Supply chains show resilience in the face of crisis
The United States is a net food exporter, so what we’re experiencing is a strain but not a serious long-term supply chain break
Many of us are dismayed by reports of farmers forced to plow under fields of vegetables, pour milk down the drain or break eggs to limit chicken production. For U.S. farmers who feed America and the world, these measures are heartbreaking. For U.S. consumers who are used to easy, on-demand access to a wide variety of foods, worry leads to panic buying and hoarding.
Once we understand the reasons for the effects of the COVID-19 pandemic on our food chain and the resulting issues facing farmers and consumers, it’s clear that, as tragic as they may seem, we will have enough food. The United States is a net food exporter, so what we’re experiencing is a strain and some shortages, but not a serious long-term supply chain break.
Most farmers can produce their normal volume of raw food, but changes in demand have left them unable to sell or transport all of it to the intermediaries who transform, package and deliver it to industrial and commercial customers. Farmers are also dealing with the issues of live animal production, which can’t easily be switched “on” and “off.” Chickens lay eggs and cows must be milked, regardless of COVID-19.
The United States has two food supply chains — consumer and commercial. They merge at some points and split at others.
Supply chain problems arise when demand unexpectedly shifts from one chain to the other. For example, although grocery shelves may suggest otherwise, our country has enough toilet paper. The stay-at-home orders abruptly shifted toilet paper demand from the commercial to the consumer chain, leaving the latter without enough supply and the former with too much.
Rerouting products from one chain to the other takes time and other resources to support product sizing, packaging, transportation, warehousing and delivery adjustments. Today’s perishable foods are experiencing a similar shift, as demand moves from the commercial sector (schools/ workplaces/restaurants) to the consumer sector (grocery stores/ local markets).
Problems also occur when disruptions happen at bottleneck points where the two food supply chains merge, such as meatpacking plants, which serve both industry and individual consumers. In-plant outbreaks have temporarily closed several facilities, reducing overall supply by 10-30%, though they will need to resume operations under President Donald Trump’s executive order. At facilities that have remained open, production rates have slowed because of additional distancing and sanitation requirements, a decline in available healthy workers and changes in processing or packaging.
One option for avoiding bottleneck disruptions is to use short supply chains, such as “farm-totable” or community-supported agriculture groups, which sell local seasonal food directly to consumers. While smaller local farms are impacted if workers aren’t available at harvest time, they tend to supply local niche markets, so the impacts aren’t as widely felt. Consumers can also use restaurant “groceries to go,” try their hand at home gardening and modify meal prep by using different cuts of meat or switching to fish or veggie alternatives.
So what long-term impacts will the food supply chain see from COVID-19?
Many consumers may continue home grocery delivery for convenience reasons. If workfrom-home options continue post-COVID-19, some of the demand shift from the commercial to consumer sector will become the “new normal.” We may also see accelerated losses of small farms and small/medium agricultural enterprises and more corporate farm ownership, if smaller farm players can’t pivot their practices quickly enough to respond to demand changes.
There’s also a COVID-19 impact on food inspection. Last month, the U.S. Food and Drug Administration suspended “routine” facility inspections to limit potential virus exposure to their inspectors and the plants themselves. That raises concerns about when routine oversight will resume and potential issues that may occur in its absence.
Finally, there’s a win-win-win for farmers, food banks and worried consumers.
The U.S. Department of Agriculture has agreed to provide $19 billion for a project proposed by the American Farm Bureau Federation (an association of farmers) and Feeding America (a network of food banks). That program will provide relief for farmers and bypass the normal supply chain to move surplus food directly from farmers to food banks around the country, feeding the food-insecure — and reducing unnecessary food waste.
Erika Marsillac is an associate professor of supply chain management and Terri Kirchner is an adjunct associate professor of marketing at Old Dominion University.