Food supply chains may be surprisingly resilient to COVID-19 impact

Food supply chains may be surprisingly resilient to COVID-19 impact (Photo: Shutterstock)

With most of the country locked indoors amidst the COVID-19 crisis, food supply chains have continued to function largely unhindered, even if there exists no semblance of normalcy in their operations. However, for food supply chains to remain healthy, it is critical to ensure produce gets harvested on time – a major concern considering the labor shortage challenges that have gripped the market. 

“If we look at row crop production, which is done at a large scale, there is typically a big capital investment involved in equipment – be it planting, spraying, harvesting or transportation,” said Arama Kukutai, co-founder and partner at ag-tech investment firm Finistere Ventures. “These are crops like leafy greens, tomatoes and potatoes, that are planted at a million-acre scale. Cultivation of row crops is not going to be affected by the COVID-19 crisis, because it involves relatively less human labor.”

However, high-value specialized crops like spaghetti squash or broccoli crowns cannot be cultivated on an industrial scale, as is the case with row crops. Here, manual labor is intensive all the way from seed to harvest, making it hard for farm owners, as social distancing rules and lockdowns have drastically reduced the available farm workforce. 

“It’s clear that one of the factors will be labor availability versus automation. From a technology standpoint, one of the things we’ve tracked for a while is about automating and digitalizing the farm,” said Kukutai. “Digitalization can help farmers manage their environmental, biological and labor components more efficiently. Technology like remote sensing and satellite drones give in-the-cloud analysis to the farmer; that helps them with anything from plotting field boundaries to figuring out pest issues and fertilizer needs.”

For all the destruction it has caused, COVID-19’s biggest impact is the speed at which it dismantles a functioning society. The agriculture market plans produce growing cycles well in advance, with retailers across the U.S. stocked up on seed, fertilizer and other crop inputs, months before the pandemic descended on the country. 

That said, Kukutai contended that all is not dire for farm owners. Farmers are usually socially isolated even under normal circumstances – farms are seldom located in dense localities. For row crop farmers with massive acreage and limited reliance on human workers, the pandemic may be a lesser concern. 

“I think the impact of COVID-19 on this year’s crop production will be relatively modest in terms of total supply, as long as the pandemic dies down in a while. And if we can get the 2020 crop in, I would certainly think we will have no issues with 2021 for the major row crops,” said Kukutai. 

The other part of the equation is the livestock-rearing segment. While certain systems like broiler chicken and egg production are quite automated, free-range feed type systems are much  more dependent on manual labor. Kukutai explained that dairy and meat producers are struggling, and will require government support to keep them afloat. Though supply is strained, meat products like beef, pork and chicken remain in high demand, as they can be frozen and stored longer than fresh produce. 

“The overarching downside to this lockdown is that it will bring in a lasting change to the way consumers consume,” said Kukutai. “This is because ecommerce channels, food delivery companies, and even supermarkets are now doing a lot more home deliveries. We are going to see a group of consumers who adopt this post-coronavirus, especially younger consumers. These are long-lasting effects that will have a big impact on the food supply chain.”

Post-crisis, consumers might also look at locally grown produce more favorably than produce that has been sourced from a different part of the world – due to the lack of transparency and provenance tracking in global supply chains. 

“How will consumers react to product lines that don’t have high traceability features? I personally think those products will either go away or they’ll be traded at absolute rock bottom prices relative to products that can show traceability,” said Kukutai. “Big players like Walmart and Smithfield have been working on supply chain transparency initiatives for a long time, and I think COVID-19 will accelerate investment in enabling those technologies faster.”