As grocers struggle to keep the shelves stocked, and Americans adjust to quotas on many staple items, it may come as a surprise to learn that there is not actually a food shortage right now. Instead, the food supply chain is struggling to keep up with new buying patterns, and it is leaving farmers dealing with surpluses which they cannot sell.
Over half of the American food budget is typically spent on restaurants. Now, with Covid-19 drying up the restaurant business almost overnight, grocery stores are attempting to deal with a massive shift in demand. Prices rose by 0.4%, month-over-month, in February, and then by 0.3% monthly in March, marking the largest price increase since 2014. Going forward, food companies such as Conagra and Smuckers are planning to phase out promotions, in an effort to stem demand and help keep shelves stocked.
At the other end of the spectrum, farmers are being forced to toss their wares – the Dairy Farmers of America has started asking members to dump milk, and fruits and vegetables are being left to rot in the field, even as sales for these products spiked in March.
Why the disconnect? The answer lies, at least in part, in the food supply chain. Food processing plants, previously accustomed to supplying restaurants are now attempting to pivot to retail, a change that will not come easily. Meat processor Tyson announced that it will make its ‘biggest shift ever’ away from wholesale, requiring workers to fill overtime shifts. Dairy processors are shifting away from quarts to gallon and half gallon containers. Everything from the size of food packaging to the production lines themselves has to change, causing a logistical bottleneck. Some processors do not have retail facing packaging or relationships with grocers to supply food to at all.
Suppliers also face a shortage of trucks to haul produce, between Covid-19 keeping some drivers home, and the spike in demand fueled by panic buying. The National Grain and Feed Association, with others, lobbied each state to increase truck weight limits to 88,000 pounds. Some suppliers, such as Dean Foods, have begun offering bonuses for drivers with dairy experience.
The USDA and the FDA have relaxed food labeling and packaging for 60 days, to ease redistribution. There has not been a single food recall since February, when a typical month sees four or five. The hope is that these measures will ease the transition from wholesale to retail, and keep food on the shelves.