Coronavirus

COVID-19 and Its Accompanying Restrictions Continue to Harm World Food Supply

Ill workers in processing facilities, the forced death of restaurants, and national and international storage and shipping disruptions all threaten our food supply.

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As the nation shifts into an economy based largely on the production, distribution, and sale of food, more cracks in our supply lines are showing—some caused by the illness and some by the interventions intended to delay the spread of the illness.

Meat packaging and processing plants in South Dakota, Pennsylvania, and Colorado have seen outbreaks of dozens to nearly 200 confirmed cases among plant workers (including a few deaths), shutting down plants in those first two states. A Smithfield facility in South Dakota was initially going to be shut down just for this week, for deep cleaning and installation of new physical barriers, but that shutdown is now indefinite. In Greely, Colorado, a JBS USA beef plant is not currently planning to shut down entirely, but around 50 workers there have been infected and the United Food & Commercial Workers Union is calling for the place to close its doors.

Most meat processing plants' policies encourage workers not to self-quarantine if ill for fear of discipline or lost pay. But the production processes often demand closeness, and ProPublica reports that "only two meatpacking companies—Tyson Foods and Cargill—have announced companywide temperature checks to screen employees for signs of the virus."

In another part of the food economy, the National Restaurant Association says its industry is facing monetary losses of more than $225 billion and job losses of more than 5 million. In 2018, Americans spent slightly more at restaurants than at grocery stores. Not anymore.

As food purchasing and consumption shifts away from restaurants, hotels, colleges, and other big institutional buyers, lots of product is going to waste. Lack of institutional demand for certain produce has already caused their prices to fall below picking and transportation costs—leading, for example, Florida farmers to just leave squash rotting in the field. For produce that still has markets waiting, closed borders and slowdowns in visa processing are keeping the workforce that harvests them away, unnerving farmers. And workers who are in the fields generally need to work in close proximity to others without proper personal protective equipment, which is unnerving the workers.

Businesses are reacting to the new environment by shifting how food is transported and packaged, but that isn't a simple or instant process. Reuters details some of the logistical problems in the dairy industry, which is seeing a grim, for consumers, combination of rising prices and dumping of product:

It would take millions of dollars…to install new equipment to switch a plant from making one type of cheese—such as barrel cheese used to make processed slices for fast-food restaurants—to producing cheddar wedges for grocers, said dairy analysts. Even switching from bagging 10 lb bulk bags of shredded cheddar for food service to 8 oz bags for retail stores would require costly new packaging robots and labeling machinery.

Milk dumping—as much as 7 percent of national output—is already causing water quality worries, even as rationing and price-gauging laws at the retail level prevent the milk market from reaching a workable equilibrium. The nature of getting milk from cows—and of milk itself—means you can't just shut production down for later. The cows keep making milk, and you can't store the product palatably for later consumption.

All sorts of systems are facing new strains in the COVID-19 economy. In America, around 70 percent of seafood is consumed outside the home. So seafood producers and processors are reporting near-instant 75–85 percent drops in income. If you run a plant buying potatoes to make French fries for restaurants, you don't want potatoes anymore, because you aren't equipped to package or sell them directly to consumers. Some products, such as eggs, are seeing price rises—even higher than after the 2015 Avian flu scare, which caused 10 percent of America's egg-layers to be culled.

And in the new and hard-to-navigate gaps between products and their final consumers, storage costs are zooming. America's food bank system is strained on one side by increased demand, thanks to the sharp increase in unemployment, and on the other side by volunteer and donation shortages, as people isolate and store for their own families' needs.

The food industry is also begging the government to relax its trucking regulations, such as weight limits and restrictions on drivers' time on the road, so more people can drive more to get products where they are needed. Drivers themselves are finding it harder to keep themselves provisioned and fed as sit-down restaurants across the nation are shut down.

