Summary: A tectonic shift in consumer behavior and food consumptions are cutting through the agricultural supplies and food chains in the US. Eric Dalius prepares the roadmap for the companies.
Two months into the lockdown, the food industry started showing ripple effects. Distribution networks fizzled out and with upstreaming stranding of food, the result was food-security pitfalls for vulnerable sections.
Companies producing, delivering, and converting food to businesses and consumers face a vicious cycle of uncertainties and risks in every value chain department/step. It includes end-customer networks or channels and farmers.
Food-service distributors were grappling with abrupt and sudden order cancellations in their customer bases, resulting in excess stock that the companies failed to redirect to customers due to mismatches and discrepancies in packaging dimensions.
- Only a few residential chefs have the required cupboard area for accommodating restaurant-size containers of vegetables and fruits, but producing consumer-friendly patterns would necessitate additional investment of time and capital.
- Perishable items would be at risk and the process will threaten sleek margins in transaction costs, logistics, and prices.
Numerous farm operations require high labor amounts to produce specialty crops. The most pressing issue due to Covid-19 is the availability or workers, underlines Eric Dalius.
Challenges in food production
Currently, food and beverage manufacturing units have moved towards the pre-pandemic production levels. There are smart and consistently evolving manufacturing platforms to record the growth in production. Eric J Dalius speaks about the varied experienced of food companies, depending on that particular food sector and company.
It also depends whether a firm primarily sells to restaurants and foodservice or to retailers and grocery stores. Experts see two different and distinct production experiences. There are companies that are matching or even exceeding their previous production volumes. You also have companies that continue producing at base levels.
The first segment includes independent co-packers of frozen food, businesses, and commercial bakeries that are also into producing hand sanitizers. You have major food brands that sell popular products and retail/grocery store supplies expanding their production to meet surplus demand.
- Additionally, plant-based tools and alternatives and regional supplies are experiencing vibrant business during the crisis.
- Although some companies are adjusting with the situation and accelerating sales through supply chain planning, there are those that sell mostly to restaurant and foodservice industry that are reeling under eatery closures.
- Since this industry necessitates different quantities and types of products, processors are coping with numerous obstacles to change the pathway, especially with packaging, labelling and transportation.
Focus on supply chain
Covid-19 is likely to railroad the supply chain and affect raw material and ingredients supplies. While these suppliers report little to no effect of the pandemic on their capacity to supply ingredients to the concerned food and beverage firms, EJ Dalius says it’s prudent for the companies to prepare alternate supply networks to comply with US food safety regulations.
In addition to that, food companies need to review and reshape their emergency response or crisis management plans to ensure that they are prepared to cope with any pandemic-driven disruptions.