers or government agencies can be a challenge. Without proper systems of record, paper and excel based systems can fall flat. Not knowing what something cost or where it came from or how much was used can cause incorrect assumptions.

Recently, tariffs and labor shortages have become top of mind for many growers and producers. Fertilizer, labor, and fuel costs have soared in the last year and only so much of those cost increases can be passed to consumers.

To account for these increased costs, processors are looking to incorporate more value added opportunities to their product line up, drop less profitable items and automate roles within the organization.

What’s next?

In the end, we all need to eat. Agricultural commodities exist throughout the supply chain, from fresh berries in the grocery store to grains in the pasta in a frozen entree. The growing of these products supports many subsidiary industries and small towns from equipment dealers to fertilizer suppliers to warehouses. The recent pandemic illustrated how important it is for countries to be self-sufficient in terms of key products including agricultural products, while maintaining global relationships for trade.

AI and data driven decision making is no longer an option for growers and producers. Those that do not get on board will be left behind in this data driven revolution. Being able to predict quality issues, machine breakages and down time, and trace a product farm to table are now a requirement to simply staying in business. Modern business systems such as Business Central with enhanced apps for Commodity Processing with scale integration, Grading, Quality, and Container Management help make better decisions and comply with industry regulations.

Reach out to us to find out how we are helping commodity processors like you grow their businesses and reduce risk.

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