Links in the food chain are breaking at the cracks.
Canadian livestock producers are facing lower prices and, in some cases, the prospect of not delivering production when it is ready or at all.
At the same time grocery store shelves aren’t over-burdened with supply, and prices for meat, poultry, dairy and farmed fish don’t reflect potential surpluses or price reductions at the farmgate.
As well, consumers are looking for answers about why agricultural products like milk are being dumped.
In the United States some grain millers are shutting down just when consumers can’t buy all the flour they want. Hog producers, facing prospects of packers’ inability to accept market-ready hogs, are considering their options. The same applies to poultry and fish farms that can’t carry fed animals for very long, if at all.
A just-in-time system was critical to the food production chain long before it became a manufacturing reality that lowered costs of inventory. Fresh fruit and vegetables and livestock rely on systems approaches to production and processing or delivery.
Large-scale meat packing and food processing operations have nearly all had to reduce capacity due to COVID-19 workplace isolation measures and testing, infections and worker fears of getting the disease.
Last week Cargill at High River, Alta., stopped buying cattle to accommodate a short-term shut down. Other packers across Canada have had to reduce orders as well. The supply side of the equation has begun to back up due to dropping demand and then producer prices adjust lower.
This is all occurring despite Canadian grocers showing a 60 percent year-over-year increase in meat sales. Flour sales have jumped 179 percent. Prices for milk, bread, cheese, eggs, frozen fish and potatoes all rose by 30 to 65 percent. At the same time, french fry processors are cutting production due to low restaurant demand.
Restaurant closures and reduced commercial needs are creating new kinds of supply and demand imbalances.
The specialized just-in-time links in the food chain are snapping and when a chain breaks, the resulting lash can damage all who stand in the way.
It’s largely impractical to make rapid adjustments to the highly specialized food-supply chain. Plants that put flour in large totes and rail cars aren’t set up to fill 10-kilogram bags for kitchen use. Dairy processors that shipped half their production to commercial kitchens can’t quickly convert packaging from bulk milk or other perishable byproducts.
In recent years floods and hurricanes have closed facilities and stranded livestock and crops. Last year’s fire at a major American beef processor put such a large dent in beef production that it adversely affected finished cattle prices. Avian diseases nearly wiped out midwestern egg production and caused poultry farm closures on a statewide scale in the east.
But at no time has the entire continent been injured at once. The pandemic has exposed vulnerabilities as large as the industry that populates it.
As meat packers struggle to operate with slower lines, the efficiencies that made them profitable vanish. They buy fewer animals — the very animals others in the food chain must sell to remain viable. Each player is relying on the others’ links to be sound.
Farmers have to plan for the next crop and have faith that whether they are filling bins, pens or barns, their products will have someplace to go and the chain will hold.
Once the “new normal” is working, farmers will have to check the strength of their chains.
Karen Briere, Bruce Dyck, Barb Glen and Michael Raine collaborate in the writing of Western Producer editorials.