Food Sector Faces Multipronged Consequences of COVID-19 Outbreak - Global Trade Magazine
  April 20th, 2020 | Written by

Food Sector Faces Multipronged Consequences of COVID-19 Outbreak

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  • Fast and effective measures are required to mitigate the effects of the pandemic on the vulnerable food supply chain.  
  • Aquaculture and agriculture sectors are among the most adversely affected by the pandemic.
  • Nutritious and diverse food sources are in short supply in the wake of the global health crisis.

Brick and mortar, as well as online food chains, are facing the wrath of the current COVID-19 outbreak. The worldwide supply chain includes distribution, packaging, as well as sourcing of raw materials. Lockdowns are disrupting the transportation of packaged foods, prepared foods, non-alcoholic and alcoholic beverages. Before the pandemic, the major growth drivers were growing consumption of ready-to-eat convenience foods among on-the-go consumers.

Shifting lifestyle patterns, rising per capita income, and a growing population have been the prominent growth-enhancing factors associated with the food sector prior to the outbreak. However, shutdowns of restaurants and quick service facilities due to lockdowns have hindered the growth of the food & beverage industry to a large extent.

Online Food Orders Surge as Offline Food Chains Struggle to Cope with COVID-19

In view of the dual nature of the food industry, the impact of COVID-19 is multifaceted on online and offline food chains. The offline food chain comprises of cafes and restaurants that have been shut down across the globe. However, online food deliveries remain operational in most of the regions. The packaged food industry, in particular, is witnessing prolific demand for milk products and shelf-stable foods. As consumers hurry to fill their pantries, the demand is projected to surge even further. Almost every region of the world has been affected by the coronavirus crisis, namely, Asia Pacific, Europe, North America, and the rest of the world. An example of how supply chains were gravely affected is derived from Coca Cola Co.

The carbonated beverage giant, sources raw material from China where the outbreak surfaced in early December of 2019. During the initial days of the pandemic, the company faced a great deal of difficulty in managing the frontend of its supply chain. The production, supply, and export of raw materials from China were delayed due to which the company now solely relies on its suppliers in the US for sourcing sucralose. The major companies in the food & beverages industry affected by coronavirus outbreak include Subway Restaurants Inc., Starbucks Corp., PepsiCo Inc., Papa John’s International Inc., McDonald’s Corp., KFC Corp., International Dairy Queen Inc., Dunkin’ Donuts LLC, Domino’s Pizza, Inc., and Burger King Corp. For instance, Starbucks had to shut down about 2,000 outlets in mainland China after the pandemic began to spread like wildfire.

Livelihoods and Lives at Risk from COVID-19 Pandemic

The looming food crisis amid trade disruptions, quarantines, and border closures continues to endanger both livelihoods and lives worldwide. The huge imbalance between supply and demand resulted from economic shock in the midst of the widespread shutdown of businesses. The uncertainty surrounding the eventual retreat of the COVID-19 pandemic is adding to the crisis. Fast and effective measures are required to mitigate the effects of the pandemic on the vulnerable food supply chain.

Nutritious and diverse food sources are in short supply in the wake of the global health crisis. Furthermore, greater food insecurity is prevalent in regions hit hard by COVID-19 such as Spain, Italy, and the US. However, there is still the need for anyone to panic about the food crisis as the world has adequate stock of it. The only problem is making it accessible to every section of the society amid strict lockdown.

What Has the World Learned from History?

The 2007-2008 food crisis offered the world some important lessons which can be utilized to avoid letting a health crisis turn into an indispensable food crisis. Policymakers worldwide are intent on not repeating their mistakes of the past. As the measures tighten around the pandemic, it will be even more challenging to prevent the downfall of the global food system. Logistics bottlenecks are a major challenge facing the globe at present. The global food industry is certainly strained in terms of transport and accessibility.

So far food supply has been sufficient thereby disruptions have been minimal. However, the production of high-value commodities such as vegetables and fruits has declined. Hence, governments, especially in India, aim to restart the agriculture activities in parts during the harvest season.

What Does the Immediate Future Hold for Food Sector?

The food supply chain disruption is expected to continue through at least May 2020 as new cases of COVID-19 continue to rise. Movement restrictions will continue for at least two more months in various parts of world, which is why minimizing bottlenecks will remain crucial for major manufacturers in the food industry. Agricultural production, on the other hand, will be affected by a shortage of veterinary medicines, fertilizers, and other inputs. Moreover, demand for seafood products and fresh produce will continue to decline in view of less grocery shopping and closure of restaurants. In particular, aquaculture and agriculture sectors are among the most adversely affected by the pandemic. Canned seafood and other frozen food products will be on the other hand in demand. The suspension of school meals in emerging nations in India is another area facing the brunt of the COVID-19 outbreak.

One thing is certain: the poorest sections of the society including the migrant workers will be the worst affected by the pandemic. In India, migrant workers are terrified of dying from hunger even before the pandemic can strike. Feeding millions of poor families is a daunting task being faced by the government of India. Individuals continue to contribute their part to help the vulnerable ones. However, feeding them every day requires uninterrupted production and supply of essential food items. The food sector in developing nations will thus certainly face greater strain over the entire system in the foreseeable future.

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Nandini is a senior research consultant working with Future Market Insights (FMI), a global market research and consulting firm. She has been serving clients across Food & Beverages, Pharma, and Chemical domains. Currently leading FMI’s Food & Beverages division, Nandini handles research projects in various sub-sectors, viz. Food Ingredients, Food Innovation, and Beverages. The insights presented in this article are based on FMI’s research findings on Impact of COVID-19 on Food Sector Industry of Future Market Insights