A lack of redundancies in agri-food system supply chains means there are risks for farmers from a disruption like that caused by COVID-19.
Farm Credit Canada chief agricultural economist J.P. Gervais and Guelph-based economic researcher Al Mussell say, however, that the government knows how important food is to Canadians and will find ways to assure supply to consumers.
Why it matters: Maintaining food supply chains is critical to the continuing health and stability of Canadians throughout the current crisis.
“Because we operate with some relatively long supply chains, agri-food could be seen as vulnerable compared with some other industries,” says Mussell, of Agri-Food Economic Systems.
He suggested that the outbreak could “introduce new bottlenecks into the (Canadian agri-food) system, and do so in a manner that is sudden and only vaguely predictable.”
There are already good examples with the news over the weekend of the closing of an Olymel hog slaughter plant in Quebec for two weeks due to COVID-19 outbreaks among its staff and the temporary closure of the Harmony Beef plant in Alberta, also due to a COVID-19 issue with a staff member.
Mussell says there’s a lack of fallback plans if a link in the chain is disrupted for any reason. For him, “the most obvious worry is the prospect of processing plant employees … being unavailable to work” either due to “regional orders to stay in place at home, not reporting to work out of fear that they will become sick,” or being sick themselves. The same goes for the inspectors needed for slaughterhouses to function.
The federal government has asked meat inspectors to come out of retirement to make sure enough are available if needed.
Mussell said the impacts of meat plant closures or even decreased capacity because of any combination of these factors in Canada “would back up very quickly to the farm level.”
Gervais agreed that, in the immediate term, livestock value chains are at greatest risk.
“A smaller labour force disrupts supply chains at home and abroad,” he said. “This may reduce our ability to export and make it difficult to reach the production targets we had set for the year.”
Domestically, the government will make sure Canadians get food.
“Food is such an imminent need, and security of access to food a matter of sufficient concern.” Mussell believes that governments will recognize “the risks to the agri-food system in this environment warrant immediate attention and major emergency action.”
In the early days of the Canadian crisis, mass-consumption outlets —workplace and institutional cafeterias, followed by restaurants and eventually coffee shops — closed their doors or restricted access. This frees supply into retail channels challenged by a sharp decline in food imports.
“Getting product currently in foodservice packaging into retail may not be easy due to differences in package sizes,” Mussell said. “But it’s still doable,” at least for some food products.
Nonetheless, domestic buying habits will change. “Canadians will shift their food purchasing patterns,” Gervais said, “eating more at home, perhaps trying to save money and purchase lower quality food items than they would normally.”
At larger risk, though, are value chains feeding export markets.
“Canada is the fifth largest ag exporting country in the world,” Gervais pointed out. “Our ag industry is exposed to global economic influences.”
When asked if there has been anything in recent memory to which COVID-19 can be compared, Gervais says we’re “definitely entering uncharted territory.”
The financial crisis of 2008-09, although caused by entirely different factors, led to a widespread decrease in consumer incomes globally.
“While the abundance of food (in Canada) is a net advantage for the country, a global economic slowdown can nevertheless significantly impact profitability of the (agriculture) industry.”
Another type of value chain delivers the tools of production onto farms. “March is a time when seed, fertilizer, and other inputs are distributed,” Mussell noted.
“This is occurring, but under the mounting risk of absenteeism among truck drivers and workers in the crop services segment.”
These are all realities that Gervais says farmers must keep in mind as they assess their response to COVID-19.
“Tighter profit margins can have financial implications, so it is critical that all operations assess their financial situation and draft a business plan to navigate the highly uncertain operating environment,” he said.
Contingency planning to keep feed trucks and milk trucks running will be critical, says Mussell.
“Spring will come, the crops will need to be planted, and the capacity for this to occur needs to be secured.”