Food Shortages and Broken Supply Chains?

| April 18, 2020 | 0 Comments

One of the topics which U.S. news outlets have taken up recently is the amount of food that is going to waste in our country. In south Florida, farmers are plowing fields of ready-to-harvest cabbage, beans, and other vegetables back into the ground because nobody will buy them. In Idaho, one farmer reportedly dug ditches to bury one million pounds of onions. One chicken hatchery is smashing 750,000 unhatched eggs per week. Farmers across the country are dumping fresh milk down the drain or into manure pits, while at the processing plants, the same thing is happening. Meat processing plants are closing down, because large numbers of workers have contracted COVID-19. As a result, chicken and pork growers are being left with barns full of ready-to-process animals and no place to go with them. Accompanying these grim stories are pictures of empty supermarket shelves, giving the impression of a major food shortage already beginning.

So, is the U.S. facing a food shortage? Are millions of people in America about to go hungry because our “fragile” supply chain is breaking down under the effects of the COVID-19 epidemic and the accompanying economic shutdown? Are our inner-city neighbors threatened by starvation while their rural counterparts dump thousands of gallons of milk? That is the impression one could get from reading some of the news articles that have been published recently. In reality, though, the United States is not anywhere near to a real food shortage.

In this article, I want to “de-sensationalize” these news reports. I want to discuss the current challenges our food producers and supply chains are facing. I want to briefly talk about some food challenges that other parts of the world are facing. I will end with some thoughts of actions we could take to improve the situation.

Food Waste

Dairy Farmers of America, the nation’s largest milk producers cooperative, estimates that American farmers are dumping 3.7 million gallons of raw milk a day. Average fluid milk consumption in the United States is less than one cup per person daily. That means the milk that is currently going down the drain is equivalent to the amount that 59 million Americans drink. That’s a lot of milk!

Let’s look at some other numbers to put this into perspective. American farmers produce 69.5 million gallons of milk every day (2019 numbers). That means that the estimated 3.7 million gallons of milk going to waste on farms is 5.3% (~1/20th) of total U.S. milk supply. While 3.7 million gallons is an enormous amount of milk, it’s a relatively small portion of what American cows make.

Now, a few more figures. The United States Department of Agriculture estimates that 31% of all food produced in America is wasted at the retail and consumer levels. In 2010, the USDA reports say this was approximately 133 billion pounds of food (worth $161 billion). This is food that was produced and processed, but never eaten. It was completely wasted. Note that these figures are for the retail and consumer levels; when you include normal producer waste, the numbers are even higher.

Farmers are throwing out tons and tons of food, it’s true. However, food waste happens all the time in America. The COVID-19 shutdown is causing new waste in the sense that the waste is happening at different points in the supply chain, but I doubt that the actual amount of food being wasted has increased by much, if at all. If no one is eating less food than they were eating before (I haven’t heard of this in the U.S.) and no more food is being produced than before (doubtful in this time), then there is no way that more food is being wasted than before.

Major contributors to the problem of food waste are restaurants (there’s 660,000 of these in the United States) and cafeterias (at schools, colleges, museums, etc.). I have seen this first-hand during my college experience. While studying at the University of North Dakota, I regularly ate at the campus’ main dining hall. The cafeteria’s multiple stations included counters featuring a beautiful array of ingredients where you could make your own salads and sandwiches. At the end of every meal, the staff would clean up the sandwich and salad bars, often throwing out perfectly good food. I remember watching in almost-horror as the sandwich bar lady calmly dumped deli meat and cheese (my favorite) into a big tub, preparing to throw it in the dumpster at the back door. This is normal practice at tens of thousands of cafeterias across the country. In fact, food safety laws demand it.

Another big waster is the stores that sell us our food (unless you’re one that grows it yourself or buys local). Basically every food product has a date on it specifying by when it should be consumed or before what date it is the best quality. Retailers must regularly check their shelves (food safety laws again) to determine they are not marketing anything that is past the expiration date. In fact, food is often pulled off the shelves and thrown away as soon as it gets even close to the expiration date. Some of this food is donated to homeless shelters or food banks, but much is simply tossed. Unlike many countries, US stores do not typically sell produce with blemishes. This also results in much food being thrown away.

Because of the current shutdown, thousands of restaurants and cafeterias are closed and thousands more have reduced services. This means that the food waste that normally occurs at these institutions is not happening or is drastically reduced. All the people that normally eat at these restaurants and cafeterias are now eating at home. This means increased sales for all the retail stores which now have to supply the food that would otherwise have been supplied by the restaurants and cafeterias. The increased business means that some supermarkets have had empty meat and dairy cases, because they are not accustomed to selling so much. The benefit of this, though, is that less food is being thrown out because it is approaching the expiration date.

