The COVID-19 pandemic dramatically altered how people access food in the United States and globally. From empty grocery store shelves to restaurants temporarily closing their doors, and farmers facing surpluses they couldn’t sell, the disruptions were felt across the entire food system. Understanding the intricacies of food chains has become more critical than ever.
To shed light on the workings of our food chains, the pandemic’s impact, and potential future shifts, we consulted with experts from the Department of Agricultural and Resource Economics at NC State University. Dr. Heidi Schweizer, an assistant professor and extension specialist, focuses her research on commodities markets, food chain management, and transportation. Dr. Kelly Zering, a professor and extension specialist, brings expertise in applied research and extension programs, particularly in the economics of pork production and markets. Their insights offer a comprehensive look into this essential system that underpins our daily lives.
Understanding Food Chains: From Farm to Fork
What is a Food Chain?
In its simplest form, a food chain encompasses every step involved in bringing food from its initial conception to the consumer’s table. Dr. Zering explains, “The food chain can be characterized as all the steps that have to happen to get food from concept to consumers − and that turns out to be a pretty complicated set of activities.” He further elaborates on its complexity, describing it as “a coordinated series of business interactions to get all those steps completed.”
These activities are vast and varied, employing millions of individuals across the nation. They include:
- Production: Farming and agriculture – the initial stage of growing crops and raising livestock.
- Transportation: Moving raw agricultural products from farms to processing facilities or markets.
- Processing: Transforming raw agricultural commodities into consumable food products.
- Marketing: Strategies to promote and sell food products to various buyers.
- Packaging: Encasing food products for protection, preservation, and marketing appeal.
- Distribution: Moving packaged food products from processors to wholesalers and retailers.
- Wholesaling: Selling food products in bulk to retailers and foodservice providers.
- Retailing: Selling food products directly to consumers through grocery stores, supermarkets, and other retail outlets.
- Institutional and Restaurant Preparation and Service: Preparing and serving food in restaurants, cafeterias, and institutions.
Dr. Zering uses a compelling analogy to further illustrate the concept: “Another analogy for the food chain would be a pipeline. We think about a pipeline having a certain capacity, a diameter that stuff can move through, and maybe having some bottlenecks or choke points that further limit capacity and throughput. There’s a time and space aspect of a pipeline. When you put something in one end of the pipeline it takes time for it to cover the physical distance to the endpoint.” This pipeline imagery helps visualize the flow and interconnectedness of the various stages within the food chain.
Seasonality and Storage in Food Chains
Dr. Schweizer highlights a unique characteristic of agricultural food chains: seasonality. “Agricultural supply chains are interesting to study because they are seasonal. Depending on the product, it may not constantly be moving through the food chain.” This seasonality introduces complexities in managing supply and demand throughout the year.
To ensure year-round availability of seasonal products, storage becomes a critical component of the food chain. “At some point in that process it might stop and be held in storage so that we can consume the product year-round.” Furthermore, global sourcing plays a role in mitigating seasonality, with imports from different regions complementing domestic production. “Or it might be that during winter we get certain things from South America and during summer we get certain things from domestic sources.” This global interconnectedness enhances the resilience of our food chains but also introduces dependencies and potential vulnerabilities.
Resilience of Food Chains: Normal Disruptions vs. Global Shocks
Modern food chains are generally designed to be resilient, capable of withstanding and adapting to disruptions. Dr. Schweizer explains, “The way modern supply chains are designed, they can usually handle disruptions pretty well. That would be what we call a resilient supply chain. What that means is if there’s shortages in North Carolina, perhaps due to a hurricane, goods can be rerouted from elsewhere to address that.” This inherent resilience relies on two key factors: effective communication and network redundancy. “For that to happen, there’s a couple of assumptions we have to make. The first assumption is that there’s good communication between each entity along the pipeline and the second is that other places in the network have relatively level or normal activity.”
