This link should answer a lot of questions about troubles in food supply chain:
Food Makers Get Shot of Reality Now that Panic Buying Has Waned
After weeks of consumer hoarding, panic buying is abating and the lack of demand from shuttered restaurants, schools and coffee shops is starting to set in. Sanderson Farms Inc., the U.S.’s third-largest chicken producer, is slowing production at plants that supply restaurants, and protein giant Cargill Inc. has idled an egg facility due to the lack of demand from the food services industry.
Americans spend more than half of their food budget eating out, and an increase in retail among grocery stores can’t fully compensate for the lack of demand from restaurants. Every 10% decline in out-of-home food spending translates into a gain of just 3% in the retail channel, according to Rabobank, one of the largest lenders to the food and agriculture industry.
Nowhere is the effect of restaurant shutdowns more obvious than in the dairy industry, with almost 50% of American cheese production going to food services. Farmers in top-producing Wisconsin are being asked to dump milk to boost low prices with overall demand for dairy products expected to drop 10% to 15% in the second quarter, according to Mary Ledman, a global diary strategist at Rabobank.
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Prices for chicken wings have taken a hit from the lack of sporting events and the pork industry is also under pressure, with some 25% of production being sold through food service outlets, according to David Herring, a hog farmer and board member for the National Pork Producers Council.
“Demand was great for about 10 days, then it just stopped,” he said, adding that the biggest hit was to bacon, with 70% being consumed out of home. “We’re basically producing 425,000 hogs a week that there is no market for because of Covid-19.”
Even your daily cup of coffee could be hit as job losses mount and restaurants close, said Christian Wolthers, president of importers Wolthers Doque in Fort Lauderdale, Florida. Some coffee shop chains have already asked to delay their shipments to later this year. For instance, the coffee they were going to get in July or August, they now want it in the last two months of the year, he said.
“We are only going to feel this incredible low in sales sometime in the middle of summer,” Wolthers said. “The stores that closed and the volumes at hotel and restaurants and K-cups were not sold, and this will show in inventories building more than usual.”
Some companies are having to slow down or shut plants because they can’t easily turn them into facilities that produce for retail. For instance, a can of tomatoes that goes to restaurants is a different size from the ones that hit supermarket shelves. Others are reluctant to invest in changes that will only yield returns during the pandemic lockdowns, before things get back to normal.
