Looking Back On The 2020 Challenges Food Distributors Faced and Looking Ahead To 2021Ella Nordell-Morris
The coronavirus pandemic has affected the food industry like no other. Because this industry contains many different moving parts that affect one another constantly, the pandemic has caused the balance to shift with devastating results. It was not surprising that when the crisis materialized, many food supply chains were left scrambling around trying to figure things out. This left them exhausted to the point of pausing production. Here, we look into some of the challenges that food distributors faced, and provide a glance into the hope that 2021 could bring.
Loss of food:
As the coronavirus numbers spiked, one of the biggest supply chain disruptions across the country was farming.The lack of the necessary labor force and orders to fulfill, left many farmers with excess crops.They were unable to easily redirect food to consumers because of packaging and other complications. Therefore, they were forced to destroy crops, dump milk, and throw out perishable items due to the lack of labor needed. This left many farmers devastated by the loss of crops and revenue.
Additionally, many farms, slaughterhouses, and meat packing plants were forced to shut down temporarily after spiking outbreaks of the virus occurred in the factories and facilities. This created a loss of millions of animals like chicken, pigs, and cattle. All these processors were also dealing with staffing problems and were forced to euthanize their flocks of chickens, pigs, and cattle, leading to shortages. Still, consumer demand was at its peak, which drove the cost of goods higher.
Transporting and Packing:
Toward the beginning of the pandemic, food packaging and transport affected a major shift in food trends. When severe lockdowns were initiated, large supplies of refrigerated shipping containers from overseas distributors were unreachable. This strained the usual transportation of many refrigerated items and created waste, as many products spoiled without proper storage. With this occurring, the food trends shifted and many people began purchasing non-perishable items instead of fresh produce and meat.
This shift in consumer trends burdened the packing industry. Demand for single-use plastic skyrocketed because of the increasing demand for non-perishable foods and take-out meals from restaurants. The packing industry could not keep up with the swift trend change and extreme demand, creating a strain on the supply chain. This resulted in increased prices and limited supply, forcing food distributors to reevaluate their usual stock and their partnerships with restaurants.
Financial Relationships with Restaurants:
The severe loss of food and issues with transporting and packing required suppliers to restructure their usual relationship with restaurants. With rising prices and restaurants struggling to keep up with finances, suppliers were forced to extend already stretched credit leaving them very vulnerable.
Account receivable issues from extended trade credit soon became a huge problem for suppliers as restaurants faced intense financial hardships that left them unable to repay. Many suppliers cut deals to try and recover some of the losses, but for many, there were hardships with serious implications. The larger suppliers were able to recover some income with insurance, but the smaller ones were left with the only hope of recovering the losses.
Looking Ahead into 2021
The devastation created by COVID-19 has caused many people to raise concerns about what is to come. As we continue to recover from the pandemic, there will be work to restore and improve supply chains and their durability through crises. Hopefully, leading to a financial recovery for suppliers and restaurants alike.
Is there hope for suppliers to recover from these disruptions?
From the onset of the pandemic, the food industry was able to make many positive strides. The initial chaos of the pandemic subsided a bit, allowing some recovery time for food distributors. As the recovery continues, technology will definitely play a vital role. The use of predictive analytics can help suppliers to anticipate what supply sources can help their supply chain to be more resilient and avoid unnecessary risks.
Selling directly to consumers through online marketplaces can help recover some losses and bring in another stream of revenue. This would help suppliers with their finances, tracking, and restaurant relations. Some online marketplaces, such as DineMarket, provide all the marketing tools and benefits to support local suppliers and restaurants. This kind of technology bridges the gap between wholesale suppliers/food distributors and farmers and solves many of the issues of directly reaching and selling to consumers.
Recovery is a continual process that will take time and effort. The severity of the current challenges will depend on how quickly and safely governments can open up economies and how quickly channels restabilize. With the right tools and information, many improvements can be made to prevent the devastation seen in 2020 and can help us to move forward in 2021.