Coronavirus puts fragile system supplying food to world under strain

A cashier behind a protective plastic tarp works in a supermarket in Strasbourg on Thursday after a strict lockdown came into effect in France to stop the spread of the virus that causes the disease COVID-19. | AFP-JIJI

BY MILLIE MUNSHI, MEGAN DURISIN AND CORINNE GRETLER

BLOOMBERG

Global warehouses are stuffed with frozen cuts of pork, wheels of cheese and bags of rice. But as the coronavirus snarls logistical operations, the question becomes: How does all that food actually get to people?

Despite the inventories, grocery stores are looking almost apocalyptic with aisles of empty shelves. Panic-buying has made it nearly impossible for retailers and suppliers to keep up with the unprecedented spike in demand. In just one example of the constraints, there is a finite number of trucks that can load up at warehouses to bring in the chicken, ice cream or toilet paper that people want to buy.

There are limits on how much time can be spent stocking shelves or filling rail cars. And there is this weird knock-on from the outbreak in China: Fewer goods were shipped out of Asia last month, and now there aren’t enough empty containers in countries such as Canada to send peas out to the world.

“There’s a complicated web of interactions we don’t often think about that’s all part of the food supply chain: truckers, rail cars, shipping, plant workers,” said Jayson Lusk, head of the department of agricultural economics at Purdue University. There are “big buckets of possible disruption,” and it’s possible the whole thing “is more fragile than we think it is.”

That is just the start. As the virus spreads and cases mount, there are seemingly countless ways the food system will be tested and strained in the coming weeks and months.

There is the possibility of worker shortages as employees are forced to stay home because they are ill or they have come into contact with someone who is. As schools close, plants may slow production because parents need to prioritize child care. Restrictions on migrant labor are increasing all over the world, stifling workers who are key to making sure tomatoes get picked and slaughterhouses run efficiently. Port closures and limits on trade could end up disrupting the flow of supplies and ingredients.

“We do not see a supply shock in the sense of the availability,” said Abdolreza Abbassian, a senior economist at the United Nations’ Food and Agriculture Organization. “But there could be a supply shock in terms of logistics, not being able to move it from point A to point B. This is something new and very difficult to predict. It is that uncertainty that right now is the biggest danger.”

Farmer, retail and trucker groups in countries including Brazil, the U.S. and France are ringing the alarm over major disruptions that can develop from quarantine and lock-down conditions, along with the possibility of a labor crunch. Government officials in Australia, Germany and Kazakhstan are worried about strains amid panic-buying and logistical hurdles.

A drawn-out crisis could lead to “real shortages” starting with fruit and vegetables before affecting staples, German Agriculture Minister Julia Kloeckner said.

For consumers, the fallout will vary depending on where in the world they are. In countries dependent on food imports, the situation could be dire.

In every part of the world, people will probably pay more for food than they did just a few months ago.

The U.S. Department of Agriculture has safety inspectors at all manufacturing facilities. Employee temperatures are being checked to make sure workers with symptoms aren’t coming in.

Christine McCracken, an analyst at Rabobank, estimates that some U.S. meat companies are already seeing a 20 percent to 30 percent slowdown in processing lines as employees stay home to recover from illness or take care of family members.

There is also the whole intricate way that food moves across the world, which is likely to be thrown off balance by port closures, government regulations and fears of contamination. Many countries have positioned agricultural production toward exporting a few key products, rather than for food sufficiency. That makes people within those nations more vulnerable if imports slow. Shipments of things like almonds into Italy have already been postponed.

The flip side is that in some instances a handful of countries, or even fewer, make up the bulk of exportable supplies of certain commodities. Disruptions to those shipments would have global ramifications.

Christian Gloor, a managing director at Zurich-based trading house Heinz & Co., cites Serbia as an example of the latter. The nation recently put bans on its exports of sunflower oil.

“If several countries start doing that, the market will go crazy,” Gloor said. “If, for example, France were to no longer supply wheat, that could cause a big disruption in all markets. If one country starts, others will follow, and then you really have a disaster.”

Vulnerability will also be heightened in those countries that had food problems even before the virus outbreak, Abbassian of the U.N. said, citing areas such as sub-Saharan Africa. With currencies plunging against the dollar, some nations will also see their buying power limited.

And of course, this is all happening against the background of climate change and the unpredictable weather patterns that have been wreaking havoc on global food production. Drought has already been hampering crop output this year in parts of Uruguay, New Zealand and Vietnam.

Source; Japan Times