High-End Meat Suppliers Begin Selling Direct to Customers
When restaurants began closing in March, the owner of premium meat company Nicky USA, Geoff Latham, braced himself for a shut down. High-end restaurants usually make up 85% of the Oregon-based company’s sales of Wagyu beef steaks, Kurobuta pork chops, and game meats like bison, elk, venison, and ostrich. However, his oldest son Gerick came up with a plan. They would sell their remaining and incoming inventory direct to consumers and grocery stores through online sales, something they had never done before. They still had to lay off some staff, but the strategy has helped the company survive and find new customers.
Nicky USA is one of 2,200 small U.S. meatpacking plants that employ under 500 workers. They now join companies like Allen Brothers, Porter Road, and Snake River Farms in selling direct to customers and retail outlets instead of supplying mainly restaurants. By selling direct, Nicky USA was able to recoup about 40% of its business just 8 weeks into the pandemic. Grocery stores, which had accounted for only 13% of sales, now make up 50% of the company’s profits. Nicky USA also began selling non-meat products such as toilet paper, paper napkins, and CBD products, an idea that stemmed from Latham’s youngest son, Gerod. To Geoff Latham, every sale and online order represents “a blip of hope” in a dire situation where “the finish line keeps moving back on us.” .
Grocery Prices See Highest Increase In Nearly 50 Years
Last month, the average price of groceries reached their highest monthly increase in nearly 50 years, largely due to high prices for meat and eggs. In April, customers spent 4.3 percent more for meats, poultry, fish and eggs, 1.5 percent more for fruits and vegetables, and 2.9 percent more for cereals and bakery products. On average, this 2.6 percent jump in grocery prices marked the largest increase in the cost of food since February 1974. Among cereal and bakery products alone, April’s 2.9 percent price increase was the steepest it has been in a single month since 1919.
During the same month, 1 in 5 American households became food insecure (lacked consistent access to affordable food) due to the loss of 20 million jobs, putting enormous pressure on both families and food banks. Inflated grocery prices have mostly resulted from supply chain challenges brought on by a combination of restaurant closures, new consumer food buying habits, and limited production in processing plants due to COVID-19. Geri Henchy, director of nutrition policy for the Food Research & Action Center (FRAC), has asked Congress to almost double the minimum SNAP (Supplemental Nutrition Assistance Program) benefit from $16 to $30 per month and to increase the maximum SNAP benefit by 15 percent. FRAC has also advocated for suspending all SNAP administrative rules that may end or lessen benefits during the coronavirus crisis.
COVID-19 Triggers Global Food Crisis, Says UN
The United Nation’s World Food Program (WFP) cautions that another 130 million people could go hungry, as up to 36 nations may face famine by year’s end. While the U.S. currently has no major food shortages, other countries such as South Sudan are at risk. The FAO published data showing that wheat prices in the capital city of Juba have increased 62% since February, and the cost of the staple food cassava (a.k.a. tapioca) shot up to 41%. “We were already facing a famine pre-corona,” said Sudan’s deputy interior minister-designate, Mabior Garang. “If you add corona to the equation, it’s crazy.”
Supply chain challenges have upended food systems in other countries as well. India is the world’s biggest rice exporter, but one of its major distributors, Shri Lal Mahal Group, can now only ship 15% to 20% of its normal volume. Shipping restrictions have also made it increasingly difficult to transport perishable products like fruits, vegetables, and fish. From January 1 through April 10, the capacity of container ships moving goods internationally decreased by 30% due to sailing cancellations. Even ships that make it to ports have faced delays due to facility shutdowns and quarantines, which have resulted in wasted cargo. Air-cargo capacity has also plummeted by nearly 35%, as approximately 85% of passenger flights around the world have been canceled. “You can have a food crisis with lots of food,” said Abdolreza Abbassian, senior economist at the Food and Agriculture Organization of the United Nations. “That’s the situation we’re in.”
Will There Be Widespread Meat Shortages? Here’s What To Expect
Americans are cooking at home more than ever, and meat sales skyrocketed 41% this April compared to the previous year’s sales, according to Nielsen research. However, meat supplies may not be able to keep up with demand in the coming months. The coronavirus continues to disrupt production at U.S. meatpacking plants, and fast food chains such as Wendy’s have already stopped serving burgers in some stores. Meat industry analysts advise consumers to expect higher prices and limited selection in grocery chains. Some grocers such as Kroger, Costco, and Albertsons have begun restricting meat purchases to prepare for potential shortages. At ShopRite stores, customers are capped at two items each for beef, pork, and chicken. “We’ve been adapting and adjusting on a week-to-week basis,” said Karen Meleta, Vice President of consumer and corporate communications for the grocery chain.
