Search Menu
Member Login
Our Insights 22 Apr 2020

Seeds of Change: Food Systems Under COVID-19

By Nicola Ledsham

© Thomas Gamstaetter on Unsplash

The novel coronavirus (COVID-19) has been a shock to systems of all kinds. Among the most critical are food systems, which are facing significant supply and demand pressure.

As the virus has spread and measures aimed at curbing it have tightened, actors along the value chain are being impacted in different ways. Unlike the 2007–2008 global food crisis, food scarcity is not the issue this time (at least not yet). According to the United Nations’ Food and Agriculture Organization (FAO), disruptions to food supply have been minimal to date, with global cereal markets expected to remain stable. Despite this, the agency warns of a “looming food crisis” unless immediate measures are taken to protect the most vulnerable and keep global food supply chains operating. Ian Rayson, Director at Caburn Consulting, noted that, “Many of the fault lines in the food system are exposed: the indefensible levels of social inequality; the growing conflict between globalization and protectionisms; the web of interdependencies in food supply chains; and ultimately the fragility of our food security.”

Strain at the consumer end of the value chain

Grocery shopping in today’s world is difficult, even dangerous, and often frustrating given so many shelves — whose abundance we once took for granted — are empty. With the onset of shelter-in-place orders and social distancing, people rushed to stockpile essential goods. Because supermarket distribution systems are based on “just in time” supply chains, retailers struggled to cope with the sudden surge in demand, resulting in shortages of food staples. In response, major retailers around the world have imposed measures including limiting the number of products that can be purchased at one time, simplifying product ranges, prioritizing store access for vulnerable customers and increasing workforces to keep shelves stocked. While jarring for consumers, these measures have allowed grocery stores to recover from the initial system shock, even in the hardest hit countries.

Logistical hurdles are making it difficult to get products where they need to be, with a senior economist at the FAO stating, “We do not see a supply shock in the sense of the availability. But there could be a supply shock in terms of logistics, not being able to move it from point A to point B. Blockages to transport routes and lack of capacity in terms of trucks, drivers and shipping containers are particularly obstructive for fresh food supply chains and may result in increased levels of waste. Some disruptions have eased as governments work to ensure food transport is allowed under lockdown rules, with the European Union relieving congestion by opening  green lanes for trucks carrying farm goods and US regulators lifting driving hour limits for essential products.

Many of the fault lines in the food system are exposed: the indefensible levels of social inequality; the growing conflict between globalization and protectionisms; the web of interdependencies in food supply chains; and ultimately the fragility of our food security.

Tweet this

Adjusting to re-shaped demand

To meet grocers’ requests for 20–25% higher volumes, many food production facilities have expanded capacity by increasing their operating hours. However, with food processors and producers often handling food in relatively close quarters, working conditions have been and will continue to be strained. Rabobank estimates some US meat companies are already seeing a 20–30% processing slowdown as employees stay home to recover from illness themselves or take care of family. Meanwhile, food wholesalers are struggling to deal with the tens of thousands of tons of fresh produce no longer required after the closure of hospitality businesses. In response, Sysco and US Foods, the US’s two largest restaurant and foodservice distributors, have struck new deals to support and sell to grocery stores. In the UK, Bidfood transformed its business model to establish a direct-to-consumer option on its website. Even with such steps, it takes time to reorganize complex supply chains, and as much as £20 million of food with a limited shelf life is still lying in UK warehouses.

Upstream, we are in the middle of harvest season for many crops, peaking demand for labor. But as farmers gear up for harvests, travel restrictions intended to stem the spread of the virus have significantly cut the seasonal migration of farm workers. American produce growers preparing to harvest crops are warning of potentially devastating impacts on fruit and vegetable harvests after the US Embassy in Mexico announced a halt to visa interviews for seasonal agricultural workers. Meanwhile, Chinese farmers face shortages of labor, seed and fertilizer in the wake of the lockdown, affecting supply there as well.

Protectionism and inequity increase

Compounding other problems, countries including Russia, Kazakhstan and Vietnam are moving to secure domestic supply by restricting exports on which other nations depend. Kazakhstan, a major cereal producer, has banned exports of wheat flour, and Vietnam, the world’s third largest rice exporter, has temporarily suspended rice export contracts. If such protectionist measures spread more widely, it could result in higher prices and shortages of certain commodities. The chief economist at the FAO warns against such restrictions, saying, Now is the time to protect the flow of food around the world.”

The countries most exposed to short-term food price inflation include those with elevated imports as a share of domestic food supply and developing countries already disproportionately at risk of food insecurity. At the time of writing, the virus hasn’t yet spread widely in places with persistent food insecurity, particularly sub-Saharan Africa. If it does, harvests may shrink, causing food prices to spike, and more people will go hungry, exposing and amplifying the inequalities existing in the food system pre-pandemic. Projections indicate that even under an effective containment scenario, an additional 14–22 million people could slip into extreme poverty as a result.

Applying lessons before the next food system shock

Once this crisis passes, there will be pressure on companies and governments to ensure we make the food system more sustainable, equitable and secure. This will increase system ability to better endure future shocks in a post-COVID, climate-changing world. Supporting a wider range of suppliers is one way food companies can hope to achieve this, diversifying away from overly-centralized supply chains to more multifaceted ones. Companies already recognize that increased digitalization of the supply chain can boost business resilience and there will be more investment here. For example, in response to the pandemic, Cargill, Agrocorp and Rabobank worked together via blockchain to ensure the safe and timely cross-continent trade of wheat, demonstrating the power of cross-sectoral partnerships and applying digital tools. As Ian Rayson said, “The food system is always on the frontline in a global crisis. It is where extreme events hit the lives of vulnerable people. The COVID-19 crisis reminds us just how vulnerable we all are.” Since we are all part of one interconnected and interdependent social, environmental and economic system, this is a crisis we share, and we cannot hope to build a more resilient food system without collective action.

Topics

Consumers

About the author

comments

What's next for
sustainable business?

Stay informed

Our latest news and updates, in your inbox every month.

See how we use your personal data by reading our terms of use and privacy policy.