Coronavirus: The Safety of America's Food Supply Chain

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Coronavirus has sparked what may be a new phenomenon in history, global panic-buying at grocery stores. Panic buying is nothing new, of course, but seeing it happen in so many countries at once is certainly rare, if not new.

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The world’s supply chains are more intertwined than they have ever been. With a shock to the global system, many Americans might be wondering if their food supplies will be reliable.

Representatives of America’s food industries are confident in the supply chain today. On the East Coast, The New York Times reports:

“There is food being produced. There is food in warehouses,” said Julie Anna Potts, chief executive of the North American Meat Institute, a trade group for beef, pork and turkey packers and producers. “There is plenty of food in the country.”

“Our stores are getting stocked every day,” Ron Vachris, chief operating officer of Costco, said in an interview on Saturday. “Transportation is functioning, our suppliers are working around the clock and the flow of goods is strong.”

The National Chicken Council said it was not seeing any disruptions in production and noted that there were “ample surplus supplies of chicken in cold storage” — totaling more than 950 million pounds, according to government data.

On the West Coast, The San Francisco Chronicle reads:

Those picked-over grocery-store shelves don’t tell the full story. The Bay Area is not in danger of running out of food, industry members and experts say, and the food supply chain is as healthy as ever.

“We’re not seeing any challenges on the supply side at all,” said Michael Janis, managing director of the San Francisco Wholesale Produce Market, which sells produce to local stores, restaurants and catering companies.

Even before six Bay Area counties issued “shelter in place” orders on Monday, long lines snaked through many grocery stores here, and items like toilet paper and hand sanitizer appeared to be in short supply as residents prepared to hunker down in their homes to mitigate the spread of the novel coronavirus. But despite the rush, the supply chain for food products like fruits, vegetables and meat has not yet been disrupted — even if it’s taking some stores a little longer to restock the shelves.

“Food is not going to run out,” said Karan Girotra, a professor of operations and technology and an expert in supply chain management at Cornell Tech in New York City.

People are buying more food, but they’re not eating more, Girotra explained: “What’s happened is the pattern of shopping has changed. People are panicked and are buying more goods than usual.” Unlike hand sanitizer, which is being consumed more than usual, “when shoppers buy a month’s supply of food, it’s not going to be used in a week.”

And the Cincinnati Enquirer reports from the Midwest:

If you ask Kroger CEO Rodney McMullen about the potential for food shortages amid the new coronavirus outbreak that’s spreading across America, he’ll tell you what he and other retail executives told President Trump on Sunday.

“We asked President Trump and vice president Pence to let people know there’s plenty of food and plenty of things in the supply chain,” McMullen told The Enquirer. “And as long as customers just buy what they need and don’t hoard, there will be no problems at all – there’s plenty of food in the supply chain.”

McMullen urges the public to remember that the grocery business deals in perishable goods and is set up to constantly ship and refill store shelves. Also, the company operates 37 of its own factories that produce everything from milk and dairy products to maple syrup and canned goods – all of those factories are working overtime and around the clock.

“Some stores get a delivery truck once a day, some every other day and some stores get multiple deliveries a day,” McMullen said, admitting some vendors, like those making hand sanitizers, are still struggling to meet the high demand.

But he added that other packaged goods companies, such as Cincinnati’s own Procter & Gamble, are narrowing their production to focus on churning out in-demand products, such as toilet paper. “Our warehouses are shipping extra toilet paper.”

Despite empty shelves, for now, you can expect them to be restocked. One risk factor that remains, is the prospect that America’s farmers and farm laborers get sick. NPR discusses the potential for that here:

There’s an even bigger worry hanging over the food industry: The prospect of workers testing positive for COVID-19.

When it happens, the response likely will go beyond sending that individual home — although that alone can be catastrophic to field workers who are paid, in part, based on their production. This week, the United Farm Workers union called on employers to expand paid sick leave for workers.

Vegetable growers are considering policies that would require quarantine for everyone who worked in close proximity to the infected person. That could easily include two dozen or more people. Workers on H-2A visas often live together, sharing kitchens and bedrooms and traveling together on buses. The virus could spread quickly, and measures to stop it will be extremely costly.

According to Steve Alameda, a vegetable grower in Yuma, Ariz., losing an entire 30-person work crew overnight will be extremely disruptive. Farm workers already are hard to find, and replacing so many people immediately could prove impossible.

“We’ve got enough disruption,” Alameda says. “We don’t need to disrupt our food supply, that would be really catastrophic.”

There’s encouraging news in the reports from most food industry representatives, but it pays to remain on guard and prepared for shocks to the food supply chain.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.