COVID-19 and the Canadian food supply chain
Dr. Barry Prentice, Department of Supply Chain Management in the Asper School of Business, and Dr. Derek Brewin, Department of Agribusiness and Agricultural Economics in the Faculty of Agricultural and Food Sciences, shared this op-ed on how COVID-19 has affected the Canadian food supply chain.
Your bread and salad dressing will still be on the shelves, but that does not mean that everything is normal. Food supply chains are long, complex and certainly could be impacted by COVID-19. The likely outcomes depend on the particular food sector and the nature of the threat.
Fruits and vegetables
Imported sources appear to be stable and the refrigerated trucking industry continues to supply adequate transport. It is likely that prices will rise because of seasonal changes and higher freight rates. Domestic sources are of more concern because of the dependence the Canadian fruit and vegetable sector has on seasonal foreign workers. Each year about 60,000 workers from the Caribbean and Latin America come to Canada to plant and harvest crops that range from carrots to apples. COVID-19 travel restrictions pose a real threat to this sector.
Dairy and meat production are spread out and unlikely to suffer many production problems, but at the processing level, the operations can be labour-intensive and at risk. So far, no beef or pork abattoirs have suspended operations, but in Ontario a couple of industrial milk processing plants (e.g. cheese makers) and a chicken abattoir have closed. This requires the Ontario producers to reduce production quotas and for dairy farmers to dump milk. The impact has been limited, but the threat of a large-scale disruption of livestock processing cannot be ignored.
Grains, pulses and oilseeds
The major field crops and associated processing facilities are not likely to feel much affect from COVID-19 restrictions. Farms are very dispersed and the processing/handling facilities are highly automated. Combined with a significant carryover of field crops in storage from last year, and normal production expectations, there is no risk to consumers of shortages for pulses, flour or canola oil. Of course, shoppers may find some empty shelves temporarily because of “panic” hoarding, but the supply chain should replenish these gaps quickly. Some concern as been raised about the ability of farmers to obtain inputs to plant the next crop. This has not materialized into any visible problems, at least, not yet.
The COVID-19 reaction has brought to the surface how much society depends on the transportation and warehousing sector to move and store products that end up on grocery store shelves. It has also highlighted the essential nature of all the workers who stock shelves and serve at the checkouts. All these people must operate in the presence of possible infection. While no stores or supply chains have ceased operations, the biggest impact is in the food service industry that supplies the restaurant and hotel trade. The ban on gatherings and restrictions on personal proximity has made their business nearly impossible. Only home delivery of such meals is maintaining any semblance of activity.
As with all crisis situations, some opportunities can also be expected. Prior to COVID-19 we were seeing home delivery of groceries, but this has been a very difficult and slow development. Now that home delivery is so desirable, they are growing rapidly, and gathering the critical mass required to compete effectively with supermarkets. Such services have a built-in market of elderly and disabled consumers that could benefit from such service. As on-line ordering and delivery becomes easier to use, the demand of this group should continue to grow long after the immediate threat has passed.
Perhaps more importantly, consumers are forming new habits and trying new approaches. Working at home might make preparing food at home more appealing. Once the learning curve is mastered, ordering groceries for home delivery might become more commonplace.
Many are concerned with storing staples for an extended quarantine. It should be noted that Canada is a major exporter of pulses, beef, pork, wheat and canola. Canadians should not be concerned with long-term famine. The major concerns are with short-term supply chain breakdowns. The federal government recognized the need for coordination of food supply chains while in the midst of the BSE crisis in 2003 and started a Beef Value Chain Roundtable to facilitate communication between firms and between industry and governments. There are now value chain round tables for most of Canada’s major food supply chains.
While industry may take time to adjust to drastic changes in consumer preferences, Canadians should not fear a total breakdown in the supply of food.