The Food Supply Chain is NOT “Breaking”

 

It was disappointing to read the ad in The New York Times & Washington Post today from Tyson Food’s CEO that “the food supply chain is breaking.” The media of course ran with that (and not much else), consistent with its own obvious strategy to spread fear. Tyson and a few other companies have had serious issues with Wuhan Virus victims, and some plants – some 30 in total, if what I read is correct, have had to close temporarily. Other plants have had partial shutdowns. But as a food industry veteran of 23 years, let me assure you – our food supply chain, while stressed, is NOT breaking.

Oh, sure, some are more stressed than others, some pretty severely, especially if ingredients or products from China are in your supply chain. If you are part of the “foodservice” supply chain, you’re really stressed.

Some 40% of food is consumed outside the home, at least until the Chinese Communist Party virus hit, followed by governors shutting down restaurants, company cafeterias, and more across the country, except for carry-out. If you raise chickens to process into chicken nuggets for McDonald’s, for example, you may be faced with the humane slaughter of thousands of chicks – your market has almost disappeared, at least temporarily. Meanwhile, packaged food companies have seen dramatic increases – in some cases, as much as 50% – in sales of many products. If you do frozen peas, or chicken or beef, for a soup company, or grow commodities for snacks, guess what, you can’t grow and process those commodities fast enough. It largely depends on which supply chain you’re largely encamped. That is why you see reports of some shortages, yet also reports of potato farmers plowing under their crops (McDonald’s French fries, anyone?). Suppliers agile enough to shift production from foodservice to packaged foods have a good chance to survive this challenge.

The bottom line: we have no food shortage. We have supply chain challenges, some more severe than others. The China coronavirus has hit employees of these processing plants as much as any other business. It seems to have hit some meat, pork, and poultry facilities more than others, given the close proximity many of these employees work in these highly regulated facilities. Food manufacturing facilities, with a few exceptions, do not have employees in such close proximity. You aren’t seeing any shortage of products in stores just yet given the amount of product in cold storage, but some disruption is likely (probably not as bad as toilet paper, although that seems to have been addressed, at least based on what I saw today ago my local Wegmans).

So, rest assured. There is no need to rush to your local grocer to stockpile bacon. Our retail grocer and packaged food companies are responding really well. They’re heroes, IMHO. And as restaurants in at least a dozen states start, slowly, to return to business (some won’t), the foodservice supply chain will begin, slowly, to recover. Through all this, know that food industry supply chains are not “broken.” Fear not; shop with confidence.

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  1. JennaStocker Member
    JennaStocker
    @JennaStocker

    Thank you for writing this. I wish it was broadcast far and wide for the people who sparked the Big Toilet Paper Raid to walk them off the impending meat shortage ledge. Here in MN I try to keep up with the good, bad, and ugly of the Ag community. Good is they’re working awfully hard – along with the manufacturers, truckers, and grocers. Bad is the difficulty in changing  manufacturing streams. Dairy was a good example. Most big plants are geared towards cheese, butter, etc for wholesale (like restaurants!), but with closures, it wasn’t selling. A demand spike in bottled milk for individual consumers was hard to meet bc manufacturing capabilities weren’t sufficient. And you can’t just push a button to change the production plants, so…The ugly is closed plants for meat processing could mean herds of cattle, pork, and chickens slaughtered. If will be another hard year for farmers.

    • #1
  2. Vince Guerra Member
    Vince Guerra
    @VinceGuerra

    So, rest assured. There is need to rush to your local grocer to stockpile bacon.

    Do you mean to say there is no need to stockpile bacon? 

    • #2
  3. Sisyphus (Rolling Stone) Member
    Sisyphus (Rolling Stone)
    @Sisyphus

    Bucknelldad: So, rest assured. There is need to rush to your local grocer to stockpile bacon.

    Done! Cleaned them out!! Thanks for the tip.

    • #3
  4. Bucknelldad Coolidge
    Bucknelldad
    @SoupGuy

    Vince Guerra (View Comment):

    So, rest assured. There is need to rush to your local grocer to stockpile bacon.

    Do you mean to say there is no need to stockpile bacon?

    Fixed it, thank you. And thanks for reading to the end.

    • #4
  5. The Reticulator Member
    The Reticulator
    @TheReticulator

    I wonder if Tyson perhaps doesn’t have a comprehensive, objective view of the entire industry of which it is as part. Perhaps it operates in a bubble–a bigger bubble than many inhabit, but still a bubble.

