Exporting in the Time of COVID-19: Food Insecurity

Exporting in the Time of COVID-19: Food Insecurity

Posted on May 5, 2021

To continue our series Exporting in the Time of COVID-19, we investigate the pandemics' impact on food supplies on a domestic and international scale.

Our world has become increasingly interconnected through trade, and this includes the global food supply. Many countries worldwide utilize food from other countries consistently, which can be complementary to both sides of the trade deal. It is essential to keep in mind that not every country has all the resources needed to be self-sustaining, and importing food, among other goods, is quite necessary - consider island nations with high populations or countries with infertile land. With the pandemic, the food supply has been a global issue affected by shipping and the availability of goods globally. As we previously explored in our Supply Chain article, one disruption along the value chain can impact every step that follows.

Both in the US and overseas, food supply chains can take numerous steps from producer to consumer. In its most simple form, let's take milk as an example of how it goes from farmer to the fridge. Once the cow is milked, the product is bottled, pasteurized, cooled, and then transported (while maintaining a cold temperature) to a grocery store and sold for purchase. While the example is simple, it shows the multiple steps, timing, and temperature controls, all of which impact how the product makes it to the consumer. If any of those steps are interrupted, delayed, or halted altogether, it could impact supplies and the overall demand.

According to Lisa Held with Eater, nearly half of the food produced in the US is exported, with Canada, Mexico, and China being the primary receivers (Held, 2020). The US also imports a great deal of products that cannot be grown here (think of all the bananas eaten for breakfast). Many of us in the modern world are fortunate enough to have items available year-round. They are available when we want them without consideration of growing seasons across the globe. This mentality brought shocks to many people as the food system was disrupted due to the pandemic. Not only were more items missing from grocery store shelves, but some items were completely unavailable. The demand for shelf-stable products like canned beans increased beyond what was anticipated for the suppliers, packers, or growers from the months prior. And the reduction in products being purchased from wholesalers - like restaurants - was drastically reduced in a brief period of time.

Domestically, it has been a struggle for many struggling Americans to access some necessities, including food. NPR reports that 25% of American households experienced some form of food insecurity in 2020. Prior to the pandemic in 2019, this number was just over 10%. Food insecurity is a global problem, and the UN World Food Program noted that food insecurity has doubled from 135 million to 265 million people globally in 2020 (Silva, 2020).

Global trade is one aspect of food insecurity that the pandemic has impacted. The pandemic brought on a shift in consumer eating habits both domestically and internationally as lockdowns persisted. This shift focused on at-home consumption rather than institutional or restaurant consumption, which has caused shocks across the food production and distribution chains, as bulk supplies are not as user-friendly or packaged for at-home or retail use. How many of us would know what to do with gallon-sized can of crushed tomatoes?

Packaging and processing may not seem like a large problem. However, it can take wholesale and packaging companies months to shift production lines, packing materials, and systems to adjust for a different method. If new equipment is required, it can take three to five years for a packaging facility to recover the costs in changing their process. Some may not see the value in shifting their entire processing facility for what may be a shorter-lived problem. Even if packaging needs to shift, companies still run into issues with workers being in close quarters not aligning with current regulations. There is also a decrease in brand recognition, with larger wholesalers selling directly to consumers. Brands that a consumer does not recognize may be slower to pick up sales (Ignacio, Martin, Mehta, & Mueller, 2020).

The producers, farmers and ranchers had fluctuating market prices and labor issues due to the pandemic. In some cases, there was extreme excess where producers could not find a way to sell their products. While migrant workers make up one in three jobs harvesting jobs across the US, the pandemic restricted travel for many workers who were unable or unwilling to make it for harvest seasons. Reports spread widely of US farmers breaking eggs and dumping spoiled milk as prices were falling and limited options to get their products to market (Yaffe-Bellany & Corkery, 2020). Often, the traditional supply chain methods were no longer available.
The Bureau of Labor Statistics (BLS) provides a sizable amount of data on the US import and export prices of food and the impact of the pandemic on consumer/producer pricing from dairy, eggs, soy, nuts, corn, beef, oil/gas, and much more. Overall, many of the items mentioned above fluctuated wildly from January through August 2020. For instance, meat production decreased by 22% from March to June 2020, and then facility shutdowns caused a shortage of meat initially. The demand then decreased as outbreaks in processing facilities occurred. Now, the price of meat is currently surging. According to the BLS reports, consumer price indexes for food consumed at home increased by 4.3% as many families utilized grocery stores rather than restaurant spending. Soybeans and other similar grains remained relatively level due to their use in animal feed rather than a focus on human consumption.

The wide fluctuations in food prices have eased in 2021, but the problem is nowhere near a solution. The pandemic highlighted the weaknesses for many countries and companies to get them thinking towards a better future. Single-sourced goods for food supplies have been the norm and were created with efficiency and low-cost intentions. However, this single-sourcing practice proved to be more disruptive across the globe when a widespread disaster hits. Diversifying supply chains, including those for food, may just be the answer to ease future shocks, be they acts of god or human-made (Holmes, 2021).

We see attempts to prioritize supply chain resilience in the Biden Administration's 2021 Agenda and other countries' trade policies. Think tanks, including the International Food Policy Research Institute (IFPRI), states that governments have a significant role in the food system, food workers, and food security. Key issues revolve around how the industries responded and how individual people responded to the food-stressed environment, and how to mitigate those vulnerabilities.

The intermediate steps in the supply chain are also of significance to increase resilience. Infrastructure improvements do play a role in the food supply chains. By increasing mobility, goods move quicker and more cost-effectively, traveling from producer to consumer while decreasing the cost and scarcity and increasing freshness. The IFPRI says that with healthier foods available, people can eat healthier and be healthier in many aspects of their lives. (Hodur, 2021)

Companies along the value chains for food made great strides in flexibility and resiliency in the past year with the pandemic. Many of the issues were sorted out relatively quickly. While there still remains some intricacies of the process to be addressed, we will see improvements in the coming months as the aftermath of the pandemic is more apparent.

References

Held, L. (2020, April). Food Distribution 101: What Happens When the Food Supply Is Disrupted by a Pandemic. Retrieved from Eater: https://www.eater.com/2020/4/16/21222176/america-food-supply-coronavirus-impact-shortage-distribution-covid-19

Hodur, J. (2021, March 29). Policy Seminar: Food Systems Lessons from COVID-19. Retrieved from International Food Policy Research Institute: https://www.ifpri.org/blog/policy-seminar-food-systems-lessons-covid-19
Holmes, B. (2021, March 25). How Has the Pandemic Strengthened the Global Food Supply Chain? Retrieved from The Counter: https://thecounter.org/pandemic-global-food-supply-chain-covid-19/

Ignacio, F., Martin, A., Mehta, V., & Mueller, C. (2020). US food supply chain: Disruptions and implications from COVID-19. Retrieved from McKinsey & Company: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/us-food-supply-chain-disruptions-and-implications-from-covid-19

Mead, D., Ransom, K., Reed, S., & Sager, S. (2020, August). The Impact of the COVID-19 Pandemic on Food Price Indexes and Data Collection. Retrieved from US Bureau of Labor Statistics: https://www.bls.gov/opub/mlr/2020/article/the-impact-of-the-covid-19-pandemic-on-food-price-indexes-and-data-collection.htm

Silva, C. (2020, September ). Food Insecurity In the US by the Numbers. Retrieved from NPR: https://www.npr.org/2020/09/27/912486921/food-insecurity-in-the-u-s-by-the-numbers

Yaffe-Bellany, D., & Corkery, M. (2020, April). Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic. Retrieved from New York Times: https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html