How the coronavirus pandemic has affected the food industry
How the coronavirus pandemic has affected the food industry.
There is no doubt that any pandemic takes an immense toll on the global economy. It is evident in the visible increase in goods prices all over the world. A big question remains, how has the COVID-19 pandemic affected the food industry?
Food plays a massive role in our society; it sustains life. The food supply chain is one of the most critical sectors in any economy, and it is noticeable that COVID-19 has impacted the food processing chain from the field all the way to the consumer. Food is essential; it provides the nutrition we need for survival. The pandemic has plunged the entire food system into bizarre circumstances. The lack of adequate food, combined with labour shortages, fragmented supply chains, and panic over associated health hazards, could lead to insufficient proper nutrition and food scarcity.
COVID-19 has impacted all global food supply chain spheres, from sourcing raw materials to distribution and packaging. Lockdowns disrupted the transportation of packaged foods, prepared foods, and non-alcoholic and alcoholic beverages, whilst some companies had to close for up to two weeks for cleaning purposes. Research also identified that social distancing in the workplace led to operational challenges causing capacity constraints. Operational challenges, including the nature of packaging, was due to the reduced in restaurant demand, and increased take out demand.
To further put a strain on the supply chain, some countries have experienced severe threats to their food supply. These include a locust plague in East African countries and the Australian mice plague.
In the early stages of the global outbreak in March 2020, supply chain management had major problems coping with an unpredicted demand for certain products coupled with the enforced simultaneous restriction for travel and production; many still struggle to recover from this impact. Currently, most business operations are adapting to the new situation and will probably face changes that will remain in effect even after the pandemic is over.
Most food businesses have embraced digital innovation. The online purchasing of groceries has drastically increased, paving the way for a new sector and business opportunities. However, it has slowed down the foot flow of consumers to traditional stores. Experts predict a loss of employment for many grocery store workers due to this increase in online purchasing.
COVID-19 has been a stress test for the world’s food supply chains, and this preview of looming threats is making efforts to improve the journey from farm to fork more urgent than ever before.
When restaurants closed during March 2020 pandemic lockdowns, many food suppliers lost some of their biggest clients, leaving them with no buyers for their products. Farmers such as Dave Wolfskill had to discard gallons of milk down the drain as demand cratered due to COVID-19 restrictions.
There are concerns that this temporary unemployment disrupted areas such as harvesting, planting sorting, thereby weakening the production and standard of food safety. Disruptions in the global supply chain also impacted the beer industry. For example, although breweries in the U.S. were declared essential when businesses shut down but, just across the border, in Mexico, breweries were declared non-essential, forcing beer production to halt for April and May of 2020. In South Africa, the government imposed an alcohol ban from 27 March to 1 June 2020, severely impacting the beer and wine industries.
“Overall, the food system has been quite resilient,” says Johan Swinnen, director-general of the International Food Policy Research Institute, a leading international think tank. “It’s hard to imagine a bigger shock than we’ve had now. And despite that, if you look at the rich countries, even countries like China, the food supply has not been a problem almost anywhere.”
Statistics on Economic Complexity (OEC) show us that COVID-19 has been bad news for some markets but good news for others. Brazil has seen a bounty in its exports of agricultural products such as frozen beef and soybeans. Export sales of beef jumped from $464 million a month in April 2020 to $639 million in May. Brazil’s soybean monthly exports grew even more sharply, by more than $1 billion on a year-on-year basis in April 2020.
However, the United Nations have estimated that around 132 million people might go hungry in 2021 due to economic recession, which will be more likely and prevalent in developing countries. The economic impact of the pandemic might create acute poverty for about 100 million people; these effects may well extend into 2022.
Research shows that the FAO index increased by 3.9 % from October 2019. There has been a global increase in food prices due to the pandemic, especially dairy products and vegetable oils. The main contributing factors have been logistical issues. Maize export prices rose 2.5% in October 2020 and averaged 19% higher than in November 2019, and the general FAO index of cereal rose by 2.5 %.
In conclusion, the impact of COVID-19 on the food supply chain has been positive in preparing the global economy for potentially worse situations, increasing enfaces on food security and supply chain and increasing the rate of digital innovations in the food industry.