    • #5
  6. DonG (skeptic) Coolidge
    DonG (skeptic)
    @DonG

    The Reticulator (View Comment):

    I wonder if Tyson perhaps doesn’t have a comprehensive, objective view of the entire industry of which it is as part. Perhaps it operates in a bubble–a bigger bubble than many inhabit, but still a bubble.

    I am cynical and I think Tyson is looking for some kind of bailout or regulation relief or immigration waiver.  I think Trump flouted the idea of using the Defense Production Act to “fix” the problems in the food supply chain.  I interpret that as Trump saying to Tyson, don’t try to blackmail the American people or we’ll show you the full power of the government.

    • #6
  7. Susan Quinn Contributor
    Susan Quinn
    @SusanQuinn

    I wasn’t particularly worried, since I assume that almost all alarmist statements are exaggerated. Still, I very much appreciate your perspective and information from your experience inside the food industry. Thanks!

    • #7
  8. Bartholomew Xerxes Ogilvie, Jr. Coolidge
    Bartholomew Xerxes Ogilvie, Jr.
    @BartholomewXerxesOgilvieJr

    I missed the part where Tyson said anything about what they were actually asking for. Was the ad intended purely to cause anxiety and panic? Thanks, guys, that’s helpful.

    • #8
  9. Sandy Member
    Sandy
    @Sandy

    Thanks for your perspective on this.  On a related subject, in the mid-Atlantic area, we hear stories of farmers who depend on farmers’ markets, many of which are now closed, being in difficulty. Is there any chance the pandemic will bring about the loss of more small farms?  

    • #9
  10. Goldwaterwoman Thatcher
    Goldwaterwoman
    @goldwaterwoman

    DonG (skeptic) (View Comment):
    I am cynical and I think Tyson is looking for some kind of bailout or regulation relief or immigration waiver.

    I’ve avoided buying Tyson products for years ever since I found out the family were/are big Democrat donors.

    • #10
  11. Vance Richards Member
    Vance Richards
    @VanceRichards

    Bucknelldad: There is no need to rush to your local grocer to stockpile bacon.

    Sure, but is there really a downside to having lots of bacon in the house?

    • #11
  12. Nick H Coolidge
    Nick H
    @NickH

    Vince Guerra (View Comment):

    So, rest assured. There is need to rush to your local grocer to stockpile bacon.

    Do you mean to say there is no need to stockpile bacon?

    There is always need to stockpile bacon.

    • #12
  13. Henry Racette Contributor
    Henry Racette
    @HenryRacette

    Thank you. This is consistent with my understanding of the situation.

    There’s a pretty good talk about supply chain issues and resiliency in this Heritage podcast:

    The Food Supply During the Pandemic: Facts From the Front Lines

    • #13
  14. Misthiocracy held his nose and Member
    Misthiocracy held his nose and
    @Misthiocracy

    Vince Guerra (View Comment):

    So, rest assured. There is need to rush to your local grocer to stockpile bacon.

    Do you mean to say there is no need to stockpile bacon?

    There is always need to stockpile bacon!

    ;-)

    • #14
  15. Misthiocracy held his nose and Member
    Misthiocracy held his nose and
    @Misthiocracy

    DonG (skeptic) (View Comment):

    The Reticulator (View Comment):

    I wonder if Tyson perhaps doesn’t have a comprehensive, objective view of the entire industry of which it is as part. Perhaps it operates in a bubble–a bigger bubble than many inhabit, but still a bubble.

    I am cynical and I think Tyson is looking for some kind of bailout or regulation relief or immigration waiver. I think Trump flouted the idea of using the Defense Production Act to “fix” the problems in the food supply chain. I interpret that as Trump saying to Tyson, don’t try to blackmail the American people or we’ll show you the full power of the government.

    Was Tyson not one of the driving forces behind the Chicken Tax?

    • #15
  16. Gazpacho Grande' Coolidge
    Gazpacho Grande'
    @ChrisCampion

    DonG (skeptic) (View Comment):

    The Reticulator (View Comment):

    I wonder if Tyson perhaps doesn’t have a comprehensive, objective view of the entire industry of which it is as part. Perhaps it operates in a bubble–a bigger bubble than many inhabit, but still a bubble.

    I am cynical and I think Tyson is looking for some kind of bailout or regulation relief or immigration waiver. I think Trump flouted the idea of using the Defense Production Act to “fix” the problems in the food supply chain. I interpret that as Trump saying to Tyson, don’t try to blackmail the American people or we’ll show you the full power of the government.

    I’d rather that than the full power of his genitals.

    • #16
  17. Housebroken Thatcher
    Housebroken
    @Chuckles

    DonG (skeptic) (View Comment):

    The Reticulator (View Comment):

    I wonder if Tyson perhaps doesn’t have a comprehensive, objective view of the entire industry of which it is as part. Perhaps it operates in a bubble–a bigger bubble than many inhabit, but still a bubble.

