No Need to Hoard:
There’s Plenty of Food in the System
Industries adjust to pared-back hours and shoppers cause unexpected surges, but numbers point to plenty of supply.
Don’t be fooled by the barren grocery store shelves: There’s plenty more food on the way.
Meat, dairy and produce groups as well as federal regulators say the U.S. has an ample amount of products in cold storage to handle the unexpected demand for food and household products from Americans.
The latest Agriculture Department data shows record-high stocks of frozen poultry, cheeses like American and Swiss and red raspberries, while frozen pork supplies are up 11 percent from last year.
Rice producers, whose grains have been flying off of store shelves along with other inexpensive and long-lasting foods, say there’s no shortage and those items are being “quickly replenished.”
“If you see depleted rice shelves in your local grocery store, it is not a supply problem; it is a signifier of changing logistics in the retail market,” said USA Rice President Betsy Ward in a statement.
On Tuesday, federal meat inspection agencies said they continue to operate as normal. Food imports continued to flow across the Southern border despite restrictions on nonessential travel. And the Trump administration and grocery executives stressed that the supply chain is holding firm, even if consumers see long lines at stores across the country.
Top retail chains like Walmart, Kroger and H-E-B have reduced store hours to give workers more time to restock high-demand products overnight, and agriculture groups insist there’s no threat of food shortages.
Amazon, the largest online retailer, announced it would hire an additional 100,00 workers in its U.S. warehouses to help handle increased demand for household staples, including groceries, while temporarily halting intake of nonessential goods at distribution centers through April 5.
Meanwhile, the White House and Congress are on the verge of what could be a $1 trillion stimulus package for workers and industries like airlines and small businesses. It will likely include at least $1 billion in extra food assistance, which could see more demand as restaurant workers, service employees and other Americans are laid off or forced to stay home for an indefinite amount of time.
The food industry, for its part, is urging consumers to remain calm and avoid hoarding, suggesting that fears of shortages are overblown.
“This is a demand issue, not a supply issue,” said Heather Garlich, vice president of media and public relations at FMI, the food industry association formerly known as the Food Marketing Institute. “The supply chain isn’t broken. The warehouses are pushing out as much inventory as possible in a 24-hour period.”
Meat supplies have not been disrupted as processing plants continue to operate, according to USDA’s Food Safety and Inspection Service and groups representing major meat firms like Smithfield Foods and Cargill.
FSIS is required by law to be present at more than 6,200 plants across the country. It employs about 7,800 inspectors to ensure the safety of meat, poultry and processed eggs. Without federal inspectors, plants can’t process the more than 330 billion pounds of beef, chicken, pork, lamb and turkey produced annually.
Planning for absenteeism is a regular part of its food safety operations and the department is closely tracking the status of employees who are sick or out for other reasons, USDA said in a statement on Tuesday.
Mindy Brashears, USDA’s deputy undersecretary for food safety, assured the agriculture industry that the department is protecting the health and safety of employees while still delivering services to keep the food supply moving.
“Field personnel will be working closely with establishment management and state and local health authorities to handle situations as they arise in your community,” Brashears said in a letter. “As always, communication between industry and government will be key. We are all relying on early and frequent communication with one another to overcome challenges as they arise."
Sarah Little, spokesperson for the North American Meat Institute, said if plants are closed because of staffing shortages other facilities will likely pick up some of that capacity.
“It is impossible to predict, however, the scenarios for individual plants across the nation,” she said. “Many companies are operating normally but they have contingency plans to address the threat of coronavirus.”
Stores still getting daily deliveries
At the retail level, Kroger CEO Rodney McMullen told CNBC that grocery stores are “getting deliveries every day,” including household goods like toilet paper, though he acknowledged there’s a shortage of hand sanitizers with “very little coming in."
McMullen spoke to President Donald Trump on Sunday along with other top grocers and food manufacturers, and he said he urged the president to spread the message to consumers that “there’s plenty of food in the supply chain.”
Kroger, the largest U.S. supermarket chain, is also considering giving seniors and shoppers with medical conditions exclusive access to stores for an hour in the morning, allowing them to avoid crowds later in the day.
“We’re starting to test it in a few markets in the next couple of days to see how it works,” McMullen said. “If it works well, we’ll expand it to other markets as well.”
