Food Deserts in Rural America Highlight the Need for Innovative Distribution Strategies

Key Takeaways

1. Rural communities comprise 63% of all U.S. counties but account for 87% of counties with the highest food insecurity rates.
2. A new report from CoBank suggests that direct-to-consumer e-commerce platforms or direct delivery could be profitable solutions to improve food options in rural areas.
3. Driverless and drone delivery innovations could provide more opportunities for food and beverage companies to reach underserved rural consumers.
4. Despite significant food delivery services like Amazon, Instacart, Uber Eats, and Walmart, only 37% of rural residents in limited-access food deserts have access to these services.
5. As delivery technologies improve, direct-to-consumer approaches will become more viable, allowing food and beverage manufacturers to establish their brands in rural communities.

Food insecurity remains a pressing issue in the United States, disproportionately affecting rural areas. According to a new report from CoBank’s Knowledge Exchange, rural communities comprise 63% of all U.S. counties but account for 87% of counties with the highest rates of food insecurity. The primary challenge lies in the prevalence of low-access food deserts, where the distance to supermarkets severely limits consumers’ ability to access various food and beverage options.

A Market Opportunity for Food Manufacturers

The report suggests that the sheer volume of consumers experiencing food insecurity due to poor access represents a potential market opportunity for food manufacturers. “A sizable portion of the country falls within the realm of a food desert, and with 10% of the U.S. population experiencing some degree of food insecurity, the market is there,” said Billy Roberts, senior food and beverage economist for CoBank. Driverless and drone delivery innovations could provide even more opportunities for food and beverage companies to establish direct relationships with these underserved consumers.

The Gap in Food Delivery Services

While research from The Brookings Institution finds that 93% of the U.S. population has access to food delivery from at least one of four major players (Amazon, Instacart, Uber Eats, or Walmart), only 37% of rural residents in limited-access food deserts can avail of these services. One significant barrier is the lack of reliable broadband connectivity in these areas.

The Role of Convenience and Dollar Stores

Convenience and dollar stores have increasingly focused on food items to improve access in some rural communities. However, low-profit margins may hinder their continued growth in food sales. Dollar Tree recently adjusted its profit expectations due to increased low-margin purchases like food.

Future Prospects

Roberts suggests that agribusinesses and food manufacturers may consider adopting tactics seen during the pandemic, such as expanding their delivery capabilities. As delivery technologies improve, direct-to-consumer approaches will become more viable, allowing food and beverage manufacturers to establish their brands as part of rural consumers’ regular ordering procedures.

In summary, the issue of food deserts in rural America exposes a critical need for broader and more innovative distribution strategies. As technology advances, there are growing opportunities for food and beverage companies to directly reach and serve these underserved communities, thereby addressing a significant social issue and tapping into a new market.

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