Impacts of COVID-19 on the Food Supply Chain

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1		Yousef abu nahleh	--	3343	2023-06-14 12:28:33	\|
2	layout	Jessie Wu	Meta information modification	3343	2023-06-15 04:29:36	\|

This entry is adapted from the peer-reviewed paper 10.3390/su15118859

The COVID-19 outbreak has significantly impacted supply chains and has caused several supply chain disruptions in almost all industries worldwide. Moreover, increased transportation costs, labor shortages, and insufficient storage facilities have all led to food loss during the pandemic, and this disruption has affected the logistics in the food value chain.

COVID-19 stakeholders consumer food

1. Lack of Communication

The supply chain during the COVID-19 crisis has faced critical challenges in the communication lines with business-related stakeholders ^[1]. The stakeholders share their assets and capabilities to minimize uncertainty, share cost, and risk, and they satisfy customers by serving them. The relevant information is required by the supply chain members to make informed and appropriate decisions ^[2].

During the lockdowns introduced almost universally by governments around the world, various markets have recorded a significant increase of the demand for food. The food supply chain system experienced a panic response globally, it seems, because of the unprecedented uncertainty of the COVID-19 pandemic and the measures introduced to combat it. As a result, and related to the high demand of customers, suppliers should manage and produce extra products to satisfy customers, but because the pandemic happened suddenly, and because of the panic buying when the lockdowns started, the suppliers dis not have a plan for communicating to consumers or for how to produce and access food. The absence of communication between the company suppliers and the customer can result in unsatisfied customers and insufficient quantities for the orders that are demanded. The process of the supply chain can thereby be affected via the strategy implementation and the decision-making process. Based on ^[3], poor communication between the company and the transportation drivers is an additional internal uncertainty and risk, and the resulting inefficiency can contribute to delayed deliveries and increase costs.

Furthermore, based on the studies in the Valguarnera Industry regarding communication outside the consortium, the exchange of information between the suppliers and enterprises was weak because of the geographical distances, which was severely exacerbated by the lockdown of the borders between the countries and the difficulty of getting even good across them, at least at first. As a result, the research analysis found that a lack of awareness of new technologies is an issue that can lead to inefficient production processes outside the consortium and delays in receiving data ^[4].

1.1. Coordination between Stakeholders

The food chain must obtain support by communicating with all stakeholders involved in the supply chain, irrespective of the physical location ^[5], although inconsistent communication due to the low capacity of wireless connections can make it challenging to obtain data for planning and also for managing instability with external and internal stakeholders. To reduce risks and build a more resilient food system, there has to be more cooperation between the parties involved in the food supply chain—a concept of interactions between supply chain partners to achieve objectives by working together to complete duties. This emphasizes the importance of horizontal collaboration in the food supply chain and the use of IT technologies, which could enhance supply chain coordination ^[6].

1.2. Coordination between Stakeholders

Sharing information is essential for preserving coordination among the FSC stakeholders. Additionally, information strategies that differ in the types of connections between supply chain stakeholders can influence how much information is shared. However, during the COVID-19 pandemic and the resultant lockdown, the lack of awareness of how to use technologies and digital communication was the main issue that caused a bottleneck in the supply chain process, since, in this process, each chain is linked to the other, and all have to share information on the levels of stock, trend sales, and trend demands, which leads to an increase in communication and collaboration by implementing effective strategies due to a well-informed decision-making process ^[4].

In the modern era, businesses collect data about the activities occurring along the food supply chain utilizing technology-based traceable systems ^[6].

2. Consumer Panic in the COVID-19 Pandemic

Globalization has brought about not only advantages but also risks to the supply chain, and one of these risks is the effect of consumer behaviour in crises, such as pandemics. Panic buying is a human behaviour indicated by a rapid increase in purchase volume before or during natural disasters and man-made crises, or in view of a large price increase or shortage. However, consumers are commonly observed to stock up on consumer goods to an extent that greatly exceeds levels observed in normal times. Ref. ^[7] provides a comprehensive exploration of consumer behavior, delving into the factors that shape consumer decision-making processes and offer valuable insights into understanding consumer motivations and behaviors.

