In the middle of this pandemic, milk is poured down the drain, livestock is euthanized, and vegetables are plowed over. There is huge consumer demand for the essentials, but store aisles are bare. And yet the United States produces and maintains ample supplies of food and beverages, so what is happening to the nation’s agricultural sector during the Wuhan Coronavirus crisis?
Cooking Up A Storm
Despite grocery stores placing limits on how much milk or meat shoppers can purchase to avoid hoarding, the nation’s largest farmers have no place to sell their output. While the supermarket is a top revenue-generator for these businesses, a significant portion of crops is sold to restaurants, schools, and other food-service enterprises. With the COVID-19 pandemic shutting down these entities, there is no buyer for half of their produce.
So, why not just shift logistics to sell to retailers? At many of the country’s processing plants, the capital equipment is designed to meet the needs of restaurants and schools. For instance, a dairy processor may possess machinery that was put together to package shredded cheese in large bags for restaurants or fill small cartons of milk. It would require millions in new investments and additional time for these plants to tailor operations to retail, and the sector does not think it is worth the headache. You also have the issue of governors continually extending their deadlines to opening their economies, so even if businesses wanted to retool their facilities, they would probably need to reverse the changes if everything returns to normal.
A growing number of farmers are now dropping off their surplus to food banks and food-related non-profit organizations. On the one hand, these institutions have seen a massive spike in demand. On the other, they do not have enough refrigerators or manpower to handle the influx of food. Plus, this is an unsustainable endeavor for producers since harvesting, processing, and transporting to charities can cost a lot of money for cash-strapped firms. They cannot export either since the global economy is suffering the same fate as the U.S. right now.
Make Baking Great Again
If you have noticed one missing item on grocery shelves, it is flour. This kitchen staple is a hot commodity because a lot of consumers are making baking great again, whether it is to pass the time or because they have nothing else better to do than to eat rich desserts. Food producers are unsure if this is a permanent trend or a blip on the radar. With this uncertainty, companies will refrain from modifying their operations to adapt to these changing conditions. If people are staying home and permanently opting for a nice meal in their humble abodes, businesses will quickly revamp their facilities and shift their business models to ensure they are meeting these evolved – or devolved – needs. That is how the free-enterprise system works.