‘People Are Hoarding’: Food Shortages Are The Next Supply-Chain Crunch
(Bloomberg) - In Denver, children in public schools are struggling with milk starvation. One local market in Chicago is running out of canned and packaged items.
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But there is enough to eat. There is simply not always enough processing and transportation capacity to meet growing demand while the economy picks up.
More than a year and a half after the coronavirus pandemic turned daily life upside down, the supply of staple foods in U.S. grocery stores and restaurants is again falling victim to intermittent bottlenecks and delays.
"I never thought we'd be here to talk about supply chain issues in October 2021, but it's a reality," said Vivek Sankaran, CEO of Albertsons Cos., Who echoed complaints from other retailers. "Every day something will be missing in our branches, across all categories."
In Denver, broken parts at the milk supplier's facility affected half-pint cartons being shipped, in addition to disruptions in grain, tortillas, and juice.
"We have had supply chain issues with various items since we started school," said Theresa Hafner, executive director of food services at Denver Public Schools. “It just keeps popping up. It's like playing Whack-a-Mole. "
In Chicago, the Dill Pickle Food Co-op ran out of certain dry goods because their two main distributors haven't shipped full orders in the past few weeks.
"At the start of the pandemic, panic buying was the cause of many of the sell-offs grocers experienced," General Manager I’Talia McCarthy said in an email to the store owners this month. "Although the food industry has been able to recover somewhat, the persistent nature of the pandemic, combined with the slow pace of vaccination around the world and the recent surge from the Delta variant, has re-emerged the problem."
The bottlenecks are no longer as acute as they were in the pandemic. According to NielsenIQ, shelf availability in supermarkets has stabilized since the drastic decline in November last year.
Nevertheless, an important metric is trending down a little. Total on-shelf availability was 94.6% in September, down from 95.2% in August. That means 94.6% of the expected sales were achieved in the past month, says NielsenIQ.
Many food suppliers plan for these hiccups and bottlenecks to persist.
Saffron Road, a manufacturer of frozen and long-life meals, maintains additional inventory and holds about four months of supplies instead of the usual one or two months.
“People are hoarding,” said CEO and founder Adnan Durrani. "I think you will see all prices go higher in the next six months."
At the beginning of the year, A&W Restaurants had to cancel a marketing contract for chicken tenders when its supplier was unable to obtain additional poultry stock. Instead, the chain, with around 560 locations in Germany, relied on chili cheese fries.
"Rather than running out, we replaced the promotion with something we could get," said CEO Kevin Bazner. Deliveries are improving, he said, but the chain is still only getting about 80% of their orders, he said.
Not enough styrofoam
Food manufacturers complain of their own supply chain headaches.
Land O’Lakes Inc., one of the largest agricultural cooperatives in the US, said its members produce copious amounts of milk at their dairies.
"The challenges in the supply chain continue to be issues such as driver shortages, manpower and congestion in ports," said Chief Supply Chain Officer Yone Dewberry in an email.
Meat processors tell a similar story. Earlier this month, a pork supplier couldn't get products out because of insufficient styrofoam trays, said Steve Meyer, a consulting economist with the National Pork Producers Council.
Work problems also shake the meat supply. The plants are running, but not at full capacity due to the lack of workers and truckers, Meyer said. The problem is so bad that at least one US meatpacker has tried to lure new employees with Apple Watches.
In most cases, animals are harvested, but there aren't enough people to handle normal value-added processes such as boning, trimming and salting. This can make it more difficult for grocery store customers to find high quality products like boneless ham.
Said Meyer: "You name it, it goes wrong somewhere."
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