HIGHLIGHTS
- The global food ecosystem is buckling due to a shortage of staff. Supplies are getting hit and some employers are forced to raise wages at a double-digit pace.
- That’s threatening to push food prices, which are already heated by soaring commodities and freight costs, even higher.
- Even as restaurants and other businesses reopen in the U.S. and parts of Europe to boost demand for goods such as meat and bottled drinks, the delta variant is spreading in places like Southeast Asia, curbing primary production.
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Shortage of workers
In Vietnam, the army is assisting with the rice harvest. In the U.K., farmers are dumping milk because there are no truckers to collect it. Brazil’s robusta coffee beans took 120 days to reap this year, rather than the usual 90. And American meatpackers are trying to lure new employees with Apple Watches while fast-food chains raise the prices of burgers and burritos.
Whether it’s fruit pickers, slaughterhouse workers, truckers, warehouse operators, chefs or waiters, the global food ecosystem is buckling due to a shortage of staff. Supplies are getting hit and some employers are forced to raise wages at a double-digit pace.
That’s threatening to push food prices, which are already heated by soaring commodities and freight costs, even higher. Prices in August were up 33% from the same month last year, according to an index compiled by the United Nations’ Food and Agriculture Organization.
“We have family-wage, great jobs that have been open, that we’ve been recruiting really hard for and have had trouble filling,” said Patrick Criteser, chief executive officer of Tillamook County Creamery Association. The Oregon-based dairy co-operative recently ran so short of workers that a board member had to skip an operational meeting to help out in the fields.
Shortages are hitting farms, processors and restaurants
Malaysia, the world’s No.2 palm oil producer, has lost about 30% of potential output of the edible oil used in everything from chocolate to margarine. Shrimp production in southern Vietnam, one of the world’s top exporters, has dropped by 60% to 70% from before the pandemic. And a fifth of tomato production in the South of Italy has been lost this year, due to the scorching heat and transport paralysis.
There are signs the labor shortfall is curbing supplies. In the U.S., wholesale distributors like Sysco Corp. and United Natural Foods Inc. are reporting production delays and slowdowns for items ranging from bacon and cheese to coconut water and spices. In the U.K., some stores are running low on staples like bread and chicken, while McDonald’s Corp. ran out of milkshakes in August.
Canceled or delayed deliveries have also forced British dairy farmers to dump milk while stores run short. Some farmers have resorted to milking their cattle less frequently due to staffing shortfalls.
Even as restaurants and other businesses reopen in the U.S. and parts of Europe to boost demand for goods such as meat and bottled drinks, the delta variant is spreading in places like Southeast Asia, curbing primary production.
Covid outbreaks continue to crop up in meat- and fish-processing plants, forcing temporary closures, and border restrictions in countries from the U.K. to Thailand are limiting the supply of migrant workers.
Minh Ngo
FURTHER READING:
The Gartner Supply Chain Top 25 for 2021
