Food supply chain deficiencies are being dramatically exposed during the coronavirus pandemic.
Dairy farmers are dumping milk down drains, egg prices are on a roller coaster, meat plants are shutting down due to worker illness—and folks are finding food shortages at groceries, exacerbated by consumer hoarding.
The market for food service distributors—restaurants, schools, hotels, etc.—has all but evaporated, but the sector can’t change their delivery systems overnight from wholesale to retail. The uncertainty involving shortages here and surpluses there reflects the many unknowns and destabilization of normal patterns of consumption and behavior.
“I think supply chain will look fundamentally different coming out of this,” said Mark Allen, chief executive of the International Foodservice Distributors Association (IFDA).
Food service has seen a 60% to 90% drop in sales. After the 2008 recession, food service providers established relationships with businesses that complicated operations during the pandemic. It takes time to establish long-term relations with retailers. Dairy producers sold much more cheese and butter to food service accounts than home cooks require. With 9% more meals being cooked at home, the consumer staples sector is rising—signaling a dramatic behavior change supply chains need to adapt to.
“The supply chain wasn’t made to swell like this,” said Jesse Laflamme of Pete & Gerry’s Organic Eggs. “Now it’s all an impediment because food is so cheap in this country and our supply chain is fragile.”
Source: Market Watch
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