Global Food Supply Chains Beginning To Erode As Crisis Looms

Thursday, April 16, 2020
By Paul Martin

by Tom Lewis via,
Thu, 04/16/2020

As the coronavirus continues to infect more and more people, food supply chains have started to become more strained in recent days. It was announced yesterday; the world’s biggest pork producer is closing a primary U.S plant indefinitely after a coronavirus outbreak amongst employees.

Smithfield Foods Inc. will halt its pork-processing facility in South Dakota, which accounts for 4% to 5% of U.S pork production. The company also warned that closures across the country are taking American meat supplies “perilously close to the edge” of shortfalls. This is just one of the latest examples of the coronavirus beginning to disrupt food chains at a more significant scale rapidly.

We anticipated this, as we reported on April 1 that food supply chains were in the early stages of being strained. Many countries were preparing many weeks ago by cutting back on exports to begin stockpiling. Surprisingly, dairy farmers in the United States are starting to dump milk because there was no place for them to go as the marketplace for dairy products has been affected by the closures of restaurants, schools, hotels, and food service businesses.

One would begin to believe history might not be repeating itself, but it is undoubtedly starting to rhyme. During the great depression of the 1930s, the hardest-hit industry was farming. Farm incomes dropped by nearly two-thirds at the beginning of the 1930s. Dairy farmers dumped countless gallons of milk into the street instead of accepting a penny a quart.

During World War 1, farmers had produced record crops and livestock to keep everyone fed. However, when prices started to fell, they tried to harvest even more to pay their debts and living expenses. In the early 30s, prices dropped so low that many farmers went bankrupt and lost their farms. In some cases, the price of a bushel of corn fell to just eight to ten cents. Some farmers even began burning corn rather than coal in their stoves because corn was cheaper.

However, there is a dramatic difference today. Prices are not dropping; in fact, grocery bills are getting more expensive by the day. Supply chains are being disrupted due to the transportation and of course processing of a vast selection of foods.

As we are beginning to learn, the country where the coronavirus started, China, may now be facing a food crisis. The country has just reopened its economy as the communist regime has even claimed a coronavirus victory.

However, there was a leaked government document made public last Thursday that shows that government officials have been planning for a shortfall in food supplies.

The document, dated March 28, was drafted following a meeting which was called to make special arrangements for food security.

“The State Party Committee and the state governments and counties and cities must do everything possible to transfer and store all kinds of living materials such as grain, beef, mutton, oil and salt through various channels,” the document said, according to a report from Radio Free Asia

The document also calls for the “mobilization of the masses to consciously store grain and ensure that each household reserves between 3 and 6 months of grain for emergencies.”

As we tweeted out, there seems to be a sense of panic food buying in response to rumors around food shortage in certain parts of the country:

Another alarming headline that came late last month was the warning from the United Nations Food and Agriculture organization who has now warned of global food shortages in the coming months.

“The worst that can happen is that governments restrict the flow of food,” Maximo Torero, chief economist of the UN Food and Agriculture Organization, said.

Harvests have been good and staple crops remain in demand, but a shortage of field workers brought on by the pandemic and a move towards protectionism — tariffs and export bans — could lead to problems in the coming weeks, Torero said, according to the report.

“All measures against free trade will be counterproductive. Now is not the time for restrictions or putting in place trade barriers. Now is the time to protect the flow of food around the world,” Torero added, the news course reported.

Some countries have begun to protect their food supplies by restricting exports, which Torero reportedly said could lead to an overall decrease in trade and a subsequent decline in food production.

“Trade barriers will create extreme volatility,” warned Torero. “[They] will make the situation worse. That’s what we observe in food crises.”

Another measure that could threaten the world’s food supply is that nations have issued stay-at-home orders at varying levels of enforcement. If agriculture workers are legally unable to harvest crops, it could cause a lapse in food flow.

“Coronavirus is affecting the labour force and the logistical problems are becoming very important,” said Torero.

“We need to have policies in place so the labour force can keep doing their job. Protect people too, but we need the labour force. Major countries have yet to implement these sorts of policies to ensure that food can keep moving.”

One thing is clear, there certainly are supply chain disruptions going on within the food industry globally, the question is, how bad will it get?

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