Coronavirus Impacting Food Supply Chain For Shoppers

Apr 23, 2020

A combination of a change in the supply chain along with panic buying led to empty grocery store shelves the first few weeks of the coronavirus pandemic.
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Shoppers looking for certain groceries like beef or eggs might have had trouble buying those products during the beginning of the coronavirus pandemic. However, the lack of food in aisles is due to a change in the supply chain and not a shortage.

John Anderson is the head of the Agricultural Economics and Agribusiness Department at the University of Arkansas. He says the abrupt closings of restaurants due to the outbreak caused a major shift in where food was delivered.

"We went virtually overnight to no restaurant trade, no food service trade," Anderson said.

According to Anderson, about 40-50% of consumer spending on food is away from home. That shift from restaurants to almost exclusively grocery stores caused disruptions in the food chain.

"That was a big change. It had some market implications. It disrupted prices and still has, but I think more than anything else, it upset the flow of products because things had to change so dramatically in such short order," Anderson said.

Though some products like poultry, beef and other items were in short supply in grocery stores due to panic buying, Anderson says that is not an indication of a food shortage, but was the supply chain moving its product to grocery stores instead of restaurants.

"When you did see not very many eggs in the grocery store, not much meat in the grocery store, it wasn’t that we didn’t have eggs and we didn’t have meat and we didn’t have milk, it was that we didn’t have the supply chain adjusted to send their appropriate volumes to the grocery stores because so much volume had been beamed directly to the food service sector that no longer needed it," Anderson said.

As far as how the coronavirus is impacting the agriculture industry, Anderson says those in the middle of the supply chain, such as in manufacturing are impacted more compared to farmers.

"You have a lot of workers working on a line, sharing a lunchroom, sharing a locker room. The kind of social distancing measures that we need to be taking represent a real disruption there. You have the potential for an outbreak to affect a lot of people," Anderson said.

As far as how this outbreak will effect agriculture on an economic basis, Anderson says one consequence could be a change in how people spend money on food.

"We typically think of food products as being very resilient to economic shocks because people are going to eat. But we saw, if you look back at the 2008 financial crisis for instance, consumers did fairly dramatically reduce their spending on food in that event and it’s not that people stopped eating, it’s that they changed what they ate," Anderson said.