Easy access to safe and healthy food is a luxury most people in the developed world take for granted. Consumers expect fully-stocked supermarket shelves and restaurants without ingredients shortages.
But this is only possible when supply chains are operating at their best, meaning crops are getting harvested and processed, products are packaged, and then stored and transported to their final destinations. The scale of the global food supply chain is unnerving. Roughly 23% of the food produced globally is traded internationally, and countries worldwide import about $1.5 trillion in food annually.
So it’s no surprise that a global pandemic has had a devastating impact on the food industry supply chain. The good news is that this is an incredibly resilient sector, and various measures have actually made the food industry supply chain stronger over the past several years.
How COVID-19 Has Impacted the Food Industry Supply Chain
Few people will soon forget the tense months at the beginning of the COVID-19 pandemic when grocery shelves were suddenly bare and retailers placed limits on the purchase of certain products. At the same time, farmers were forced to euthanize chickens, smash eggs, and dump milk that they were unable to get to market. Here are some of the ways the pandemic disrupted the food industry supply chain:
- Harvests — Come spring, many crops have been left rotting in fields because immigrant workers have been unable to travel for the harvests.
- Processing — Food processing plants were forced to scale back or shut down production due to infection outbreaks or lower agricultural production.
- Logistics — Food transportation has become a logistical puzzle thanks to border restrictions, tariff issues, and labor shortages in the transportation sector.
- Go-to-market — Companies that normally sell products through out-of-home channels, such as soda producers, have seen sales plummet.
- Sourcing — Grocery stores, while experiencing unprecedented demand, have been unable to keep shelves stocked and stores sufficiently staffed.
Ongoing Challenges for the Food Supply Chain
Even before the global pandemic became a reality, the food industry supply chain was experiencing issues. Those issues haven’t changed, but the health crisis has magnified many of them and turned what were items that required attention into major crisis points. These include:
- Shifting consumer preferences — More than ever, consumers are health-conscious and environmentally conscious. Not only do they want additive-free, fresh food from traceable sources, but they also want to buy from sustainable companies.
- Increased supply volatility — The global pandemic has fueled already existing volatility in the supply change due to climate and geopolitical factors. Political tensions have increased in recent years, giving rise to more trade wars and complex supply chain issues.
- Tightening standards and rules — A worldwide health crisis has underscored the need for more regulations to protect consumers from unsafe food products. Further, many nations are still striving toward creating a carbon-neutral society, which will require changes in how food is produced, processed, and transported.
How the Pandemic Has Made the Food Supply Chain Stronger
The pandemic isn’t over, but markets and consumers are increasingly learning to live with it. In this vastly different environment, here is how the food supply chain has become stronger because of the events of the past several years.
More Flexible Processes
At every point of the food supply chain, growers and processors had become accustomed to dealing with just one type of market or single buyers and sellers. This avoided the additional expense of having to cater to multiple markets. But, it also made companies less flexible when conditions changed.
When the pandemic happened, many of these same businesses realized they needed to be able to pivot their operations faster. For example, a supplier that only catered to restaurants can now quickly adjust its processes to serve individual consumers. Having multiple markets also reduces the opportunity for food waste.
Greater Transparency
When stakeholders don’t know where products are in the food supply chain, this is a major issue. Not only do buyers and sellers need transparency, but the people who are going to consume the food do as well. More than ever, consumers want to know where their food came from and how it got to their grocery cart or table.
The best way to deliver a higher level of transparency is by leveraging technology solutions like RFID tags and bar codes. Specifically, a farmer, processor, or logistics company can apply RFID tags to individual items and transport containers, giving every stakeholder up and down the supply chain complete visibility and actionable data. Logistics companies can use tools like mobile carts to read these tags, reducing on-site errors and increasing efficiency.
Stronger Infrastructure
Some of the more useful adjustments for creating a more robust food supply chain have to do with infrastructure. Many countries are investing in better roads, bridges, and other means of getting products from Point A to Point B more quickly and safely.
It might sound basic, but some of the biggest obstacles in the food supply chain have been transportation bottlenecks. Greater transparency will address some of them, but stronger infrastructure will go the last mile to create a more sustainable system.
More Resilient Crops
Billions of dollars worth of crops were wasted during the early part of the pandemic. With an exploding global population, this isn’t a situation anyone wishes to repeat. The lack of genetic diversity in the current crops of corn, wheat, and soybeans leaves them vulnerable to disease.
With climate change becoming a greater concern, farmers are turning to more resilient crops, such as ones that are less water-intensive. The U.S. Department of Agriculture (USDA) announced last year that it planned to invest over $4 billion to strengthen critical supply chains, part of which will address production.
The global pandemic has placed unprecedented stress on the food industry supply chain, with bottlenecks in labor, processing, transport, and logistics. But those disruptions have also led to many changes that have made the supply chain stronger and more resilient. Among those are a greater reliance on technology solutions, more efficient processes, and greater transparency throughout the supply chain. Combined, these changes are providing a better customer experience and give businesses improved short and long-term results.
