By Mike Estadt
If we answer this question with the knowledge at hand this is going to be a very short article. We really do not know yet. But what we do know is there have been some fundamental shifts in how the consumer shops and how they consume not only beef but food in general. Will these shifts remain and what might we expect in the years to come?
Let us look at the year in review and try to understand the effects on the larger food industry as well as local livestock growers. The New Year came in with some optimism for agriculture as the effects of the trade war was dissipating, cushioned by USDA financial assistance via the Market Facilitation Program. For livestock producers, specifically pork, the effects of the Asian Swine Fever which decimated the Chinese breeding herd by 40%, gave rise to optimism for increased exports to China.
In late December and early January, reports of a flu-like disease began to be reported out of the Hubei province, in the city of Wuhan, China. The disease caused by SARS-CoV-2, would soon become a worldwide pandemic known as COVID-19.
By March in response to the increasing numbers of infections and resulting deaths, shutdowns of businesses, schools, hotels, and restaurants literally destroyed demand for institutional food suppliers. At the same time Americans were hoarding paper products, sanitizing wipes and food, especially meat. Store shelves were empty, and some forms of rationing meat began to take place. At the same time milk was being dumped and vegetable fields plowed under as processors could not convert institutional packaging quickly enough to supply the retail sector.
The virus continued to wreak havoc on the economy and drove the national unemployment rate to a high of 15% in April. Center for Disease Control data reported a 300-400% increase in anxiety and depression. This may explain record sales of comfort foods such as canned soups and baking supplies disappearing from grocery shelves. As quarantines and lockdowns continued baking and cooking meals from home continued to increase. At one point during the peak of the pandemic, consumers reported that 88% of meals were being consumed at home.
Just as grocery stores were beginning to recover from this disruption, a larger aftershock would be felt in the food supply chain as workers in beef and hog processing plants began to test positive for the COVID19 virus, leading to major shutdowns of some of the largest plants in the country. These shutdowns resulted in a 40% decrease in beef and swine processing compared to 2019.
Wholesale prices soared but the prices paid to farmers and ranchers declined due to no available processing. Beef producers were able to slow growth rates of feedlot cattle and the prospect of euthanasia of finished hogs loomed over the Midwest. Fortunately, by June processing was able to recover to pre-pandemic levels.
This nationwide series of events gave rise to an unprecedented demand by consumers in communities across America for locally raised pork and beef. But this was not without complications as small mom-and-pop processors, already at nearly full capacity began to book harvest dates sometimes as far out as a year. To make things even more complicated, the supply of deep freezers was quicky exhausted as demand quickly outstripped supply. The backlog for deep freezers was 6-9 months out.
What trends will remain when the pandemic subsides? Online and e-commerce will continue to be a major shopping behavior. If you do not have an online presence, you need to get one soon. If you have one, update it to accept online ordering and payment. Consumers will be cooking more meals at home in the future than prior to COVID-19. This means they will be searching for information to help them cook at home. Recipes and YouTube videos need to be a component of a successful social media marketing strategy.
Not only will consumers buy more food online, but the return to remaining restaurants may also take on a different look as online meals-to-go prepared at “Ghost Kitchens” (food preparation centers with meal delivery services) will likely more common place.
The larger food industry will be spending time and research into making the food processing infrastructure more resilient and less prone to disruptions such as Covid19. More inventory capacity, factory automation and creating linkages to regionally based processing facilities will be explored. Local producers should concentrate their efforts in maintaining positive customer relations, exploring possible cooperative partnerships with other farmers and ranchers and alternative harvesting and marketing infrastructure. What local food producers do now to capitalize on these recent trends could set the course for a fruitful and successful future.
Source : osu.edu