When workers and consumers cannot move freely, the problems caused are international; so are the problems caused by reduced air and sea shipping capacity. To the extent that we import food, those issues will ripple to effect U.S. consumers soon. As Bloomberg reported last week, "port backups that have paralyzed food shipments around the world for weeks aren't getting much better. In fact, in some places, they're getting worse."

The Food and Land Use Coalition, a group of food-related businesses and NGOs, has called on the world's governments to not add to the dilemmas of the disease itself by restricting the movement of goods and people that, near miraculously, has long kept much of the world fed:

Some food surplus nations have already imposed export restrictions. New restrictive rules at ports of entry and borders impede the free flow of food products and compromise the timely supply of essential agricultural inputs

Restrictions on the movement of people—while needed for public health purposes—risk shortages of farm labour at key moments in the farming cycle. The risk of major interruptions to food supplies over the coming months is growing, especially for low-income, net food-importing countries, many of which are in Sub-Saharan Africa. Governments, international institutions and major private organisations…must make it clear that they will continue to fully supply international markets and customers. Importing countries must play their part as well by keeping ports and borders open, while continuing to ensure proper food safety provisions are in place. There could not be a more important time in which to keep trade flows open and predictable.

After this pandemic, the world will have had a very vivid example of the problems that quickly result from disrupting the market exchanges around our most important commodity, food.

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  1. My daughter would KILL for a 10 lb bag of shredded cheese.

    1. Yeah that doesn’t seem like the biggest hurdle. I mean, the 10 pound pack would cost ~50 dollars to the consumer, but honestly most grocery stores would be able to repack into deli bags and sell smaller quantities

      1. I don’t think repacking is the biggest problem. What about all the individual retail nutrition labels? What about weighing and pricing individual packages?

      2. A traditional grocery store with a full-service deli and a full-service butcher operation could do that repacking. And you can still find some of those stores in any city. The vast majority of groceries, however, are now sold in stores that have no such facilities. They bring prepackaged food in, they take it out of the cardboard boxes and put it on the shelves, they sell it. They are not equipped to break down and prepackage bulk products. They don’t have the bags, the food handling equipment, the staff, the labels or even the food-safe space.

        1. Maybe in NY, but every Kroger, publix, or giant Walmart I’ve been to has both active delis and bakeries

          1. Us Southerns are much more advanced

  2. The nature of getting milk from cows—and of milk itself—means you can’t just shut production down for later.

    “But this is the greatest, wealthiest nation on Earth!”

  3. I suppose this will cause a lot of the supply chain to prepare better for future disruptions. As with everyone, those who prepared best will do the best and those that don’t won’t survive economically, to be replaced. A dairy Farmer with a diversified customer base, liquidity, and a plan will outcompete the guy who took the status quo for granted.

    1. Diversified how? You can’t sell milk from your farm, except under strict guidelines. You have to deliver it to a creamery. It has to be tested for antibiotic residues and other contaminants. A large or even semi-large dairy is not equipped for individual sales. This is not like most supply and demand issues. It is similar for beef producers. Yeah you can sell a side of beef or two but when you have a 800 head cow calf operation that just doesn’t fly (hell much more than 20 head that starts getting really impractical). Now if you are an average family dairy in Idaho, your herd size is around 1500 head. If you follow a standardized 305 day milking period, about 2/3 of your herd is milking and 1/3 is dry at any given time. So you have 1000 head of Holstein producing an average of 90 pounds a head of milk per day. So you are producing 90,000 pounds of milk a day. How the fuck do you diversify that without a commercial creamery. Now let’s talk a smaller 200 head speciality dairy running Jerseys. So if you follow the above industry averages. So you have 132 head milking at an average of 60 pounds a day producing 7,920 pounds a day. They might have some flexibility, but chances are they still have to sell to a creamery. Basically, your conclusion deploys a complete misunderstanding of agriculture. First, regulations has almost completely made it impossible for dairies and ranchers to sell directly to consumers, and second you have no idea about how modern dairies operate. Diversification is not realistic for anything but the smallest cottage producers. Mostly these people have secondary incomes or already are maxed at their production and have a select cliental. They also make up less than 1% of the industry. At peak lactation a single Holstein is producing over 200 pounds of milk a day, and averages 90 pounds of milk a day over a 305 day milking period. She is also consuming around 38 pounds of dry matter a day (over 42 pounds as fed). She needs to get calve every 13-15 months. She won’t be profitable until she reaches a third lactation, which about half of heifers never will. She will fail to get pregnant or have to be filled for another reason. When this happens the farmer will sell her for a loss. To offset this and other fixed costs, they need as many head as they can operate. If I can operate 200 head and can operate 250 without having to buy more equipment or hire more employees (this is completely viable) I drastically increase my chances of profitability, but I also greatly decrease my flexibility in consumers.

