How will our supply chain weather the pandemic?

In the first weeks of the pandemic, stores resembled a doomsday scene, with shelves picked clean by panicked consumers rushing to stockpile essentials. For Canadians used to buying whatever they want when they want it, empty shelves were a shocking new reality.

Thankfully, experts who insisted we weren’t going to run out of pasta and toilet paper were right: the supply chain is catching up and products are becoming more readily available (although, as of early May, many baking enthusiasts are still hard-pressed to find yeast and baking powder). However, while the supply chain has so far proven resilient, new challenges are emerging.

Let’s start with the farm. Every year, Canada’s agriculture sector hires about 60,000 temporary foreign workers, who take on tasks from planting to harvesting. Under new federal rules, migrant workers must self-isolate for 14 days upon arrival in Canada. “Right now is the time they’ve got to prepare the harvest season, and if these workers are not involved, that means farmers are missing out on an opportunity to get the prep work done,” says Amar Singh, principal analyst at Kantar Consulting. In many cases, when the workers are out of isolation, it will be too late for them to harvest. “So there will be a lot of crops that will not be harvested to their full yield.”

On top of that, there’s the threat of COVID-19 spreading to farms and processing plants. In late April, for example, more than 40 migrant workers at a greenhouse facility in Chatham-Kent, Ont. tested positive for the virus. “There are a lot of crops that are processed at the farm, and with sick workers and social distancing measures, the production of crops is going to slow down,” says Singh.

Some meat-processing plants, where employees work in close quarters, are being hit hard. In April, Cargill temporarily closed its beef-processing plant in High River, Alta., after 350 cases of COVID-19 were linked to the plant. There have also been more than 150 cases among employees at the JBS processing plant in Brooks, Alta., which has gone down to one shift.

Singh says it’s hard to say if and when Canada’s grocery retailers will have product shortages, as it depends on the category and how long COVID-19 lingers. “If this continues the way we are right now, we will definitely see the shortages in the supply chain and at grocery stores,” he says. “Some SKUs will not be available and very basic groceries will be hitting the shelves—not the differentiated products we’re so used to.” And if the country is able to contain the virus in a shorter time frame? “We will definitely see some product shortages in the short run, but it will even itself out by the end of the year,” says Singh.

How prepared companies and supply chains are depends on a number of factors, says Giovani J.C. da Silveira, professor of operations and supply chain management at the Haskayne School of Business, University of Calgary. Those include the level of safety stocks or spare capacity before the crisis; the level of automation; having multiple suppliers; and the level of co-ordination, information exchange and integration across the supply chain.

But by and large, “no supply chain has been built to withstand such a level of crisis and disruption,” says da Silveira. “It would be extremely costly to do that. The solutions would be increasing inventory to a much greater level and developing local domestic supply chains, which tend to be more expensive. And who is going to pay for that cost? The consumer.”

However, aside from the current challenges in the meat-processing sector, da Silveira says the industry appears to be doing quite well. “Apart from the purely irrational craziness that happened [with panic-buying], we don’t see any great shortages of food.”

Sylvain Charlebois, senior director at Agri-Food Analytics Lab Faculty of Agriculture at Dalhousie University, isn’t concerned about food shortages, either. He believes the biggest impact of COVID-related supply chain issues will be higher costs to consumers.

“Physical distancing [at farms and plants] will impact everything throughout the entire supply chain,” he says. “It will cost more to produce, process and distribute food. And Canadians will have to be ready for that over time.”

This article appeared in Canadian Grocer‘s May 2020 issue.