Supply chains and COVID-19: which food and drinks groups are impacted and how?
31 March 2020
Supermarket shelves continue to restock but several food and drink sectors are feeling the impact of Covid-19.
Having to deal with seasonality each year, the industry has cutting-edge forecasting tools, agile distribution and reliable transportation.
However, its main vulnerability is a reliance on skilled and healthy labour.
Sarah Malone, exports policy manager at the Food and Drink Federation (FDF), told the Daily Update:
“With staff absenteeism on the rise and concern over border issues impacting supply chains mounting, these are challenging times for food and drink exporters.”
As well as labour shortages, research from the FDF shows “fluctuations in the exchange rate are making immediate trading conditions difficult, while access to certain imports of ingredients and raw materials are similarly impacted”.
Here, we present national media reports on how food and drink sectors are faring:
Fruit and veg
Farm workers have been declared ‘key workers’ by Government but the UK relies on cheap labour from poorer countries to pick and pack its harvest of fruit and veg, The Guardian reports.
The work is unpopular with British citizens as it is low-paying, physically demanding and occurs at difficult hours.
With international labour flows constricted, the UK needs to find around 90,000 growers within a period of weeks.
(Source: The Guardian)
Demand for healthy drinks like orange juice is spiking, with future prices set to increase by 20%, the BBC reports.
Yields of oranges will not be affected, but producers need healthy workers to pick and transport them.
With oranges needing to travel by sea to the UK, slowing shipping lanes are already seeing supply struggling to keep up with demand.
Pasta is now a much in-demand commodity, with sales up 168 percent in the second week of March year-on-year, according to the Financial Times.
For most pasta eaten in the UK, wheat is shipped from Canada and processed in Italy before being transported to wholesale distributors in the UK.
At present, Italy’s factories are running at full capacity compared with the usual 75 per cent, despite a 12-15 percent decline in workforce.
Were port workers in the UK and Europe to fall sick or shipping lines across the Channel to slow, pasta may become more difficult to come by.
(Source: The Financial Times)
Meat and animal sales are already taking a hit, with sheep trade prices down by £1kg per liveweight and live animal transport coming under scrutiny.
Under EU regulations, animals should not travel for more than eight hours without being rested, due to animal welfare and disease transmission concerns, but many roads in Europe have become gridlocked as borders have closed.
Slaughterhouses are also under pressure as they are “largely dependent on human labour”, according to Adam Speck, a senior commodity analyst with HIS Markit’s Agribusiness Intelligence.
(Sources: The Guardian and Farming UK)