However, the COVID-19 pandemic presented a unique challenge – a simultaneous global shock to the food chain. “What’s happening now would be perfectly fine if it was just us here in North Carolina that needed more toilet paper, but the system isn’t designed to handle a sudden worldwide increase in toilet paper demand.” This unprecedented surge in demand across the globe overwhelmed the system’s capacity to respond instantaneously.
Dr. Schweizer also points out the limitations in rapidly adjusting food production. “It’s also not easy to make quick shifts in food production. Many agricultural crops are produced once per year. If we’re talking about apples, for example, you have to have an orchard that’s established for years in advance before it starts producing.” This inherent lag in agricultural production means that food chains are not always agile enough to respond immediately to sudden shifts in demand or disruptions.
The Impact of Stockpiling on Food Chains
The phenomenon of stockpiling, driven by consumer anxieties during the pandemic, significantly exacerbated the strain on food chains. Dr. Zering explains how modern systems are optimized for efficiency: “But we went through a shift a decade or two ago to what was called “just in time” production. Built in to the system now is this efficiency where the system is designed to handle, produce and deliver just as much product as consumers need at any point in time. There’s not a lot of surplus because it’s expensive to store things and have big inventories sitting around.” This “just-in-time” approach, while efficient under normal circumstances, becomes vulnerable when faced with demand spikes.
“You have this pipeline that’s running pretty close to capacity most of the time and now you create this global demand spike all of a sudden where everybody wants to buy not one or two weeks’ worth, but a month’s worth of products – and the pipeline may only have one week’s worth of product close to consumers at that point.” Consumer stockpiling creates an artificial surge in demand that the food chain is not designed to handle instantaneously, leading to temporary shortages and empty shelves. “Consumers overwhelm the system by trying to buy several times as much of a product as would normally be consumed in a period of time. That’s the stockpiling or hoarding impact.”
Shifting Demand Channels: Restaurants and Retail
While retail demand surged due to stockpiling, another sector of the food chain experienced a dramatic demand collapse: restaurants. Dr. Zering notes, “In another market channel, demand has collapsed. The demand for sit-down restaurant meals has collapsed because of social distancing. Now restaurants have a surplus of their raw materials. Their pipeline is delivering supplies, and they have no customers to buy them.” This sudden shift created imbalances within the food chain, with surpluses in the foodservice sector and shortages in retail.
Restaurants, in response, demonstrated remarkable adaptability by pivoting to new business models. “To maintain some income and sustain their business, they’re changing the way they sell their product. That’s one adjustment that can offset some of the shortages caused by stockpiling. It alleviates some of the disequilibrium that we have.” Examples include restaurants selling raw ingredients directly to consumers, meal kits, and expanding takeout and delivery services. However, Dr. Schweizer points out that these shifts are not seamless. “Restaurants, in particular, are adapting to make things work in the current situation. Those particular supply chains aren’t really optimized for consuming food at home.” The food chain for restaurants is distinct from retail, requiring adjustments in packaging, distribution, and product formats to cater to home consumption.
Bottlenecks and Disruptions: Meat Supply Chain Example
The meat supply chain faced unique challenges during the pandemic, highlighting vulnerabilities in processing capacity. Dr. Zering explains, “In the past few weeks, another effect of the disease emerged. The disease is causing disruptive shocks or volatility in some supply chains. Worker illness is causing temporary shutdown of large processing plants and reduced capacity in others.” These processing plant closures created bottlenecks in the food chain, disrupting the flow of meat products.
The consequences were felt across the entire meat food chain. “We see farm level prices dropping and cases of farmers having no place to deliver market ready animals or milk. At the same time, processors are warning of potential shortages of retail products and rising retail prices if processing capacity is not restored quickly.” Farmers faced the difficult situation of having market-ready livestock but nowhere to send them for processing, while consumers experienced potential meat shortages and price increases at grocery stores. This disruption vividly illustrates how bottlenecks at critical points in the food chain can have cascading effects.
