"Supply chain disruptions in the Food Industry from COVID-19 will take years to rebalance. Implications stretch beyond when everyone else reaches a “new normal”.
Owner Radix Strategy
For the Idaho District Export Council | 10 minute read
July 31, 2020
The catalyst for this article was a question that has been asked by much of the general public since virus-related shutdowns began impacting the supply chain: can’t manufacturers just shift their production from foodservice to retail? Aren’t they making up for what they lost in restaurants by what people are buying at the grocery store?
The answer is no – whether it’s toilet paper or food – due to the package size of the products, the way manufacturing lines are engineered, and the broader distribution systems that support each channel. Complexities of the food chain such as perishable raw inputs and highly regulated outputs make the web of decisions particularly more challenging for the food industry and all who supply it.
The international arena
In Idaho, agriculture and food processing combined to generate 28% of the state’s economic output. In the United States, one of every three acres planted is for export. Top Idaho food and agricultural exports include dairy, fresh and processed vegetables (such as french fries), wheat, beef, and feeds such as alfalfa. 1
Agricultural exports are shipped primarily to Canada and Mexico, which combined receive approximately half of Idaho’s total. North Asian countries such as China, South Korea, and Japan also receive a large share –these three countries combined account for almost 20% of the total.
Many companies look to exports to diversify sales and achieve growth targets, often relying on more predictable domestic business to provide a solid foundation for some of the complexities that arise in the international space. With Idaho’s largest economic sectors being technology and advanced manufacturing, and these and other smaller sectors supplying directly or indirectly to the food industry, it makes sense that food and agriculture would be discussed among a meeting of exporters.
Though many of the details presented relate to the U.S. food industry, the effects are amplified globally. Every piece of the food chain has been touched by the current crisis, from the farm to the processor to the retail and restaurant side where consumers begin to see gaps that were not resolved behind the scenes. For food, the rebalancing will continue well beyond when everyone else reaches a “new normal.”
