How has Covid-19 impacted our food chain?

The Covid-19 outbreak has brought health risks and difficulties to our food chains.

Demand above normal rates and the hoarding of some basic products have affected the normal operation of the food supply chain, resulting in empty shelves in supermarkets, forcing some of them to impose constraints on the quantities sold. These impacts have increased the food insecurity risk of the most vulnerable groups in the country.

How do food supply chains operate?

A supply chain is a system of organisations, people, activities, information and resources involved in moving a product or service from a supplier to a customer. An agri-food supply chain can range from the relatively simple − such as those involving domestic vegetables, to the amazingly complex where some of the ingredients of the final product, such as flavours, may come from different parts of the world.

Food supply chains have evolved over time and like other chains they aim to improve their efficiency by providing the same or improved services at a lower cost or minimising the amount of a product kept in stock. Retailers like just-in-time or build-to-order supply strategies which have been developed to provide a near-instant supply of the precise products demanded between businesses.

While they are designed to cope with a variable demand within certain limits, a disadvantage of these strategies is that suppliers along the chain are not able to significantly increase the quantity they supply in the short term if there is a significant surge in the demand in a very short time, like the one that we have recently observed.

There are additional issues created by the effect of Covid-19, such as the shortage of labour due to illness or self-isolation. This affects every stage of the food supply chain and makes it less flexible. The lack of migrant labour in some food chains, such as in agriculture, mostly unrelated to the virus, reinforces the problem.

Why do we see empty shelves in supermarkets?

The surge in consumer demand is a combination of at least three different factors.

First, there is a reallocation of meals from food services like restaurants and canteens to household consumption.

Second, contact minimisation requires a reduction in the frequency of trips to supermarkets, and therefore, an increase in the size of the purchased baskets and stockpiling.

Third, there is consumer panic due to a combination of media coverage and the language used (labelling the crisis as a ‘war’).

It is also important to highlight that there is a shift in demand towards non-perishable basic foods such as pasta, rice, UHT milk, canned food, canned meat and frozen food.

What can supermarket chains do to deal with this situation?

Supermarkets are taking the lead to prevent ‘stockouts’ and improve accessibility to food for all people.

Some of the measures are:

• Limiting the number of products that can be purchased

• Asking suppliers to simplify product ranges to help increase production volume

• Reducing opening hours and increasing the workforce

• Expanding delivery hours and increasing the number of click and collect points

• Helping small suppliers affected by decrease in their demands

Product travel restrictions

Another vital element to consider in terms of supplies of food and drink is the disruption to trade due to travel restrictions imposed to protect countries against Covid-19. A large share of the UK’s trade is with EU countries. However, suppliers within the EU are facing the same challenges as the UK, and their supply could potentially be disrupted.

Travel restrictions might lead to the reduction of products imported from around the world and may restrict UK food exports. Depending on the time scale of the pandemic, this might result in a change in consumer demand towards more local and seasonal food and a change of suppliers’ commercialisation strategies.

Access to food by the most vulnerable

The surge in demand has disrupted the food chain, with the most visible consequence being empty shelves in supermarkets. A knock-on effect is the impact on the most vulnerable in society. Not only do they face a reduction in income, but stockpiling might be increasing their food insecurity and reducing the availability of goods in food banks.

According to The Grocer, in 2008 only 7 per cent of the UK’s local authorities had opened temporary food banks, the Trussell Trust was in the early stages of establishing its national network and 26,000 people had been referred to receive emergency food parcels. In 2018, that number had risen to more than 2,000 food banks delivering supplies to 1.6 million people living in food poverty.

The Trussell Trust says food banks depend on the donation of non-perishable in-date food by the public at a range of places such as schools, churches and businesses, as well as supermarket collection points. In addition to availability issues, many food bank volunteers have been asked to self-isolate which weakens these much-needed institutions at the worst time.

What support is needed?

Supermarkets need the support to find the human resources they need and to overcome product travel restrictions. The UK government should be more forceful, making people aware of the social consequences of stockpiling, as well as protecting parts of UK society from becoming food insecure.

Montserrat Costa-Font and Cesar Revoredo-Giha, Food Marketing Research

Posted by SRUC on 27/03/2020

Tags: Food and Drink, Research
Categories: Natural Economy | Consulting and Commercial