The COVID-19 pandemic is the major story of 2020 and the crisis is not going away any time soon. Despite some countries are starting to ease lock-downs and restart their economies there is real uncertainty over the timing of a return to normal life if at all, and the risk of a second wave of infections.
With many countries in lockdown restaurants and pubs are shut leading to a shift from food service to retail. In the US, foodservice sales have fallen by 60%, and fine dining is down by as much as 80%, in Europe, the decline has been even sharper. This has created problems for the red meat sector for example, where demand for high-value cuts has fallen, and an imbalance within the supply chain. The closure of coffee shops has led to an oversupply of milk, which has led to price cuts and in some cases farmers dumping milk. In response, the UK government has relaxed some aspects of competition law to allow farmers to work together to minimize waste and divert milk into the production of other dairy products.
The closure of borders and the disruption to air travel makes it difficult for many farmers to find seasonal labour. UK fruit and vegetable producers are very concerned about the availability of seasonal labour, despite campaigns to encourage furloughed workers to help out, this is likely to be a real issue over the Summer period. The pandemic had also led to the closure of many food processing facilities. In the US thousands of workers have reported ill leading to disruption to the meat supply chain. Meat processing is particularly vulnerable to the virus due to the fact that much of the work is conducted at close quarters. COVID-19 was detected at 115 meat processing plants across 19 U.S. states between April 20 and 27, 2020. There are 130,000 people working in those affected plants and 4,913 of them (3%) tested positive for the COVID-19 during this period and sadly 20 of them died. The availability of seasonal migrant labour is also threatened, in the U.K. despite a “pick for Britain” campaign, there are serious questions over the ability and willingness of UK workers to fill the gap.
The economic fallout will impact demand for agricultural products for some time to come and had hit commodity prices hard. In the longer term, they may also be changed in attitudes to trade, food security, and globalization. The pandemic is prompting long term questions for food and farming with many calling for a rethink on the importance of food security given the disruption to global food and farm supply chains, particularly in light of panic buying of food staples in the early stages of the crisis.
Working practices will change. Homeworking is not an option for many in the food and farm supply chain, and the pandemic will lead to long term changes in employment practices. As companies return to work, employers will need to find new ways of working to reduce the risk of infection spreading in the workplace. This will mean measures to maintain physical distance, use of PPE, and other hygiene measures, it is also likely to drive further investment in automation and robotics in all parts of the food chain.
Although we may never know for sure, China’s infamous wet markets may be the cause of the outbreak and certainly, pressure for regulation and reform of China’s food safety systems will grow. The fallout from the outbreak is likely to impact already deteriorating relations between China and the rest of the World, including trade relations. Australian calls for an investigation into the pandemic has led to retaliatory action against Australian beef and grain exports.
The food and farming sector is not new to the economic impacts of animal disease and is used to dealing with issues of biosecurity, but the current human pandemic is presenting whole new challenges and has major long term consequences for the sector.