Meanwhile, sales of plant-based alternatives continue to climb. This week, Kroger began selling Impossible Foods plant-based burgers and other products at 1,700 of its supermarkets. Beyond Meat has also expanded sales of its plant-based meat products to warehouse brands like Walmart and BJ’s Wholesale Club. Beyond Meat Chief Executive Ethan Brown said the company plans to discount products and sell bulk packages to attract new customers over the next several months.
Egg Prices Triple And Lawsuits Accuse Producers Of Pandemic Price Gouging
Demand for fresh eggs has soared as more Americans cook at home during the coronavirus lockdown. Egg prices have also tripled in some states, prompting lawsuits against Cal-Maine Foods, the nation’s largest producer of eggs. Two separate lawsuits have come from the Texas attorney general and a group of private individuals in California.
In March, the average wholesale price of a dozen Grade A large eggs increased from $1.01 to $3.07, according to the U.S. Department of Agriculture. Lawsuits from Texas and California describe the inflation as excessive, unfair, illegal profit. The California lawsuit included several of other egg producers and major grocery chains as well, such as Whole Foods and Costco, totaling 25 defendants. “As in any time of economic turmoil, there are those who seek to profit from the misery of millions,” read the complaint. Texas attorney general, Ken Paxton, accused Cal-Maine of inflating its egg prices 300% and mentioned one of its Texas subsidiaries, Wharton County Foods, in the suit as well.
The nation’s largest egg producer has strongly denied the allegations. “Cal-Maine has not exploited this tragic national pandemic for gain,” it said in a statement. Other accused companies have spoken out as well. “This case has no merit,” said Kenya Friend-Daniel, public relations director of Trader Joe’s, and the popular grocery chain has since been dropped from the lawsuit. Costco issued a statement denying any price gouging, saying it had also lodged complaints with government agencies over egg suppliers’ prices. The firm that filed the California suit on behalf of defrauded consumers has not responded to requests for comments.
U.S. Meat Supply May Fall As Prices Rise
Last Sunday, Tyson Foods took out a full-page ad in multiple newspapers, including the Washington Post and the New York Times. The ad warned consumers and government officials that the U.S. food supply chain may be disrupted as a result of COVID-19, causing an increase in meat prices.
“The food supply chain is breaking,” said John H. Tyson, chairman of the executive board. “We have a responsibility to feed our country. It is as essential as healthcare. This is a challenge that should not be ignored. Our plants must remain operational so that we can supply food to our families in America. This is a delicate balance because Tyson Foods places team member safety as our top priority.” The company claims “millions of pounds of meat” will disappear from the market, causing prices to rise. The U.S. Department of Agriculture expects beef prices to rise 1 to 2 percent this year, poultry as much as 1.5 percent and pork between 2 and 3 percent. Farmers will also continue to depopulate animals that can’t be sent to closed slaughterhouses, wasting significant amounts of meat that would otherwise be consumed. For instance, the Delmarva Poultry Industry reports that 2 million chickens were euthanized this month due to worker shortages.
Meatpacking plant closures have stemmed mostly from the crowded conditions in consolidated production facilities. “This spacing is difficult in a high-speed assembly-line environment,” said Gail Eisnitz, author of the book Slaughterhouse. Tyson workers claim that proper social distancing is nearly impossible on the line, and spacing will obviously slow down production and reduce profits. Workers also claim they were given confusing instructions about when to return to work and whether or not to come in while sick. In a statement last week, Tyson assured that it is testing all employees for symptoms of COVID-19 before reopening its shuttered plants. The company has installed infrared scanners to detect fevers and has said employees will have their temperatures regularly checked before shifts when the plants resume work.
Artisan Cheesemakers Pivot to E-Commerce and More
Fine cheesemaking is an industry composed of many small businesses, and it is scrambling to survive amid the pandemic. As shelter-in-place orders shut down most U.S. restaurants and cheese shops, sales of artisan cheese dropped by 30 to 75 percent, declines so high that farmers supplying cheesemakers have been forced to dump unsold milk. Smaller businesses along the cheese supply chain may be forced to close, while larger companies will likely survive, but not without significant damage. DiBruno Bros., a large cheese and Italian gourmet food shop in Philadelphia, recently laid off 100 of its 400 employees. “Retail is down about 30 percent,” said executive VP Emilio Mignucci. “Restaurant, catering and events are down to zero. E-commerce is up about 200 percent, which is not quite making up for other losses…Right now, it’s not about profit, it’s about being sustainable and turning product into dollars. We had a lot of inventory.”
Other independent cheese businesses have transitioned to e-commerce or selling a wider variety of products. In Portland, Oregon, Steve Jones reinvented his Cheese Bar in a matter of days. “We’ve become what I jokingly call a cheese bodega,” said Jones, who had a café business before the pandemic that seated up to 50 guests in the summer. “We’re the only ones in about a 20-block radius selling milk, eggs, flour, rice and beans.”
