“The food supply chain is breaking.” John Tyson, chairman of Tyson Foods, warned in a full-page ad in The New York Times. America, and the world at large, is facing a unique challenge as Covid-19 spreads across the globe causing major disruptions in the global food supply chain. The problems facing America’s food supply chain specifically, are unprecedented, as it is neither a supply nor demand side problem. Demand is at an all-time high, with consumers flocking to grocery stores, while farmers who supply unprocessed food contend with a surplus they can’t get rid of. Local grocery stores have empty shelves, while farmers euthanize millions of chickens or give away millions of potatoes. The disconnect lies within America’s food supply chain, which relies on a complex web of farmers, processors, and distributors to bring food to your table. Like other industries during this pandemic, the disruptions highlight supply chain fragility and the necessity for greater agility and visibility across this complex web to withstand such significant public health and operational disruptions.
Major Disruptions from Farm to Table
Large grocers and food retailers were forced to respond to an unprecedented public health lockdown, with knock-on effects swiftly propagating across their supply chains. Wendy’s was forced to remove burgers from the menu at hundreds of their fast-food locations. Kroger’s and Costco, two of the nation’s largest grocers are limiting the amount of fresh meat customers can purchase in one trip. And consumers are forced to grapple with the sharpest price hike for food in 50 years.
State-by-state economic closures were only the beginning of the impact of COVID-19 on the food industry. Thousands of workers at meat processing facilities have tested positive for COVID-19, forcing some of America’s largest meat distributors to limit or entirely shut down facilities to ensure workforce safety. The drop in production capability has created a bottleneck in the supply chain and has driven meat production down 40%, even as supermarket sales for meat has increased by 40%.
The above visualization from the Interos Platform shows major meatpacking facilities (white circles) plotted on a trend map of COVID-19 cases. Darker red counties have a greater increase in COVID-19 cases compared to green counties. The map shows a correlation between meat packing industry locations and counties with a greater increase of COVID-19 cases.
A Similar Story of Surpluses and Shortages across the U.S.
Currently, there are 41 plants nationwide that are either operating with limited capacity or shut down completely. Most of the affected facilities are clustered in the Midwest (Nebraska, Kansas, Missouri, Iowa, and Minnesota). In Iowa, which has the single highest number of affected facilities (6), Governor Kim Reynolds is easing social distancing restrictions across the state. Even though the plants themselves are considered essential and never faced any restrictions, data gathered by Last week over 1,000 workers tested positive at a Tysons plant in Waterloo, Iowa just two days after reopening from a two week closure.
In Texas, which has only seen one affected facility so far, Covid-19 cases are clustered around large beef and chicken processing facilities across the state. Texas ranks towards the bottom in the nation in Covid-19 tests per capita, making it difficult to accurately assess the extent to which the virus has infiltrated meat processing facilities. However, if facilities in Texas mirror trends elsewhere, they may be forced to reduce their workforce or shut down completely.
A Global Phenomenon
The challenge facing the food supply chain is not unique to the United States. The global food supply chain (which in 2019 saw $1.5 trillion of food shipped around the world), has grown increasingly complex over the past few decades. Food, much like every other consumer product is globally sourced. The system has become increasingly fragile and large-scale disruptions reverberate throughout the entirety of the supply chain. With COVID-19 wreaking havoc on everything from oil prices to global financial markets, there is a significant risk of a global food crisis due to a lack of supply. Some countries are beginning to restrict exports as their internal supply chains struggle to meet demand. If global food supply chains are unable to adjust, upwards of 265 million people face the prospect of acute hunger according to the U.N World Food Programme.
As this crisis unfolds, forward-leaning food producers are adopting the United Nations Sustainable Development Goals to combat poverty and create more resilient food production ecosystems and supply chains that can withstand the next global shock. In the near-term, some are stepping in to the food directly from farmers to support Feeding America and ensure the food reaches where it is needed most. At the same time, localized farmers and producers have stepped in to. We are on the precipice of significant changes across the entire food chain. These changes will not happen overnight, but the COVID-19 crisis has brought home the fragility of the food supply chain, encouraging globalized and local suppliers alike to do their part to nourish the world and protect communities.
To learn more about how you can protect your business from unexpected impacts from COVID-19, visit www.interos.ai.