There have been some serious shortages during the pandemic, from toilet paper to ventilators. Some of the shortages have resulted from closed factories, but most have been supply and demand issues. There have also been shortages of food. Those are a little more complicated — and they’re not just about the farmers.
Is there a food shortage?
It’s important to realize that there have actually been no food shortages. There is plenty of food to go around. The problems aren’t on the farm — they’re elsewhere along the supply chain.
Getting food to where it needs to go is a problem.
Overconsolidation
There used to be meat processing plants in every town and county in the nation. Now there are basically just five major meat processing companies:
- Tyson Foods.
- Cargill Meat Solutions
- JBS USA (Swift)
- National Beef
- Smithfield
JBS has a Brazilian parent company, and Brazil has been hard hit by the virus. Smithfield, a pork processor that had to close down because of COVID-19, has a Chinese parent company. Cargill and Tyson are family firms.
But all of them are so big that if they shut down to clean their plants, or even reduce their staff for safety reasons, meat doesn’t get processed. That means farmers are left with animals they can’t sell or afford to feed, and consumers might face shortages.
In fact, consumers have not faced shortages, but they are paying more for meat in the grocery store even as farmers earn less. They’re worrying about meat shortages, too.
Packaging
The biggest problem may be a matter of packaging. Dairy farmers who are used to selling their milk to schools and hotels have arrangements in hand to pack their milk in five gallon containers that fit into milk machines. They can’t quickly arrange to package their milk in 1 gallon cartons or pint bottles.
Yeast is another example. While bread baking is getting a surge of popularity during the shutdown, yeast producers have been having trouble getting the jars and the materials to make the packets that they use to get the yeast ready to sell.
Again, there is no shortage of yeast. But without the packaging materials, yeast growers can’t package their goods and get them into the stores.
Sourcing
Things that are grown on American farms, processed in the United States, and then delivered to American consumers are facing real problems with packaging and delivery. But not all the foods we eat are sold to us in the form they’re grown.
Dependence on China as a source of manufactured goods is coming back to bite brands that went that direction. For example, 70% of Amazon marketplace sellers source their goods in China. Amazon has pressured their sellers to choose Amazon fulfillment, but they stopped offering it during the pandemic. Sellers are stymied. They have trouble getting and distributing the goods.
The result? An extremely high level of out of stocks just as consumers increase their online buying by double digits.
Supply and demand
Packaged snacks are being bought at a faster clip than their makers have ever seen before. It’s hard to keep those snack cakes on the store shelves, especially when factories may be shut down or working at lower capacity because of safety precautions.
This seems to be the result of the fact that people are staying home feeling bored and anxious. They’re eating junk food at a ridiculous pace.
But demand also includes people who hoard toilet paper or pork chops. When people buy far more than they normally would, and far more than they can actually use, the supply and demand balance gets out of whack.
Retailers often use algorithms to guide reorders of goods. As they begin to reduce the number of options and try to respond to consumer behavior changes, retailers are resorting to things like limiting the number of items people can buy.
Some retail specialists are suggesting that brands will need to retrain consumers to get back into a normal supply and demand curve.
Rexroth motion control
Companies that use Rexroth electric drive and control solutions may be facing problems in their part of the supply chain. If you need support with any Rexroth components or systems, call us first. We specialize and we can get you back up and running fast.