One thing that is notable here is that different sectors of U.S. production are now bearing the cost of the waste. When restaurants waste food, they are throwing out food that they have paid for. The cost of the food waste is figured into the restaurant’s budget and the cost is passed on to customers like you and I. But if the food is never reaching the processors and farmers are throwing it out, now the farmers are bearing the cost. Farmers do not figure this magnitude of waste into their operating budget, and if this scenario continues for long, these producers at the beginning of the supply chain could end up in serious financial trouble.

Supply Chains

The United States has a well-developed supply chain system that has worked to bring consumers what they have demanded for years. Now, that system appears to be failing, at least if you listen to certain news reports. I’ve seen news reports talk about the “fragility” of the nation’s supply chain that is now being exposed by the pandemic. There is a little truth to this. There’s also a lot of sensationalism involved.

A good transportation system and computer networking capabilities have increased the ability of retailers to maintain a “lean” inventory. Two hundred years ago, the general store in town might have gotten a new shipment of goods in once a week or once a month. Every time a new order was needed, the store proprietor would have to walk around his store and count what was still in stock and then calculate what he would need to get him through to the next order. And of course he didn’t want to run out, so he probably ordered a little extra.

There are still plenty of small businesses that operate similarly today. However, large chain retailers operate completely differently. They have computerized systems that keep minute-by-minute record of what is in the store. Every day (if not more often) semi-trucks roll in, bringing goods from the stores’ distribution hubs. If shelves get empty (or stocks get low) because of increased demand, replacement stock is only hours away in the distribution center. This system allows stores to keep as little as possible in stock. It’s a good system, financially. Because the retail outlet is not storing a week’s supply of goods, they don’t need as much warehouse space, reducing overhead expenses. Because they don’t have a lot of perishable goods sitting around, the food waste discussed above is minimized.

America’s food supply chain today is very streamlined. Stores keep track of consumers’ buying habits and know that certain seasons or holidays mean increased demand for certain food products. When that season or holiday rolls around, they are prepared with extra stocks of those goods. The entire food supply system is coordinated around these predictable fluctuations. My family has been involved in the turkey-growing industry in the past. The company we worked with intentionally scheduled turkey flocks so it would have plenty of whole turkeys available for consumers around Thanksgiving and Christmas.

This system works well, until something comes along that unpredictably changes consumers’ buying habits. This is what happened with the COVID-19 outbreak. Consumers began requiring more food from retailers, and the retailers were not prepared for it. Then panic buying happens. An example of this is what happened with toilet paper. As consumers saw reports of increased sales of toilet paper, they reacted by going out and buying extra toilet paper themselves. This led to an apparent shortage of toilet paper. (Walmart alone is selling enough toilet paper that, if rationed, every person in America could have one roll every five days.)  It’s not that people were using more toilet paper than before or that less toilet paper was being produced, it’s simply that an unexpected change in buying habits caught retailers off guard. They didn’t have time to prepare. Also, a sizeable percentage of toilet paper is produced in industrial-size rolls for use in schools and businesses. Suddenly many people are staying home and this requires more smaller rolls that are normally used in homes. Distributors of industrial-size rolls have tried selling their stock to some grocery stores that need something for their customers. But the large-size rolls have no bar codes to scan, so labels needed to be placed on each roll. These are the challenges of abruptly-changing lifestyles.  However, the system is responding to the changes like it was supposed to. Stores are bringing in more toilet paper (if they can find it) and manufacturers have ramped up production.

Because of lean inventory practices, retailers may experience short-term shortages when buying habits change quickly. However, the same tools that allow for lean inventory practices also make it possible to quickly respond to these shortages.

One potential “weak link” in the supply chain is the processing plants themselves. There have been multiple animal processing plants that have shut down in recent weeks because a significant number of workers tested positive for COVID-19. One notable example is the Smithfield pork plant in Sioux Falls, South Dakota, which processes 4-5% of the nation’s pork. Other plants are experiencing worker shortages as their employees are scared to come to work. If enough plants shut down, the nation’s protein supply could be in trouble.

Thankfully, that doesn’t look very likely at this point. Before COVID-19 hit, pork stocks were high. When the shutdown happened, the industry lost its food-service customers (think restaurants and cafeterias) which compose 25% of national demand. Some of this demand is replaced by retailers, but not all of it (remember the waste). So, at the same time that pork processors are struggling to get their pork processed, they are struggling to sell all the pork they are still processing. If over 30% of food is wasted at the retail and consumer level, the meat processing plants can process significantly less and still provide enough for everybody. We will just have to waste less at the retail and consumer level.

In Wisconsin, farmers are dumping raw milk, while just miles away, stores are rationing milk by limiting sales to two gallons per customer. Why? There are multiple reasons for this. The first is supply chain-related. Milk demand at the grocery store has increased and processing plants need time to switch their facilities over to bottling more milk for retail. It can’t be done overnight. Can’t the milk being dumped go directly to the consumer without passing through the processing plants? No; many states (Wisconsin included) have laws limiting how much raw milk can be sold or distributed. Can’t the processing plants move faster? They probably could, but there is not much economic incentive. Dairy product prices (as high as they might feel to the consumer) are very low when compared to input costs, meaning that the farmers and processors have little economic incentive to change their equipment and production habits for what is likely a temporary demand change. If the grocery stores could raise their prices in response to increased demand (as is supposed to happen in a true free-market economy), it would ration the available milk in the grocery store while providing more incentive for producers to increase available milk. However, anti-price gouging laws in the U.S. prohibit the store from raising prices enough for this to have much effect on production. As we can see, there is often more to empty shelves than a swamped supply chain. There are laws and unsustainable practices that complicate the situation.