Laura Strange, a spokesperson for the National Grocers Association, which represents independent grocery stores, said the group’s members are hiring cashiers and staffing up for round-the-clock restocking.
“It’s really an all-hands-on-deck situation where everyone is lending a helping hand where they can,” including CEOs stocking shelves and manning cash registers, Strange said.
Anthony Hucker, CEO of Southeastern Grocers, whose brands include Winn-Dixie, told CNBC in a separate interview that his stores have seen demand for certain items spike as much as 200 percent, but they’re well versed in handling those surges.
Hucker said they’ve “built a very strong muscle, especially around our computer-generated ordering systems,” after dealing with catastrophic hurricanes in recent years.
He said fresh foods like produce, seafood and deli products sourced from local suppliers are readily available to shoppers.
Imported foods see no slowdowns
The U.S. imports nearly half of its fresh fruits and vegetables from Mexico. Of the $26 billion worth of agricultural goods shipped across the southern border each year, more than $13 billion is produce.
As of Tuesday, fresh produce continued to flow across the Arizona border without any hiccups, said Jaime Chamberlain, president of a distributing company in Nogales, Ariz., that sources peppers, squash, tomatoes and other fruits and vegetables from 14 growers in Mexico.
Chamberlain is also board chairman of the Greater Nogales and Santa Cruz County Port Authority, through which about $3.5 billion worth of food and 360,000 trucks pass annually, he said.
“So far there are no disruptions,” Chamberlain said. “We’re in the middle of our produce season. It’s typical. Things are in short supply because of the enormous demand and some weather issues this spring, but our growing season is the same.”
Chamberlain said his business has experienced a drop in sales to restaurant and food service sectors like hotels and cruise lines, but grocery retailers have made up for those losses.
He added that he expects international trade will continue, even if Trump bans travel between the U.S. and Mexico, similar to the current restrictions on the EU.
However, heightened travel restrictions for passengers can also weigh on imports of fresh foods like berries flown in from other continents, according to Peter Friedmann, executive director of the Agriculture Transportation Coalition.
“Much of the capacity for air cargo is at the bottom of passenger flights,” he said. “Now, because there’s no passengers on the top of the plane, a lot of those airlines are just not flying those planes, and therefore we’ve lost a lot of capacity to bring air cargo into the U.S.”
Friedmann said the “severe backup in the global supply chain” emanating from China — which shut down factories and ports earlier this year, causing trans-Pacific shipments to plummet — has also led to logjams throughout the U.S.
He also called on federal transport regulators to loosen trucking rules for food and farm goods amid the crisis, like they did for medical devices and other items needed to address the outbreak.
“We need to have that same [flexibility] for agriculture, for food, because it will reduce congestion,” Friedmann said. “We’ll be able to more dependably supply supermarkets and other places where the product needs to go.”
Farm labor shortage remains a problem
One potential threat to the food supply is the temporary shutdown of U.S. embassies and consulates in Mexico, effective Wednesday, which help process visas for seasonal farm workers, according to the American Farm Bureau Federation.
The U.S. agriculture industry has already been dealing with chronic labor shortages for at least a decade, and without comprehensive immigration reform, has increasingly relied on the H-2A temporary agricultural worker program.
Applications for H-2A visas jumped by nearly 11 percent in fiscal 2019 over the previous year. The visas are to fill more than 257,000 jobs in states like Florida and California where much of America’s produce is harvested, according to Labor Department data.
“The decision to halt visa application processing in Mexico will restrict the number of immigrant workers being allowed to enter the country,” Farm Bureau President Zippy Duvall said in a statement Tuesday. “Under the new restrictions, American farmers will not have access to all of the skilled immigrant labor needed at a critical time in the planting season. This threatens our ability to put food on Americans’ tables.”
Duvall said he has urged the Trump administration to find “practical ways” to admit farm laborers under emergency visas while still protecting public health.
Immigrant laborers with previous work experience in the U.S. and who do not require in-person interviews will be allowed to return in the H-2A program.
Friedmann, of the Agriculture Transportation Coalition, suggested it could take months to unwind the knots in the food and agricultural network, but cargo can be rerouted and other changes can be made.
“The agriculture supply chain is like water. It will find the path of least resistance,” he said.
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