If there is a lack of awareness and education about food availability and security, this can lead to anxiety, stress, and panic. This, in turn, can cause a change in consumer behaviour that triggers a demand shock in the food supply and in food demand, specifically in supermarkets and retailers, and the number of stockouts would thereby increase significantly as shown in Figure 1. This is what happened during the pandemic. Indeed, serious stock-out situations have arisen in many countries for consumer staples in 2020. Stock-outs are costly for consumers in general. Consumers’ food consumption habits have changed as a result of less frequent grocery shopping, a bad income shock, and skyrocketing food prices. In addition, lockdowns, transportation disruptions, and panic buying led to shortages of products in almost every sect, which made it difficult for producers to reach markets and limited consumer access to the inputs where the cost of transporting food has gone up. This only goes to show the way in which human behaviour is impacted by a sense of fear or anxiety, especially during disasters or extreme situations ^[8].

Figure 1. Consumers Panic Impact Flow Chart.

2.1. Food Availability

Food availability refers to the regular accessibility of food at the local level, ensuring that individuals and households can obtain their essential food items without facing difficulties ^[9]. Consumer preferences are significantly influenced by the perceived scarcity or abundance of goods, including food ^[10]. During pandemics, the unavailability of food in retail stores has a direct impact on consumer purchasing behavior and contributes to food-related stress. Without intervention from countries or governments in the food industry, there is a risk of severe disruptions in the food supply chain, leading to a doubling of the number of people experiencing hunger. The absence of available food in local markets during the COVID-19 pandemic has been particularly distressing for parents of infants ^[11]. To avoid future food shortages, the Food and Agriculture Organization (FAO) has recommended that countries maintain resilient food supply systems ^[12]. However, when foods are not accessible in the market, consumers are unable to make purchases, which directly impacts their buying behavior ^[13].

The product availability perceptions and shortages can have a big influence on customer preferences. Consumer purchasing patterns and stress levels during the epidemic are affected by the availability of food in retail outlets, resulting in an increase in the number of customers in ordering goods, and causing food shortages and the unavailability of many essential products. Lockdowns brought may, indeed, quadruple the number of hungry individuals ^[14].

The only alternative left for people to buy food products during the CVOID-19 pandemic was supermarkets and online services with home delivery. However, even here, there were major problems in obtaining products. The problem of understocking was also widespread at this time, and finding necessary products in the market was another challenge. In times of shortage, retailers raised prices as they saw fit, and access became expensive. The biggest problem for supermarkets was imported products, and shelves were left empty due to border closures ^[15].

2.2. Food Stress

Due to the lockdowns, which generate panic in food purchases, the majority of nations experienced a shortage of goods and services. Regional stores do not carry food, and the cost of basic items increased by 300%. Customers will therefore be concerned about buying and eating food. Therefore, stress played a crucial part in the increased food consumption that occurred during the COVID-19 epidemic. Consumer food stress is increased by the disruption of the food supply chain, indeed, and by lack of access to food, rising food prices, and unemployment ^[14].

2.3. Food Insecurity

Direct food stress brought on by food insecurity has a detrimental effect on consumer spending behaviour and access to affordable and nutritious food. During the COVID-19 pandemic, more than 1 billion people suffered from nutritional deficiencies, which is an increasing global issue due to food insecurity, and, therefore, these problems can have detrimental effects on public health, including diabetes, heart disease, depression, etc. As a result, there are now more people who are food insecure than there were a few years ago. A total of 8.9% of the world’s population (690 million) suffered from malnutrition in 2019, and this is one of the reasons that food prices have risen since February 2020, increasing by more than 10% in Belarus, Bolivia, Ghana, and Myanmar, and more than 20% in Guyana, Sudan, and Zambia ^[16].