That being said, the United States government takes supplying its citizens with what they need very seriously, maybe too seriously at times. All state governments that I am aware of classify food production and distribution as essential business, permitting anybody who holds a job in this sector to still go to work. The financial relief bill the government passed a couple of weeks ago includes billions of dollars designated for the agricultural sector, attempting to ensure that U.S. farmers will survive this shakeup in demand and come out strong on the other side. While no government is capable of everything, our government would do all it could to ensure a sufficient supply of food to the people. The National Guard stands by to assist in times of need, and, if necessary, the government could call on the National Guard to staff the nation’s slaughter houses. I have heard of no federal government intervention in the nation’s food supply chain at all, signaling that they are not too concerned at this point.

Across the World

All of what I have said above applies to the United States. I believe it would apply equally well to most of the developed world. Plenty of food is wasted in other places. There are places, however, where things look a little different. Much of the developing world does not have the over-abundance of food that is normal for us in America, nor do they have a resilient supply chain that can quickly adapt to changes.

In many African countries, the farmers are the supply chain, and lockdowns are so strict they cannot market their goods. The other day, in one African country, police intercepted a group of farmers traveling to market to sell their produce. The farmers were breaking the law by traveling to sell their goods instead of sitting at home. The police forced the farmers to return to their homes and confiscated and burnt several tons of fresh vegetables. These kinds of conditions and rules make the chance of food shortage very real for millions of the world’s people.

In these same countries, there are millions of workers who have no financial reserves. When they lost their jobs because of the lockdown, they also lost the ability to provide for themselves and their families, effective immediately. These countries’ governments are also concerned for the welfare of their people, but often do not have the financial capability or the necessary infrastructure to deliver emergency aid to those who need it. The international aid community is attempting to respond to these increased needs, but it was already falling short of its goal of eliminating world hunger before COVID-19. The increased restrictions that come along with the pandemic lockdown only complicate the process of delivering food to hungry people. There is a very real possibility that increased starvation will result.

What Can We Do?

So, what actions should we be taking (or not be taking) given all this?

For the short term, we should do everything we can to help meet the needs of the people that are really going hungry because of income loss. There may be a few of these in the United States and Canada. Let’s reach out to them. We could buy groceries, or get them connected to the glut of food that is being donated to food banks and other charities. However, the majority of these hungry people are going to be in other countries. Current travel restrictions make it difficult for individuals to travel and transport food to these countries. However, there are established organizations (like Christian Aid Ministries) who are already asking for more contributions to provide food to the hungry. Let’s give what we can. Maybe this would be a good option for all those stimulus checks that the government is mailing to us without our permission.  If you can travel internationally and help manage the distribution of food, you can offer your availability to organizations like Christian Aid Ministries.

The next suggestion is related to the supply chain. It is this: NEVER PANIC BUY. It is panic buying that makes “food shortage” predictions a self-fulfilling prophecy in rich countries. People hear about a hiccup in supply (whether real or imagined) and rush to the store to stock up so they will have enough to carry them through the “shortage.” The suddenly-increased demand naturally leads to temporary local shortages as the supply chain struggles to catch up. Most of the time, if everybody would have continued their normal buying habits, no “shortage” would have ever happened.

An opportunity for those who are out of work is to go work at a slaughter house. There are plenty of these that are still in operation, but are experiencing worker shortages. I have heard of at least two chicken processing plants (both in Fredericksburg, PA) that are desperate for workers. At least one is willing to take new workers if they only commit to a week. Anyone interested should contact one of the following phone numbers: (717) 821-4413; (717) 644-7219; (717) 821-8934.

A long-term project for us all is to do everything we can to reduce food waste in general. The American habit of wasting so much food does not go without its costs. American producers spend time and money growing and processing millions of tons of food every year, only to have it end up in compost heaps or landfills. This is not good use of the time and resources that God has given us. I realize that much of this is outside our control. However, we can make a difference for the better by directing our spending toward food suppliers that we know are doing what they can to reduce food waste. Maybe we should stop supporting wasteful businesses like restaurants. If you are involved in the food service industry, look for ways to cut waste, even if it means a cut to profits. Where possible, we should help direct food supplies to the people in this world that really need them. Go dumpster-diving if your local laws allow it. We cannot fix all the world’s problems, but we should improve the situation as best we can in our little corners of the globe.

-Leonard Hege

Tags:

Category: Public

Leave a Reply