Come Into the Light

July 29, 2021
In his monthly column, Senior Editor Pan Demetrakakes talks about how the end of the pandemic will require some tough decisions for the food and beverage industry.

The country is emerging from the pandemic, blinking and groping like someone stumbling out of a dark prison into the sunlight. And like that prisoner, making its way forward semi-blindly.

It’s too soon to declare the pandemic over. There are too many uncertainties, especially since so many American adults are refusing the COVID vaccine (egged on by a pack of unforgivably irresponsible politicians and journalists). But the end is in sight, which means the food and beverage industry has a course forward to plot.

There are bound to be some obstacles along that course. A few of the more obvious are:

Unkinking the supply chain. If there’s one thing the pandemic showed us, it’s that the just-in-time model has flaws. The massive shift in demand from foodservice to retail caught many processors, distributors and retailers utterly flat-footed, leading to empty supermarket shelves.

The pandemic “exposed a food system that was rigid, consolidated, and fragile,” in the words of U.S. Agriculture Secretary Tom Vilsack. The “consolidated” part especially applied to the meat and poultry sector, where COVID infections shut down mega-plants and disrupted supplies. Encouraging smaller meat-processing operations, through loans and other incentives, would be a good start.

As for the “rigid” part, a good remedy would be to keep doing what many food retailers were forced to do in the pandemic’s early stages with their partners up the supply chain: talk. Many large supermarket chains depend on software to do their purchasing, and thinking, for them when it comes to ordering supplies. Those algorithms worked fine in normal times, but went kablooey as soon as people started panic-buying. Retailers found themselves having to get on the phone and actually talk to processors and distributors about what they needed and how hard it might be to get. Let’s hope those lines of communication stay open.

Dealing with inflation. As the economy starts picking back up, so do prices. Food prices increased 2.2% year-over-year in May, with larger increases for milk, pork, produce and other commodities. The prices of transportation, packaging materials and other goods and services needed by industry are also going up.

For processors, this leads to the eternal question of how much of the price increases to absorb and how much to pass on. That in turn depends on how long inflation will last. Is it due merely to a temporarily heated economy, as maskless consumers pour out of their homes, roaring with pent-up energy and pockets bulging with cash? Or will it last longer?

Some processors are already engaging in strategic product downsizing, i.e., making packages smaller while keeping the price the same. That’s a gamble, and not only because consumers might notice. Retooling for smaller packages is a major endeavor that shouldn’t be undertaken unless those packages are going to be around for a while.

Dealing with labor shortages. Labor had been a problem before the pandemic, and like many problems, it got worse. Food plants, especially in rural areas, became epicenters of infection. According to the Food & Environment Reporting Network, more than 1,400 U.S. food processing plants had COVID cases. People were just plain scared to come to work.

The industry dealt with this mostly effectively, in both sentimental and practical terms. The latter included bonus pay, sick leave at full pay and such protective measures as were available. There also was a lot of feel-good advertising and general rhetoric about how these “front-line heroes” were appreciated.

But that won’t be enough in the long term. The industry will have to commit to continuing improvement in employee relations, no less than it does to improving operational efficiency. In fact, you could argue that the former is a crucial aspect of the latter. The basics would be good pay and a general sense that employees are more than pieces of equipment.

Preparing for another pandemic. No one wants to think about this, but the horrible possibility exists that COVID will not be a once-in-a-lifetime event. Even if the vaccines are able to squelch the Delta and other variants of the current virus, who can say if there’s another one coming?

Preparing for it will involve nothing less than a reconfiguring of the standard factory model to allow for more distance between workers. This will almost certainly require cutting-edge automation and material handling technology, as well as more overall space. Whether, and how much, to invest in all this will be one of the hardest long-term questions facing the industry.

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