COVID-19 and the US Food Supply Chain: What Happened?

COVID-19 and the US Food Supply Chain: What Happened?

August 12, 2020 Hallie Casey, Supply Chain Program Manager

“The juxtaposition of images in the news of farmers destroying crops and dumping milk with empty supermarket shelves or hungry Americans lining up for hours at food banks tells a story of economic efficiency gone mad.” - Michael Pollan, New York Review of Books (June 2020)

The image Michael Pollan paints is familiar to many of us. We felt the anxiety and confusion as interruptions plagued our food system at the start of the pandemic. As a result, more people began to question how our food system works and started to pay attention to how we access our food. So, what happened to our food supply chain, and how can we avoid it in the future?

The COVID-19 pandemic has revealed the dramatic shortcomings of our supply system. Supply chains are so consolidated and siloed they break at the slightest pressure. This leads to food loss and squeezes the people at the very bottom of the supply chain: farmers and farmworkers. To learn more about this issue, we looked at three different case studies of supply chain failure this year.

Pork

First, let’s look at pork. The key weak point in pork (as well as chicken) was meat processing plants. In the U.S., the pork industry is dominated by three mega-giants: Tyson, Smithfield, and JBS. On any given day, up to a thousand employees are in one of these corporations’ facilities, processing meat for grocery and restaurant sales.

In the last thirty years, the U.S. food and agriculture industry has undergone massive corporate consolidation, and pork is no exception. Many swine farmers don’t actually own the pigs they raise. Instead, they are what is called “vertically integrated,” which means a processing corporation owns the swine and dictates to the farmer what pigs they will raise, how they are raised, and when and for how much they are sold.

In March and April, meat processing companies closed plants because of sick employees, leaving farmers with unsellable pigs and American grocery stores with much less pork on the shelves. Because pork processing is consolidated into a few massive plants, when these plants shut down it closed the entire pork supply chain.

On April 26th, Tyson Foods themselves said the American “food supply chain is breaking”. In late April, President Trump (with significant input from meat processing executives) signed an executive order to remove liability from meat processors, forcing employees to continue working despite the extreme risk of COVID-19 infection.

This corporate consolidation of pork left the supply chain incredibly vulnerable. Hundreds of thousands of hogs were - to use the industry term - “depopulated” because there was simply no give in the rigid farm-to-plant pipeline.

Americans were faced with a meat shortage that was entirely preventable, but most importantly, dozens of workers' lives were lost because of corporate and political irresponsibility. The COVID-19 pandemic acted as a kink in a hose, building up the pressure but making it impossible for resources to flow.

Milk

Now let's look at milk. One of the most striking images from the agricultural sector early into lockdown was of dairy farmers dumping fresh milk. Why did this happen? Unlike pork, the constraining factor for dairy-owners was markets, not processors.

Dairy milk is not the staple it once was, as more and more customers move to plant-based milk alternatives. The largest consumer of fluid milk in the U.S. is school cafeterias, and Americans eat much more cheese, yogurt, and milkshakes while eating out than at home.

Typically, dairy cows are milked twice a day. If they are left unmilked the cows can experience discomfort or develop infections. Without a market for sale, the milk that dairy cows were producing had to be disposed of.

The price of milk plummeted - bottoming out in May - only to soar in June, due to government-sponsored purchasing programs like the Farmers to Families Food Box program. The May to June jump shattered all previous one-month price increases for the industry. This volatility makes for nervous dairy farmers, and farmers throughout the country are reducing their herds. With changing demand and the uncertain future of American schools, the future of the dairy industry is unclear.

Potatoes

This brings us to our third case study: the potato market. In most of the U.S., potatoes are planted in early spring and harvested in the fall. However, potatoes can be stored for months, so farmers or aggregators fill up massive, specialized storage houses with potatoes in September and October and sell off their stock over the year. As restaurants, schools, and other institutions that typically purchase large quantities of potatoes closed, potato prices dropped to more than half of what they had been in early March. With a dramatically deflated restaurant market, millions (if not more) pounds of potatoes were left unsold after the harvest.

We haven’t seen a potato shortage yet, but because the prices plummeted in spring, there has been a huge drop in the number of acres farmers have planted with potatoes this year. The United Potato Growers of Idaho estimated that 2020 would see the second-lowest acreage of potatoes in the last 20 years. This means next year we may see higher prices on potatoes and potato products.

This is scenario is not unique to potatoes. The USDA is scrambling to offer financial relief to specialty crop farmers (fruits and vegetables) across the country in hopes of encouraging them to plant. The pandemic has exposed the extreme fragility of our food system. A fragile system is expensive: the USDA has spent billions on economic relief programs for the agricultural industry. It is also dangerous, which was tragically seen by the loss of life in the meat processing facilities this spring.

What is the alternative? How can we protect from these tragedies and crises? The answer is building a stronger and more resilient food system.

What does it mean to build resilience into a supply chain?

The idea of “resiliency” in systems comes from ecology. Resiliency is the ability to resist disruption and the ability to recover from disruption.

There are many ways to build these concepts into our food system, and at SFC we are working on three strategies.

1. Shorter, more localized supply chains

Shorter supply chains are more resistant to disruption, and localized buying helps keep economic power in the region. If you buy your groceries from a farmers’ market, there are very few disruptions that can interfere in that supply chain, as the food is going directly from the farm to you.

SFC has been working with Central Texas retailers and institutions (schools, hospitals, etc.) to expand their purchasing to include local products. Typically, institutions and retailers have 2-3 suppliers for all their products, which can mean an extremely fragile system. Adding in local products builds a more robust network of suppliers.

2. Less corporate consolidation

USDA regulations require meat processing facilities to have an inspector on-site whenever meat is processed. This doesn’t guarantee safer food and can be burdensome to smaller processing plants with limited funding and physical space. SFC just added our name to the list of organizations advocating for the PRIME Act, which would change USDA regulations, making it easier to run smaller meat processing facilities. Policy change work is key to checking corporate irresponsibility in our food system.

3. Greater use of ecologically based practices.

SFC supports farmers who contribute to a resilient food system by using regenerative practices that treat their land like an eco-system. To recover from disaster or change, the land must have the capacity to renew natural resources. This work can be challenging, so we provide training, connect farmers to financial resources, and advocate for policy change.

At SFC, we envision a world free from exploitation of farmers, land, and farmworkers. We want a world where we are confident the workers who grew and processed our food did so in safe conditions. We are working toward ensuring our community is safe and well-fed, in a system that will not only sustain us now, but that will make us stronger and more resilient for years to come.