These last few weeks I have been educating myself about the impact that a pandemic like the coronavirus can cause to the food supply chain. Normally I position myself on the side of the supply chain that formulates questions and analyzes outcomes in order to help others to carry on with their operations in the most optimum way possible, so I always need to go to the source to measure, analyze and evaluate all possible scenarios.
There have been numerous interviews across different media sources with directors of food cooperatives, fresh food shows organizers, directors of retailer organizations and other subject matter experts to gain an understanding into (1) what is going on (2) how the whole supply chain is reacting to the coronavirus and (3) where we are heading to after Coronavirus. Here is some of the information I would like to share as I think it can shed some light into the situation.
What are the challenges we have?
It is impossible to understand current food supply chain challenges without considering both ends of the chain, namely the producers and retailers, as this is where many of the challenges can be sourced and / or solved.
Both Spain and Italy continue to be the biggest producers of fresh fruit and vegetables (FFV) in the EU, and the first exporter of fruit and vegetables in the world. In Spain there are currently no issues with supplies. Produce is arriving to stores in a regular and controlled manner and it is still possible to maintain most of the FFV exports to the rest of the EU and other continents.
In fact, some seasonal productions and harvests are already finished, for example the olives are already transformed into oil. However, the challenge will come shortly when some of the crops will be ready to harvest and we will be short of human resources. This will be due to the restrictions on mobility where field workers will not be able to reach the fields the crops are situated due to transportation issues.
I learned recently from an online webinar ("Agrifood Beats Coronavirus") organized by Smart Agrifood that 160K people are needed for the harvest of berries and there are already initiatives in place to connect growers and workers to ensure this will not be impacted. I also asked some of the people I know in Almeria - an area we call the orchard of Spain - and they assured me that there is no problem with field labor, which is comforting to hear.
Farmers and field workers are not only planning on harvesting berries and asparagus and other produce in the next few weeks they are working today to feed us in 3 - 4 months and plan to continue into the next few years.
In the meantime, farmers are fighting the coronavirus using their pesticides machines for disinfection and distilleries are producing sanitizing gels.
The industry is experiencing a peak of work caused by the high demand for produce, first from customers and consequently from stores. There is a shift in preferences from high added value products to more high turnover products. The sector is prepared to meet the demands of this peak which is supposed to be temporary since it is expected that the customers return to normality (previous) behavior.
This sector can absorb the peak demand about to be placed on the supply chain since by default the production of fresh fruit and vegetables does not work on demand , it produces the products as they become ready irrespective of overproduction challenges and this over production often covers for major chain inefficiencies
One of the current major challenges for the sector is that some of the usual product channels and customers are now closed or went to minimum work, such the HORECA (hotels, restaurants and cafeterias) sector, which represents about the 20% of the food consumer spending. However some of the industries keep the same amount of production in fact there is a peak on distribution and exports.
To accommodate these sectoral losses there has been a product re-routing where product that is no longer needed in the HORECA sector has now been diverted to retail and the consumer shopping cart since now we are all advised to remain at home. To date it is not clear if we are over stocking at home or using more food these days. But at some point, it is expected to return to normality.
I find very interesting the situation surrounding “home deliveries” and “click and collect” services. It has been reported that some are suffering, and others have collapsed. Some retail stores decided to stop home delivery services and decided to put all their effort on in-store shopping since the craziness and increased influx to the stores from the first weeks of quarantine. However, there are customers that prefer or need home deliveries.
Before the coronavirus outbreak started, home deliveries were growing slowly in Spain and the systems in place to fulfill these orders was not ready to absorb the current demand but, as with all systems, the market is gradually adapting to it. It is true however that the offer is very segmented and now the demand is especially concentrated on supermarkets, leaving local markets in lower positions of preference for customers.
Now some stores have derived resources to fulfil the home deliveries and click and collect orders. My father in law was telling me that the person that used to assist him in the sports - golf department was now handling him groceries. Similarly, a friend that creates a furniture catalog and ordinarily visits factories around the globe for the store department is now walking the aisles fulfilling the grocery orders.
We really need to rethink the supply chain of food; I feel it is important to have a dedicated spaces or storages just for home deliveries.
Also, while we have all been assured that the effects of the coronavirus pandemic are temporary we must be vigilant and recognize the reality that we must always must remain in control of our supply chains and be prepared to adapt them as a moment’s notice to our new - unknown normality.