Food Supply Chain Adjusting to Current Demand

USDA Secretary Sonny Perdue is telling the country that the nation’s food supply system remains strong thanks to the continuing efforts of farmers to stockers and all in between. But Perdue wants to be sure consumers have that food supply intact while the coronavirus threat is affecting day to day life.

“We don’t want to have a panic next fall because we don’t have enough food. We’ve got some demand issues right now. We don’t want to have supply chain, and we don’t.”

Among all the challenges ahead for the food system, Purdue agricultural economist Dr. Jim Mintert says adapting is high on the list.

“I agree with Sonny Perdue. In the short run we don’t have a supply chain problem, but it is a big shift and especially when you think about the meat industry. We’re moving a tremendous amount of demand for meat away from the hotel, restaurant, and institutional trade into the retail grocery store trade, and that’s a big shift not only in where people pick that food up but also in terms of the types of products that are typically demanded in a retail grocery store vs. what’s demanded in that hotel, restaurant, institutional trade.”

He said processors weren’t prepared for such a shift but are now making adjustments, and in many cases scrambling to do so. Adjustments include changing cutting lines, changing management of cold storage facilities, and possibly even working with different wholesalers.

“Those changes are taking place as we speak, but the good news I think from a producer perspective is those products are still in demand. That’s true here in the U.S. as well as elsewhere around the world.”

What if coronavirus enters the meat processing workforce? Can the food supply chain continue and safely?

“USDA I think has taken some steps, along with the processors, to try and ensure that those facilities would remain open. I think they’re trying to work through some of those procedures right now. One of the concerns I know initially was, what would happen if meat inspectors happen to contract the virus and couldn’t work and had to go into some sort of a quarantine. USDA has taken some steps to make sure they can backstop around the country meat inspectors to keep the meat inspection service operational, so certainly in the short run I don’t see a problem.”

But livestock producers are nonetheless feeling the pressure. Cattle and hog futures prices have collapsed in recent days, more so than cash prices. Mintert says cash prices are a better indication for producers of what’s going on here in the short term.