
In March, the spread of Coronavirus and Social Distancing led to a warping of grocery shopping patterns. Early on, many people stocked up, some hoarded, and Public Health experts recommended reduction in the number of trips to the store. At the beginning of the month, the stores were full and the shelves were empty. Now the shelves are full, (with a few exceptions; yeast? it’s a nation of bakers now??)Â Â the stores, while not exactly empty, are mostly able to accommodate social distancing without too much of a wait.
For Foodservice the asymmetries have been by segment more than by public reaction. Almost everywhere schools and colleges closed and will likely remain closed until the fall. The food operations at these as well as most business and industry cafeterias has come to a complete halt. Fast food restaurants are not quite thriving but are steady in their carryout and delivery sales; some dine-in restaurants have adapted their business to all off site meals, but many have not. Indications are that most high end restaurants are struggling; bars and taverns are generally closed.
While we hope quarantining and distancing slow and stop the spread of the flu and that interactions become more fluid and general soon, there is no doubt that there will be significant permanent effect throughout both these channels. As we manage through the public health issues, there are also some other challenges and dangers to the food supply chain above beyond closures and temporary surge in consumer demand. Below are some considerations. While these may sound especially pessimistic, risk management should be done with an eye to worst case scenarios. These are based upon no new vaccine or prophylactic being available and the virus becoming endemic in the population:
- Mismatches. While people may not think their eating patterns while out versus at home are very different, in truth they are. There are foods and ingredients that restaurants make that people just don’t buy for home. Plus formats – how products get packaged and shipped are different. So we have a situation where there are shortages of some commonly available foods while gluts of others that are being destroyed.
- Efficient plants aspire to reduce machine downtime and maximize production. Many private label products exist because manufacturers of branded products want to run their production as close to capacity as possible. One way manufacturers maximize throughput is by by designing high-velocity machines that produce in a very specific format or size. (see above) They are not easily adapted to different products even if that is desired. Production models are based upon just-in-time supply chains; buffers are inefficient.
- Last week we heard of a large Southeastern supermarket chain, that closed 12 of its locations due to the fact a significant percentage of its workforce had come down with COVID 19. A single Walmart in Suburban Chicago had a pair of workers die. Because many people are asymptomatic and because symptoms can take a long time (14 days) to appear, the virus can be spreading among staff and resulting in multiple illnesses at a single operation. This is just as true for restaurant operations.
- While most common in fast food, employees in many businesses without paid time off and/or insurance may be motivated to keep working even thought they are ill. Early data suggested that the average infected individual spread the virus to 2.4 people. Regardless of the precision of that estimate , COVID 19 is highly contagious and so this threat stretches all the way back across distribution, processing and production. A single individual is a concern but a swath of sick employees at an operation can cause stoppages.
- Most farms in this country are still family run operations. While the spread has been first fastest in urban areas, there is no guarantee that the virus won’t infect rural populations as well. Besides issues regarding access to doctors and hospitals in rural locations, work structures that depend on family and a few employees can be disrupted by a couple of illnesses.
- Food production, even in rural areas, is at risk as well. The Smithfield plant in South Dakota is likely the first in a series of plant closings. https://www.forbes.com/sites/alexandrasternlicht/2020/04/16/smithfield-foods-becomes-largest-coronavirus-hotbed-in-united-states-south-dakota-governor-yet-to-mandate-stay-home-order/#27b30ea42143Â
- Similarly many crops are dependent on seasonal and migrant workers. These populations may have movement restricted by borders or policies. Mexico has been particularly slow in recognizing and reacting to the impact of COVID 19 and many observers are concerned that the virus will hit particularly hard there soon.
- Imports from Mexico and other countries may be affected if further border restriction are put in place or because those countries have developed severe outbreaks.
Again, the purpose here is not to paint doomsday scenarios but rather describe some of the potential risks to the food supply chain. The food industry has already been altered by the effects of both the virus and the disruption in the economy. Short of a miracle, a return to ‘normal’ is likely months off.