      1. Awesome post. I grew up in Iowa. I love it when people who have never been to a farm try to tell you how it should work.

        1. I’m doing the opposite, telling them to figure it out instead of whining when things happen. Or go out of business. Someone else will fill the void.

          1. Just go fuck yourself you have no idea how the industry works. They can’t just start a bottling company. Thank the overregulation environment for a lot of their inflexibility. You don’t understand the industry and it is fairly obvious.

            1. Ditto.

      2. Start a second biz to bottle it. Geez I gotta do everything?

        1. With what fucking capital? You don’t know what the fuck you are talking about.

          1. With the profit you made during good times. How are you not understanding proper disaster planning?

        2. Look up how hard and how many regulations and rules they would have to go through, and how long the process is to get approval (and the cost) to start a bottling company. You sound just like that idiot Bloomberg right now.

        3. Also, don’t you think farmers spends endless hours working with their accountants, bankers, other farmers, extension, NRCS, FSA etc trying to come up with new ways to make money, especially when commodity prices are below break evens (which has been the norm since about the summer of 2016)? No, we are all to dumb and need a bunch of city people to explain to us how to be more flexible and just start a bottling company (if only it were that fucking simple).

          1. I know Reason thinks we are all becoming millionaires off of subsidies (and there are some who farm for a loss hoping for insurance, but they generally get fucked quickly). I am not defending the subsidies but the truth is the subsidies and insurance pay cents on the dollar. And maybe the industry would be better off without them (probably in the long run) but it isn’t exactly like they pay the bills either. And most years you buy the insurance but never use it because you don’t experience a qualifying event.

          2. Obviously!

    2. yeah. tell it soy boy

      1. Soy boy? Really? I hunt, fish and ranch. Hardly a soy boy. I also happen to have a master’s degree in animal science. So maybe I know more about the industry than this guy who thinks they can just open a bottling company. If it were only that easy. Regulations and lack of capital would be their first hurdles. Secondly, they would still have to dump milk until they can get a bottling company up and inspected and approved for sale. Say probably about a year to complete the process. Third they would have to hire and train crews to operate it. Guess what it takes quite a bit to process 90,000 pounds of milk a day. Then they’d have to get around the milk boards. And the grocers lobbyists and the public health advocates. Then maybe in 18 months, if they are lucky, they can begin selling bottles of milk. That is if they haven’t gone tits up trying to jump through all the hoops and pitfalls placed in their path.

  4. he who controls the spice. you know the rest

    1. One of the things that isn’t well known outside agriculture is how over regulation that favors large corporation (crony capitalism) has consolidated processing into the hands of a few large corporations. It isn’t the farmers or ranchers that are causing the price spikes (or choosing to dump their milk rather than sell it) it is at the processors. Look at the huge difference in live cattle prices and boxed beef prices. There are only five companies that own almost all the beef processing facilities. Before 2008 the number was larger and there were considerable number of medium and small processors. Some closed because of the recession but others were forced to close because of stupid rules and regulations supposedly aimed at stopping monopolies but only aided in creating stronger monopolies. It is the same old tired story. And the farmers gets screwed by the processors and gets blamed by the public.

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