Food prices expected to rise as world runs short of workers

ACROSS the world, a dearth of workers is shaking up food supply chains.

In Vietnam, the army is assisting with the rice harvest. In the UK, farmers are dumping milk because there are no truckers to collect it. Brazil’s robusta coffee beans took 120 days to reap this year, rather than the usual 90. And American meatpackers are trying to lure new employees with Apple Watches while fast-food chains raise the prices of burgers and burritos.

Whether it’s fruit pickers, slaughterhouse workers, truckers, warehouse operators, chefs or waiters, the global food ecosystem is buckling due to a shortage of staff. Supplies are getting hit and some employers are forced to raise wages at a double-digit pace. That’s threatening to push food prices — already heated by soaring commodities and freight costs — even higher. Prices in July were up 31% from the same month last year, according to an index compiled by the United Nations’ Food and Agriculture Organization.

The coronavirus pandemic has helped spark a labor shortfall for many parts of the economy. But the impact is particularly stark in food and agriculture, which are among the world’s least-automated industries. Food security is a sensitive issue in many parts of the world and thin margins mean rising costs generally pass through to buyers, according to Boston Consulting Group (BCG).

“Almost certainly there is disruption,” said Decker Walker, BCG’s agribusiness expert in Chicago. Effects vary among locations and products, he said, but “the general theme seems to be: The roles with the least desirable working conditions are actually the ones that we have the most pain with.”

There are signs the labor shortfall is curbing supplies. In the US, wholesale distributors like Sysco Corp. and United Natural Foods, Inc. are reporting production delays and slowdowns for items ranging from bacon and cheese to coconut water and spices. In the UK, some stores are running low on staples like bread and chicken, while McDonald’s Corp. ran out of milkshakes in August.

“We have family-wage, great jobs that have been open, that we’ve been recruiting really hard for and have had trouble filling,” said Patrick Criteser, chief executive officer of Tillamook County Creamery Association. The Oregon-based dairy co-operative recently ran so short of workers that a board member had to skip an operational meeting to help out in the fields. “With the inflation we’re seeing in the business and the inflation that we’re seeing at the farm level, it’s going to translate to the shelf.”

Shortages are hitting farms, processors and restaurants alike. Malaysia, the world’s No.2 palm oil producer, has lost about 30% of potential output of the edible oil used in everything from chocolate to margarine. Shrimp production in southern Vietnam — one of the world’s top exporters — has dropped by 60% to 70% from before the pandemic. And a fifth of tomato production in the South of Italy has been lost this year, due to the scorching heat and transport paralysis, according to the farmers’ association CIA. —