Update | The Impact of COVID-19 on the Food Industry

In our previous article we discussed some of the initial effects of the COVID-19 virus on the food industry. In short, most of Europe’s consumer behavior is classified as “restricted living” by a Nielsen investigation. Common behavior indicators here include severely restricted shopping trips, price concerns as limited stock availability impacts pricing in some cases. Common COVID-19 indicators include restaurant closures and restrictions on small gatherings. Furthermore, with the closing of restaurants, alternatives like home delivery is booming together with the retail industry as consumers display hoarding behavior out of uncertainty. While the food industry remains a crucial sector, the pandemic caused a noticeable shift and effect that food businesses have to deal with while ensuring they can continue daily operations.

Pressure on the supply chain

The supply chains of food sectors and organizations are often a complex and international cooperation between producers, growers, processors, storage, transporters and more. While the COVID-19 virus is continuing to spread new and established measures are enforced to prevent to further escalation.

Currently, disruptions still seem minimal as food supply remains adequate and markets relatively stable but the food supply chain will continue to be tested for the coming time. Worldwide cereal stocks are at adequate levels together with a positive forecast for 2020 for wheat and other major staple crops. Implications in the fishery sector can vary and become quite complex. As for wild-capture fisheries, the collapse in the market together with the difficult to abide sanitary measures hinder fishing vessels to operate. This can generate a domino effect across the value chain.

Fluctuation in prices

Furthermore, logistical issues such as restriction in transportation, border closures and reduced demand from the hospitality sector cause significant market changes, which in return can affect prices. Although a spike in prices is not expected in major staples, like rice, corn and wheat, due to the supply, stock and production that is more capital-intensive, other high value commodities like meat and fish are more likely to be subject to a spike in prices.

Logistical issues put further pressure supply chain

At this moment, challenges related to reduced access to animal feed and capacity of slaughterhouses due to logistical constraints and labor shortages could lead to disruptions in the food supply chain. As mentioned in our fresh produce article, logistical issues like slowed down transportation at borders are particularly damaging for the fresh produce sector as it can lead to increased food waste. Similarly, fresh fish also needs to be sold, processed or stored in a relatively short time to avoid this. A shortage in labor, similar to fresh produce, can also start to disrupt other labor-intensive industries like fishing.