When Normal Is Disrupted? Breaking the Supply-chain Link

It’s said that a chain is only as strong as its weakest link. The coronavirus pandemic has strained every link in the food chain, but the distribution link has probably experienced more disruption than any other within the food-chain system.

Pre-COVID 19, an efficient distribution system was modeled on two primary channel-pillars: the grocery channel, and the dine-out restaurant and fast-food channel. In mid-March, literally overnight that fairly balanced model dissolved. The dine-out channel almost disappeared, while the grocery channel was overwhelmed with panicked buying and food hoarding. The result was a distribution system completely knocked off balance.

The Arrell Food Institute at the University of Guelph was created to study entire food systems, including consumption trends and analysis. Institute director Dr. Evan Fraser says the pandemic has provided a real-time case study of when an entrenched food distribution model and consumer incomes are both suddenly disrupted.

“First couple of weeks of the pandemic we all went out to stock up our pantries. And that was the remarkable moment when grocery stores essentially emptied out of their inventory. None of us had experienced food shortages on that scale before, and then millions of Canadians had seen their incomes go down. So, we’re seeing a food-insecurity problem linked with lost wages.

A good example is the Western diet staple, potatoes. The new potato crop is being planted right now, but there are millions of pounds of last year’s crop still unsold, sitting in storage. Potatoes are moving well through grocery stores, in line with resurgent home-cooking. But the huge French-fry sector is a fast food and restaurant staple. Also, cautious consumers are not buying potato chips like they used to.

“We’ve got an industry which is used to selling French fries to restaurants, that no longer’s doing that. And so, there’s a major reorganization of the supply chain. And some things that used to be, and we’d eat a lot of, like potato chips and French fries, we’re not, and other things that we maybe didn’t use as much of in the past, but are using a lot of now like yeast and flour. Because we’re suddenly home baking, and we’re not going to restaurants and buying French fries.”

Dr. Fraser says that, generally, distributors have adapted quickly. But he also thinks that the overall food system may have taken a ‘bigger-is-better’ mind-set too far. An example is Canada’s highly concentrated meat-packing sector.

“We have allowed that system, for economies of scale, economic efficiency, to become extremely centralized. Over the last twenty years, its undeniable that regional meat packing industry has essentially stopped in favor of these giant factories. Maybe one of the lessons of COVID is that we need to go back to smaller, more regional packing and maybe that would create a little bit more resilience. Not to say we abandon trade and economies of scale, but maybe there’s a bit of a trade-off that we invest in a little bit more regional infrastructure because that’s going to protect us against big disruptions.”