    I am cynical and I think Tyson is looking for some kind of bailout or regulation relief or immigration waiver.

    That is almost exactly what my totally apolitical wife said.

    • #17
  18. Bucknelldad Coolidge
    Bucknelldad
    @SoupGuy

    Sandy (View Comment):

    Thanks for your perspective on this. On a related subject, in the mid-Atlantic area, we hear stories of farmers who depend on farmers’ markets, many of which are now closed, being in difficulty. Is there any chance the pandemic will bring about the loss of more small farms?

    That is an excellent question. It’s a little harder to track trends and patterns among local farmers who direct sell to “farm to table” restaurants and other outlets (some retail grocery, but really farmers markets, “agrotourism,” and niche markets). It seems to me that the most successful local farms have developed good relationships with restaurants and foodservice, which of course have been pretty much shut down, aside from carry out. I suspect that a large number of smaller farms relying on this trend are in trouble. Here in PA, aside from dairy, cheese and other forms of processing, the late summer and fall will be more critical as their commodities (especially fruits and vegetables) come to market. Smaller, local wineries are holding their own with curbside sales and pickup. 

    In my own area, a local farm has aggressively set up an online direct to consumer sales effort that seems to be very popular. I suspect that’s a trend that will really take off. It helps that food retail, broadly defined, is considered a “life essential” business, even by the most stringent lockdown artists like Gov. Tom Wolf. Watch this space. I really see the trend to local farms by consumers growing. In fact, I would be surprised to see a population shift exurbs and rural areas, as remote work becomes institutionalized, and as people discover the much lower infection rates of the virus in less populated (and less expensive) parts of the country. Just speculation on my part, but evidence is beginning to emerge. 

    This is worth watching. Again, it will largely depend on whose “supply chain” they’re a part or parts of, and how those entities are faring. Like so much about this epidemic and it’s dislocations, we will have to wait and find out.

    • #18
  19. Bucknelldad Coolidge
    Bucknelldad
    @SoupGuy

    Bucknelldad (View Comment):

    Sandy (View Comment):

    Thanks for your perspective on this. On a related subject, in the mid-Atlantic area, we hear stories of farmers who depend on farmers’ markets, many of which are now closed, being in difficulty. Is there any chance the pandemic will bring about the loss of more small farms?

    That is an excellent question. It’s a little harder to track trends and patterns among local farmers who direct sell to “farm to table” restaurants and other outlets (some retail grocery, but really farmers markets, “agrotourism,” and niche markets). It seems to me that the most successful local farms have developed good relationships with restaurants and foodservice, which of course have been pretty much shut down, aside from carry out. I suspect that a large number of smaller farms relying on this trend are in trouble. Here in PA, aside from dairy, cheese and other forms of processing, the late summer and fall will be more critical as their commodities (especially fruits and vegetables) come to market. Smaller, local wineries are holding their own with curbside sales and pickup.

    In my own area, a local farm has aggressively set up an online direct to consumer sales effort that seems to be very popular. I suspect that’s a trend that will really take off. It helps that food retail, broadly defined, is considered a “life essential” business, even by the most stringent lockdown artists like Gov. Tom Wolf. Watch this space. I really see the trend to local farms by consumers growing. In fact, I would be surprised to see a population shift exurbs and rural areas, as remote work becomes institutionalized, and as people discover the much lower infection rates of the virus in less populated (and less expensive) parts of the country. Just speculation on my part, but evidence is beginning to emerge.

    This is worth watching. Again, it will largely depend on whose “supply chain” they’re a part or parts of, and how those entities are faring. Like so much about this epidemic and it’s dislocations, we will have to wait and find out.

    Typo – meant to say that I would NOT be surprised to see a population shift to the exurbs and rural areas. . .

    • #19
  20. The Reticulator Member
    The Reticulator
    @TheReticulator

    Misthiocracy held his nose and (View Comment):

    DonG (skeptic) (View Comment):

    The Reticulator (View Comment):

    I wonder if Tyson perhaps doesn’t have a comprehensive, objective view of the entire industry of which it is as part. Perhaps it operates in a bubble–a bigger bubble than many inhabit, but still a bubble.

    I am cynical and I think Tyson is looking for some kind of bailout or regulation relief or immigration waiver. I think Trump flouted the idea of using the Defense Production Act to “fix” the problems in the food supply chain. I interpret that as Trump saying to Tyson, don’t try to blackmail the American people or we’ll show you the full power of the government.

