Reports on how the COVID-19 outbreak is affecting global supply chains and disrupting manufacturing operations around the world are increasing daily. These effects may not yet have reached their peak, at least not in North America, but could over the next few weeks.
Grocers and food retailers are likely engaging their vendors to make sure their supply chains won’t let them down. And stores across Canada are rationing the number of particular food items customers can buy.
So panic buying is here. And it will bring its own complexities.
Unlike natural disasters, viruses know no borders. The entire globe is affected by what’s happening, even if the impact has been gradual.
China appears to have contained the virus, although some say the data may not be reliable. The outbreak has reached North America and could affect supply chains within days. Food wise, North America is self-sufficient. We import from other parts of the world but the abundance of food on our continent is impressive.
We have few cases of COVID-19 yet in North America but that may change and epidemic conditions are possible. And testing here has not been as predominant as in Asia. So more cases are a certainty.
Logistics have come a long way over the last few years on a number of fronts. The use of artificial intelligence, robotics and enhanced automation makes everything more efficient. Critically for food, the growing pressure to lower supply chain costs has motivated retailers over the years to pursue such strategies as lean manufacturing, offshoring and outsourcing. Such expense-cutting means that when there’s a supply-chain disruption, distribution will cease due to lack of access to food products.
Some retailers are much better equipped than others to address these disruptions. Most regions in Canada are serviced by retailers that emphasized investment in logistics and supply chains over the years. The prospect of some areas of the country running out of food is highly unlikely. But more remote regions are and always will be more vulnerable, with or without an outbreak.
And often our rational nature will give way to anxiety. An inner panic-buying button exists in all of us.
The sight of empty shelves and lineups at stores will suggest resource scarcity. Humans will always go after the necessities of life when they firmly believe these goods are running out. We’ve already seen some empty shelves across the country.
Some reports suggest non-gluten and organic products in Canada are running out faster than conventional food products. This is hardly surprising. Inventories for these items are typically lower, and people who want and need these products feel the urge to stockpile early. It’s simply human nature.
We estimate that about 25 per cent of all Canadian households have enough food supplies to survive independently for three to four days. But the other 75 per cent will take time to think about it.
Since the virus started to spread, more than 20 per cent of American households have started to stockpile food. The percentage in Canada is likely not that high but it’s probably higher than 10 per cent.
However, from panic-buying and turmoil comes opportunity. Alibaba, the multibillion-dollar online Chinese giant, grew out of the SARS outbreak in 2003. The company saw an opportunity to sell products online, given that people were avoiding physical interaction with others.
This could very well happen in Canada, where grocers are just starting to embrace the virtual nature of their business. Disruptors like Amazon, Walmart and Costco have done well since the virus started to spread.
Conventional grocers need to think about ways to get more traffic on their websites when a growing number of people stay home to feel safe. It’s not just about convenience; it also allows customers to cope with emerging public health risks. It’s the same solution, but the psyche and motivations are completely different.
As well, the products sold will be different. The most popular items since the start of the outbreak have been dry goods, frozen foods, comfort snacks, power beverages and, of course, water. Grocers could sell survival kits for a family of four online, to be delivered safely.
The bottom line: we should brace for a major effect on food supply chains worldwide. It will begin to hit full force in two to three weeks and could last for months.
More than 50 central banks around the world have reduced their base rates this week, including the American Federal Reserve and the Bank of Canada.
But this doesn’t mean we need to panic. Even if viruses know no borders, we have some time to get ready, unlike with natural disasters when we have mere days, hours or perhaps no time to prepare.
So get the food you need, one shopping trip at a time. And leave some for others, as a responsible citizen.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.