Omicron Poised to Hammer Food Industry

Jan. 7, 2022
The omicron variant of the COVID virus will cause further severe disruptions of the food supply chain, some of which have already started.

The omicron variant of the COVID virus will cause further severe disruptions of the food supply chain, some of which have already started, according to observers up and down the chain.

Increased infections are affecting everything from farm laborers to retail employees. Processors are getting hit hard also. More employees of Conagra Brands are testing positive for COVID, affecting its operations from receiving through shipping and keeping service below pre-pandemic levels, CEO Sean Connolly told investors in a recent earnings call.

“It’s entirely reasonable for all of us to project that the next month or so could remain strained within the supply chain as omicron runs its course,” Connolly said.

Meat production, which has been affected by COVID more severely than any other major food sector, is showing the first signs of a possible slowdown: hog slaughter the week of Jan. 3-7 was down 5.5% from the same week last year, and cattle slaughter down 3.6%. In addition, more USDA inspectors are calling in sick. “Omicron is nailing us,” the head of an inspectors’ labor council told Bloomberg.

Ken Goldman, an analyst for JP Morgan, said in a note quoted in the Wall Street Journal that a surge in infections caused by omicron could make it harder for food companies to fill orders in January.

“The entire food-at-home supply chain is being impaired by deeper labor shortages than anticipated — this much seems clear to us — and it’s only a question of how bad the impact is,” Goldman said.

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