Autonomous vehicles transporting food to hard-hit areas in China. New partnerships linking supply chains. And grocery stores limiting hours and enforcing social-distancing rules.
Every business sector today has been affected by the pandemic. But one sector, the one deemed “essential” by governments globally, has reacted with a series of creative solutions to maintain its critical link at all ends of the food chain. Experts say leaders’ creativity and speed of change alone are among the bright spots in an otherwise deeply gloomy economic environment these days.
“You have leaders stepping up where they will take very critical measures to secure food production and distribution,” says Pablo Golfari, Industrial Market leader at Korn Ferry.
To be sure, the industry has one critical advantage over most: surging revenues. Consumer “panic” food-buying alone is expected to shift more than $100 billion in revenues from restaurants to retail channels in the second quarter, one new research report estimates. New or established delivery apps are reporting 150% business spikes with customers “buying billions in the last three weeks,” according to another report.
Going into the crisis, the industry was notoriously behind in e-commerce, with that business accounting for only 2% to 5% of the $743 billion US grocery retail market. Then, as the outbreak spread, new issues emerged, including shortages caused by consumer hoarding, concerns over food safety, and growing labor shortages that grew from the surging demand. In response, newcomers and major chains put apps into action, gave some employees a temporary raise (typically $2 per hour), and deployed social-distancing measures to improve safety. Some outlets also reduced hours for extra cleaning time and to better restock shelves emptied from the overbuying.
For his part, Golfari says more labor shortages could be addressed by tapping into the labor surplus created by pandemic-related mass layoffs. Or leaders could fill the shortage of long-haul drivers, which he says is a longstanding issue for the industry, by recruiting truck drivers who typically transport nonessential goods. “Organizations have the agility needed to adapt and make it through,” he says.
Still, experts say that maintaining the overall supply chain will likely become a longer-term problem, especially as more borders begin to close in order to curb the COVID-19 outbreak. Companies in some countries, in fact, are bracing for a scarcity in produce as lockdowns delay shipments and ground seasonal workers coming in from other regions. And in the case of the United States, leaders “had to play the politician side of business” by lobbying the government to revise its restrictions on visa applications submitted by Mexican farm workers, says Tyler Howells, managing consultant with Korn Ferry’s Agribusiness practice.
The longer term—past the pandemic—remains a question mark for the food business, of course. But, says Sean McBurney, senior client partner and sector leader for Korn Ferry’s Agriculture practice in North America, the global crisis has shone a light on the importance of agribusinesses, particularly those that operate in the background, like grain producers or fertilize suppliers. “In this environment, it really demonstrates how critical they all are,” McBurney says.