Grocery stores not having enough toilet paper to stock is one thing—not having enough food is quite another.
In recent and quick order, a number of setbacks have hit the food supply chain, among them the closing of a few major chicken, pork, and meat processing plants in the United States due to coronavirus outbreaks. The concern among experts is that the regional clustering of processing plants, coupled with labor shortages and working conditions that are conducive to the virus’s spread, could turn what is currently a ripple in the food supply chain into a dangerous wave if not watched closely.
One or two plants closing down isn’t going to stop production, says Pablo Golfari, market leader of the Industrial practice at Korn Ferry, “but if the virus spreads to enough plants, it could spell trouble.”
To be sure, the industry can—and has turned to—some creative solutions. Major meat and poultry producers have dozens of processing plants to shift around product. So while Smithfield Foods just made headlines for shutting down its plant in Sioux Falls, South Dakota, it can shift some of the processing to other plants still in operation, says Sean McBurney, sector leader for Korn Ferry’s Agricultural practice in North America. Firms can also partner with other processing plants. “Moving the supply chain around is disruptive,” he says. “But food processing companies have agility and capacity to adjust and have been pretty good at it.”
One challenge with that approach, however, is that processing plants are often clustered regionally—many beef facilities are located in Nebraska, for example. McBurney cautions that producers have to take extreme precautions when shifting production because of a virus-related shutdown to not spread it from one plant to another.
Or, as Silvia Sigaud, global sector leader for Korn Ferry’s Agribusiness practice, says, food producers are operating plants under the mantra of “monitor closely and act fast.” They are checking employees’ health daily, taking temperatures and the like, and putting in social distancing measures at the plant such as staffing smaller shifts and offering staggered breaks.
But the biggest concern for the food supply chain at the moment centers around the labor pool. In addition to ill workers, absenteeism for health and safety concerns, or childcare issues, restrictions on H-2A visas—which allow US firms to bring foreigners stateside temporarily—is hitting agricultural companies hard just as the growing season is beginning. Without open borders to allow seasonal migrant workers into the US, particularly from Latin America, farmers lack the labor needed to plant corn, wheat, and other fruits and vegetables. Tyler Howells, managing consultant for Korn Ferry’s Agribusiness practice, estimates farming environments are working with between 50% and 70% of their regular labor force due to the coronavirus pandemic.
“This is a pivotal time of the year as the produce they are planting now will be harvested and into the food supply chain in a few short months,” says Howell.
In fact, as it relates to labor, McBurney says one trend he is already seeing is agricultural and food processing organizations looking to hire people with government procurement experience. The expectation, he says, is that companies wanting to qualify for federal stimulus or other assistance will need to know how to interact and contract with federal government procurement and supply chain departments. “They want to be proactive and get that expertise in house in case it is required in the near future,” says McBurney.”