October 15, 2021
The story of the pandemic’s impact on food, beverage and agriculture has been one of disruptions to the intertwined systems of supply chains, food prices and the workforce. The most influential voices helped to explain how the industry is scrambling and adapting:
- Food prices rise due to multiple factors.
- Worker issues strain the food system.
- “Beleaguered” and “woeful” increasingly describe the supply chain.
Pandemic-driven supply chain issues, unprecedented weather, erratic international trade and worker shortages are all conspiring to drive up food prices around the world.
- Food Ingredients First reported on the FAO Worldwide Food Price Index and its continued rise through September, up 1.2% from August and 32.8% higher than a year ago.
- Stateside, Wall Street Journal reporter Jesse Newman summarized how major manufacturers like PepsiCo and Lamb Weston are “boosting prices as they contend with escalating costs, and labor and transportation problems that are hampering the flow of staples to grocery-store shelves.”
- Kraft Heinz CEO Miguel Patricio explained to the BBC how sourcing raw materials internationally is affecting prices: “As economies have restarted, the supply of these products hasn’t been able to keep up with returning demand, leading to higher prices. Higher wages and energy prices have also added to the burden for manufacturers.”
- Reuters’ Tom Polansek looked at the organic commodities market, which is experiencing record prices for soybeans and other feed for livestock. Organic chicken producer Bell + Evans had to raise prices amid this “madhouse” market.
- Food industry financial analyst Anne-Marie Roerink of 210 Analytics posted commentary on her LinkedIn page about IRI data that indicated a 6% increase across all food items. Meat prices increased 11% because of supply chain issues.
- USA Today outlined money-saving tips for consumers, and reflected on Consumer Price Index numbers that indicate the most inflation in 13 years.
Where Are the Workers?
Workers across the country have had enough. The pandemic forced many essential workers to reflect on their jobs — the long hours, the low pay and the added threat of COVID-19 — and take up the fight for better conditions through strikes or relocation. To retain employees and attract new ones in a competitive market, some companies are now increasing pay and benefits.
- The number of striking workers (or soon-to-be) is astonishing — including 1,400 workers at four Kellog’s plants and 10,000 John Deere workers, the Intelligencer summarized.
- Barron’s reflected on the Deere strike: “Experts say these strikes portend a coming wave of labor action as workers have gained more leverage during the pandemic.”
- A Wall Street Journal article examined what’s behind a 4.3 million worker shortage, and explained how a Connecticut cafe owner scrambling for employees had to cut operating hours, raise employee pay and increase menu prices.
- With finding workers so challenging, some are turning to technology. Jamba and Blendid announced the opening of their second autonomous robotic mall kiosk that delivers contactless, customized smoothies.
- Some restaurant workers have left the industry and aren’t looking back. Eater discovered that forced time off and unemployment benefits gave these workers time to reflect and reevaluate their lives, with many turning to their other skills for employment and a healthier work-life balance.
- As a thank you to its team members, Target will increase wages by $2 per hour during the busy holiday season, detailed Supermarket News. Target also is looking to hire 100,000 seasonal team members — but they’ll be competing with Publix, Kroger, Walmart and the rest of the retail sector.
Clogged: Not Just the Ports
Since the pandemic began, new supply chain disruptions seemingly pop up every week. U.S. ports have fallen behind as more ships bring goods from overseas that can’t be offloaded, and worker shortages continue to plague ground transportation, distributors, retail and foodservice sectors.
- The Philadelphia Inquirer covered the unfortunate impacts of supply chain failures on school lunch programs.
- A coalition of 77 commodity groups, led by the U.S. Dairy Export Council and the National Milk Producers Federation, have repeatedly called on the Biden administration to ease port backlogs.
- Reuters writer Lisa Baertlein reported on October 7 that Walmart, Costco and other retailers began chartering their own ships as the Port of Los Angeles logged a record number of container ships waiting to unload.
- On October 13, President Biden announced commitments from labor unions, delivery companies and retailers to operate 24/7 to ease congestion at West Coast ports. “Our goal is not only to get through this immediate bottleneck, but to address the longstanding weaknesses in our transportation supply chain that this pandemic has exposed.”
- Reception of the plan was lukewarm, at best. The Washington Post’s David Lynch cited beleaguered transportation executives: “It’s just window dressing.”
- Consumer Brands Association offered statistics for context. One astounding number: “For every one truck available, there are 16 shipments waiting.” And here we thought highways were already too congested.
“As the COVID-19 pandemic has worn on and supply chain pressures have intensified, we have run out of slack in the system. The labor shortage is driving the majority of issues in the supply chain and the paltry additions today … create an untenable situation for manufacturers.”Geoff Freeman, President and CEO, Consumer Brands Association
Some important points of view worth checking out this weekend.
Why So Salty?
In nutrition news, the FDA published voluntary guidance suggesting that food manufacturers and restaurant chains reduce sodium in packaged foods like condiments, cereals, french fries and potato chips. The recommendation aims to cut average sodium intake by 12% over the next two and a half years. The CDC applauded news of the guidance on Twitter: “[It] could result in tens of thousands fewer cases of heart disease and stroke each year.”
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New York Times tech columnist Shira Ovide examined a growing revenue stream for food delivery apps: paid placements. Ovide worried that the practice may damage the ordering experience: “The trick is striking the right balance between serving the companies that are footing the bill for advertising and the interests of those of us on the receiving end.” That’s basically “Endemic Advertising 101.”
GIS (NYSE) – Buy Buy Buy
Kiplinger’s ESG columnist Ellen Kennedy wrote a positive investor’s review of General Mills, partially because of its long-standing commitments to a sustainable supply chain. On October 8, General Mills issued a $500 million sustainability bond tied to its efforts to combat climate change and reduce GHG emissions. The bond will raise the company’s interest rates if it fails to meet environmental commitments.
What’s Your Ratio?
A rain delay during the Sunday Night Football matchup led to important investigative journalism on the composition of peanut butter and jelly sandwiches. NPR spread the news after Twitter users debated whether 70/30 was an appropriate peanut-butter-to-jelly ratio. But where do players stand on peanut butter and pickle sandwiches?
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