Retailers have explored as many alternative markets, online sales, and promotional efforts as possible, particularly in social media. John Antonelli of Antonelli’s Cheese Shop in Austin, Texas has created a real-time interface, Cheesemonger Live, and is making the proprietary software available to fellow cheesemongers. Other cheese shops can be listed on his site and customers click through to set up an appointment with a cheese expert for buying advice. To help American-made artisan cheeses survive the outbreak, cheesemakers around the country are urging consumers to search for artisan cheeses online or at local farmers markets.
Global Food Supply Threatened by Coronavirus, Says UN
As the pandemic forces businesses to close around the world, food supply chains are weakening and food security is decreasing, particularly in less developed nations. To keep people fed, countries around the world are responding in various ways.
“Supermarket shelves remain stocked for now, but a protracted pandemic crisis could quickly put a strain on food supply chains,” the Food and Agriculture Organization of the United Nations (FAO) said in a report late last month. The UN’s Committee on World Food Security (CFS) stated that “The issue, however, is not food scarcity — at lest, not yet. Rather it’s the world’s drastic measures in response to the virus. Heightened instability in global food supply will affect the poorest citizens most.”
Here’s how various countries are responding. China has been working for years to improve food security, investing tens of billions of dollars throughout the past decade on major seed businesses. China’s government subsidies and investments in technology such as agricultural drones and unmanned vehicles have thus far kept the coronavirus from crippling the nation’s food supply. In Australia, air travel has been the primary transportation for food exports, and the nation is a top food supplier for the entire Asia Pacific region. The Australian government has provided emergency aid and increased commercial air travel to keep its food export businesses running. Elsewhere in Asia, Hong Kong imports most of its food from mainland China, while Singapore imports from Malaysia. So far, these food imports have continued relatively smoothly, and analysts in Hong Kong and Singapore forecast less risk of food shortages in those regions. Less developed nations such as those in The Pacific Islands, however, are at greater risk due to a weaker economic base.
The UN has urged affected countries to implement emergency measures domestically, in addition to working with neighboring governments on protecting international food supply chains. “Governments can protect their citizens by mobilizing food banks, offering cash transfers to vulnerable households, establishing emergency food reserves, and taking steps to protect agricultural workers,” said the FAO.
Pandemic Exposes Five Weak Spots In U.S. Food Supply Chain
Americans are questioning the stability of the country’s food supply, and the viral outbreak reveals meatpacking plants as a primary weak spot. Due to cramped working conditions, meat processing plants currently account for some of the largest coronavirus hotspots. Smithfield Foods was forced to close its largest pork processing plant after over 500 workers contracted the virus and one worker died from COVID-19. Other meat processors such as Tyson, Cargill and JBS have also closed plants due to infected workers.
Foreign workers are another weak spot, particularly in the agricultural sector. President Trump’s temporary suspension of immigration during the lockdown could deter seasonal workers from picking fruits and vegetables in the future.
The supply chain has also been challenged with new consumer buying habits, a third weak spot. As restaurants remain closed, consumers are buying record amounts of food at retail grocery stores. But retailers are struggling to keep up with demand. While wholesalers have surplus food products from business interruption in the hospitality industry, products packaged for wholesale cannot be easily repackaged for retail.
Food insecurity marks a fourth weak spot. Prior to the pandemic, 37 million Americans were considered food insecure. Monica Hake, senior research manager at Feeding America, estimated that a 7.6-point rise in the unemployment rate would increase the number of food-insecure people by 17.1 million. To combat the problem, Democrats are advocating to increase nutrition assistance in the CARES Act, signed into law last month.
Lastly, delivery services are struggling with labor shortages to meet demand for increased food delivery. As the coronavirus lockdown continues, the supply chains that provide food to Americans may undergo lasting reforms to withstand any potential interruptions in the future. .
Pandemic Worsens Food Shortages In Poorest Nations
Before the coronavirus outbreak, 135 million people struggled to deal with acute food shortages. However, Arif Husain, chief economist at the World Food Program, estimates 130 million more people could now go hungry. In total, about 265 million people may starve by year’s end. Over 368 million children are not receiving nutritious meals that they normally would in school. As of now, the pandemic hasn’t caused any global food shortage or mass starvation, but the next few months bring logistical challenges for poor countries. Analysts predict that food safety will also be worsened worldwide, particularly in countries like Sudan and Zimbabwe, whose economies had been hurting before the pandemic.
Food shortages in countries that are going hungry will likely lead to social unrest. In India, half a million people evacuated cities to walk home during the pandemic. Amitabh Behar, the chief executive of Oxfam India, reports that this was India’s “largest mass migration since independence”. Many migrants fear starvation more than they fear the virus, and those waiting in food lines have seen others fight over plates of food.
