Major overhaul not needed for supply chain: observers

There have been widespread predictions that North America’s food supply chain will be radically reformed after COVID-19 passes.

Reasons for why the food supply chain should, in some people’s eyes, be restructured include:

  • Shortages of flour, dairy and meat products.
  • Shutdowns and slowdowns at meat packing plants.
  • Worries about cross border agriculture trade and food availability.
  • Trouble bringing in farm workers.

In their place, some have suggested building many smaller packing plants, focusing on domestic food security, turning to local food supplies from small farmers rather than food delivered to stores by complex systems, and building in much more storage and stockpiling capacity.

It’s a line of thinking that has been heard repeatedly during the crisis, but some are skeptical.

“I think at the end of the day that’s going to be really, really hard to pull off,” Nate Franzen of First Dakota National Bank said during a Granular Ag farm finance outlook.

“I don’t think it’s going to happen.”

For all that many consumers got scared when they saw flour, toilet paper and other staples running out or low on grocery store shelves, on the other side of the crisis, consumers and food industries might not be willing to embrace the costs of a less vulnerable system.

“The only way that can happen is you add cost into the system. Who’s going to pay for that?” said Franzen, whose bank has more than US$1billion in farm loans on its books.

“Do consumers want their food to cost more? I don’t think so. Do businesses throughout the chain want their process to become more expensive and for them to be less efficient? I don’t think so. That goes completely in the face of good business.”

Has the food supply chain performed poorly? For many, the sight of empty shelves seems an obvious proof that at least some of the system has failed.

Packing plants with hundreds of workers sick and operations shut down seem to be further proof that the current food-industrial system is too risky for disruptions and should be redesigned.

But others have argued that the food chain in general has responded admirably with grocery stores remaining open and well supplied with 95 percent of their usual food products.

U.S. Agriculture Secretary Sonny Perdue has been singing this song since the beginning of the crisis. There’s lots of food in the system, he says. Farmers are growing more than enough for the American people and for export customers, and any problems are adjustment issues and any glitches are patched and products reconfigured for different means of delivery.

Considering the short span of the crisis so far, the food system has weathered well, Perdue has been saying.

Some consumers have suddenly warmed to the local food supply and begun buying from local farmers who supply meat, vegetables, fruit and grain.

Others have filled pantries and basements with months of future food consumption, worrying that supplies will run short.

But already many parts of society are returning to a form of pre-COVID-19 normal, and some of the air of panic has dissipated.

Will the changes in consumer behaviour last? Will demands for bigger stockpiles and new facilities be strong enough to force wholesale changes to the food supply system? As Franzen posed, who pays for that?

So, while there might be widespread and loud calls for the food supply system to be overhauled, there are other voices out there holding their tongues but viewing the calls for a food system revolution with skepticism.

Where it all ends up a few months or a couple of years from now is anybody’s guess, but it’s far from certain that the post-COVID-19 food system will be much different from today’s.

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