Dr. Schweizer suggests potential short-term adjustments to alleviate processing bottlenecks. “Given the resources available in the short term, one of the only ways to increase throughput is to do less processing. Meat packaging is labor intensive, and with some facilities closed and less employees at each facility processors may have to do fewer value-added activities in order to get meat to consumers quicker.” This could involve simplifying product offerings, such as selling more whole chickens or turkeys instead of further processed cuts. However, some processing steps, like milk pasteurization, are non-negotiable for food safety. The meat industry’s challenges underscored the fragility of concentrated processing infrastructure within the food chain.
Local Food Chains and Traceability
The pandemic has sparked renewed consumer interest in the origin and traceability of their food. Dr. Schweizer observes, “Food traceability is important because of food safety, but it’s actually become a marketing tool as well. It’s not just for the direct-to-consumer folks.” Consumers are increasingly seeking transparency in food chains, wanting to know where their food comes from and how it is produced.
While traceability is important for food safety and marketing, its impact on shifting consumer behavior towards local food chains is still evolving. “I agree it’s a trend that people are starting to show greater interest in where their food comes from, but I don’t know if that necessarily means more direct-to-consumer sales or not.” Dr. Zering highlights innovative initiatives that emerged during the pandemic to connect local farmers and consumers directly. “For example, there’s the MeatSuite.com online marketplace launched by NC Choices… It enables local farmers and meat consumers to find each other and sell products.” These direct-to-consumer channels can offer resilience and transparency, potentially strengthening local food chains.
Technology and Data in Modern Food Chains
Technology and data play an increasingly vital role in optimizing and enhancing the resilience of modern food chains. Dr. Schweizer notes the advanced data analytics employed by large retailers like Amazon, Walmart, and Target. “One thing they might do is put in stricter requirements for their suppliers to share information with them, which they were already starting to do but now they have more urgency. Larger companies are getting real-time data via QR codes or RFID chips or whatever. It’s collected passively. It’s really a lot of data, but retailers have big data experts that work with that.”
Real-time data and predictive analytics enable these companies to anticipate demand fluctuations, optimize inventory management, and streamline logistics within their food chains. This technological sophistication contributes to efficiency and responsiveness under normal conditions. However, the pandemic highlighted the limitations of even these advanced systems when faced with unprecedented and unpredictable demand shifts. The future of food chain resilience will likely involve further leveraging technology for enhanced data visibility, predictive capabilities, and agile adaptation.
Long-Term Changes and Future of Food Chains
Looking ahead, the experts anticipate lasting changes in consumer behavior and food chain strategies. Dr. Zering believes the pandemic may accelerate existing trends. “We were already in a transition away from traditional retail distribution toward more online shopping and home delivery of goods and services. … Maybe this will be a hard reset for the way we do some things. It might be a sudden shift to more online shopping and home delivery because more people are trying it now or relying on it more now than they did in the past.” This shift towards online food retail could reshape distribution networks and consumer access to food.
Supply chain resilience will likely become a paramount focus for businesses. “I think companies in the supply chain will be looking at ways to add more resilience to their supply of resources and the way they provide products to customers.” This may involve diversifying sourcing, increasing storage capacity, and investing in more flexible and adaptable processing and distribution systems. Dr. Zering reassures consumers about the long-term outlook for food availability. “One thing I would say to reassure people is that the reason the shelves were empty is because of stockpiling rather than lack of availability. … I think supply chains are adapting. They are restocking shelves and will keep restocking them and eventually we can get back to more normal consumption patterns.”
However, Dr. Schweizer raises a crucial concern about food access and affordability in the face of economic hardship. “There will continue to be food available but perhaps not the selection we’re used to. A larger concern in my mind is how economic hardship will affect consumers’ ability to purchase food. Job loss and income reduction will certainly increase food insecurity.” Economic factors and food security are inextricably linked to the functioning of food chains, and addressing food insecurity will require multifaceted solutions.
In conclusion, the COVID-19 pandemic served as a stress test for our intricate food chains, revealing both their resilience and vulnerabilities. Understanding the complexities of these systems, from farm to fork, is essential for building more robust, adaptable, and equitable food chains for the future. As we move forward, continued innovation, strategic investments, and a focus on resilience will be critical to ensuring a stable and accessible food supply for all.