    Was Tyson not one of the driving forces behind the Chicken Tax?

    After all the Tyson-Clinton scandals one tends to forget. 

    • #20
  21. Fake John/Jane Galt Coolidge
    Fake John/Jane Galt
    @FakeJohnJaneGalt

    I was at 3 stores today.  They were either out of meat or had a very limited selection.  In every case there were 1 item purchase restrictions.  Thus you have to go to the store daily to get your daily meat.  I have not seen toilet paper for sale since mid March.  Medicines like Advil or Aleve are either out or if available are only allowed to purchase one bottle.  Sams Club was missing many of their normal electronic items with empty bays everywhere.  Maybe the supply line is not broken but it is also not working as expected.

    • #21
  22. PoliticalWoman Inactive
    PoliticalWoman
    @PoliticalWoman

    H’mmm.  No food shortages, just supply chain logistics.  I worked for 15 years as a commodity buyer for what was once The Quaker Oats Company, now Pepsico, so I know a thing or two about food supply and logistics.  Today, half of the items in my Instacart shopping list were either out of stock and refunded, or substitutes offered.  Depending upon what area of the nation you live in, you’ll be affected differently.  But I’ve also noticed food prices rising, which granted, can be taking advantage of a situation, or because the retailer/wholesaler has to pay higher prices and they’re passing on to the consumer.  According to a farmer/rancher, seen here in this brief six minute video, we won’t see shortages for another two weeks yet.  I’m more inclined to believe the farmer and my grocery bill/shopping list.  Thank you.

    • #22
  23. Fake John/Jane Galt Coolidge
    Fake John/Jane Galt
    @FakeJohnJaneGalt

    PoliticalWoman (View Comment):

    H’mmm. No food shortages, just supply chain logistics. I worked for 15 years as a commodity buyer for what was once The Quaker Oats Company, now Pepsico, so I know a thing or two about food supply and logistics. Today, half of the items in my Instacart shopping list were either out of stock and refunded, or substitutes offered. Depending upon what area of the nation you live in, you’ll be affected differently. But I’ve also noticed food prices rising, which granted, can be taking advantage of a situation, or because the retailer/wholesaler has to pay higher prices and they’re passing on to the consumer. According to a farmer/rancher, seen here in this brief six minute video, we won’t see shortages for another two weeks yet. I’m more inclined to believe the farmer and my grocery bill/shopping list. Thank you.

    This one is weird.  I have seen a few things going up. But some strange exceptions.  I am into KETO diet so we eat a lot of meat.  Upper end steaks like Rib-eyes, Filet Mignon, Prime Rib were going up very fast.   Price at the beginning of April for Ribeye went from $12lbs to $22lbs.  Now it is a bit harder to find them but the price is about $8lbs.  I suspect it may be the unemployment since it looked like hamburger was going up while steak was going down.  Some may be the way I purchase since I tend to buy loins and cut them myself instead of individual steaks.  But still it has been a strange ride on the beef price train.

    • #23
  24. Housebroken Thatcher
    Housebroken
    @Chuckles

    Fake John/Jane Galt (View Comment):

    PoliticalWoman (View Comment):

    H’mmm. No food shortages, just supply chain logistics. I worked for 15 years as a commodity buyer for what was once The Quaker Oats Company, now Pepsico, so I know a thing or two about food supply and logistics. Today, half of the items in my Instacart shopping list were either out of stock and refunded, or substitutes offered. Depending upon what area of the nation you live in, you’ll be affected differently. But I’ve also noticed food prices rising, which granted, can be taking advantage of a situation, or because the retailer/wholesaler has to pay higher prices and they’re passing on to the consumer. According to a farmer/rancher, seen here in this brief six minute video, we won’t see shortages for another two weeks yet. I’m more inclined to believe the farmer and my grocery bill/shopping list. Thank you.

    This one is weird. I have seen a few things going up. But some strange exceptions. I am into KETO diet so we eat a lot of meat. Upper end steaks like Rib-eyes, Filet Mignon, Prime Rib were going up very fast. Price at the beginning of April for Ribeye went from $12lbs to $22lbs. Now it is a bit harder to find them but the price is about $8lbs. I suspect it may be the unemployment since it looked like hamburger was going up while steak was going down. Some may be the way I purchase since I tend to buy loins and cut them myself instead of individual steaks. But still it has been a strange ride on the beef price train.

    Have observed similarly.  Not to mention that the beef availability in general just seems to be a great deal less – like the fresh meat cooler is seriously sparse.  And forget frozen mashed cauliflower, been looking for 4 weeks (my wife eats the wretched stuff).  

    • #24