2.4. Food Quality and Safety

Consumer purchase intentions and consumption behavior are significantly impacted by the quality and safety of food ^[17]^[18]^[19]^[20]^[21]. Consumers have a preference for purchasing high-quality products, and food quality and safety encompass various criteria, such as taste, naturalness, freshness, safety, production methods, healthiness, control, sensory appeal, shelf life, and overall condition ^[22]. Describing food quality and safety can be challenging as they are considered as credibility attributes, which are characteristics that consumers cannot directly verify. Consumer judgments of quality and safety rely on comparisons with other products, considering intrinsic factors (e.g., product aesthetics) and extrinsic factors (e.g., quality labels) ^[23]. Food choices continuously involve decisions related to food quality and safety, which, in turn, influence consumer purchasing behavior ^[21]. It is important to note here that ^[24] has clarified that coronaviruses are not transmitted through food, as demonstrated by previous coronavirus outbreaks like MERS and SARS. However, it is still recommended to follow proper hygiene practices, such as thorough handwashing or sanitizing after handling food packages in order to minimize the risk of contact with coronavirus-contaminated food ^[25].

The most important aspects of consumer purchase decisions that significantly affect consuming behaviour are food quality and safety. Customers like to buy high-quality goods. Food quality and safety refers to a number of food standards, including good flavor, freshness, safety, appropriate production processes, and healthiness. In Bangladesh, an outbreak that resulted in a decline in food quality and safety was caused by a number of businessmen mixing infected food. People are consequently concerned about food, and their shopping patterns are quickly changing ^[14].

2.5. Demand Shock

At the beginning of the lockdown, panic buying has led to a food shortage, shocking the supply chain’s rhythm. For instance, the initial lockdown period in South Africa was imposed for a period of 21 days to stop the spread of COVID-19 infections ^[5]. People stocked their pantries with necessities as a result of the uncertainty and panic that the lockdown period caused. It has been observed that the biggest obstacle was not a shortage of food but rather a consumer’s ability to access that food, a factor that is primarily determined by economic and social variables.

With spikes and demand shocks at the start of the lockdown, numerous markets observed a considerable rise in the demand for food, household goods, and home electronics. In the United States, a study on food demand was conducted. The food demand in the United States from March to May 2020, with an initial shock in March and stabilization from April 2020 onwards ^[26]. Uncertainty brought on by the shutdown of distribution routes was the cause of the initial shock period. The shock in the food supply chain may have been caused by a panic response rather than by actual threats of food scarcity.

Consumer demand for food products initially increased as a result of stockpiling behaviour, which also caused demand for basic goods to increase. For instance, in the protein industry, manufacturers increased production in response to this spike. The loss of nearly all food services as well as a shift in consumer behaviour towards preventative saving had a negative impact on demand as economic activity slowed, which was a result of changes in consumer behaviour brought on by the pandemic, and which was also a result of active government initiatives (i.e, full or partial lockdowns) ^[27]. However, on the supply side, the severe negative shock was reflected through plant slowdowns and shutdowns as COVID-19 kept workers at home due to illness, quarantine, or risk avoidance. Additionally, COVID-19 encouraged restrictions on processing due to social distancing measures and additional health, safety, and sanitation measures, which further constricted supply.

Short-term stockouts have been caused by consumer stockpiling and panic buying. Large scale supermarkets often operate on a just-in-time delivery system ^[8]. A constant supply of items is maintained on the shelves of grocery stores due to sophisticated inventory management and planning procedures that take into consideration typical supply-and-demand trends. The system is functional and efficient in normal conditions, it should be said, but the demand shock’s unexpected nature put it under a significant amount of strain.

3. Labor Shortages in COVID-19

Labor shortages are one of the potential factors that could cause supply-side disruptions in the food supply chains. It is important to consider the possibility of labor shortages in the networks of downstream food processing and distribution as a result of the illness, isolation, or limitations on movement suffered by workers ^[28].

The COVID-19 epidemic has caused massive shortages in the labor supply, and it has affected several countries and, also, a diverse range of industries, especially ones that require a large amount of human interaction, such as hospitality and food as well as manufacturing. The increased labor shortages post COVID-19 may be partially a result of structural changes, particularly preferences changes as some workers may no longer accept low pay and unfavorable working circumstances.

Recent surveys, conducted in ^[29]^[30]^[31]^[32], have provided evidence linking long-COVID to individuals leaving the labor force. These surveys revealed that around 20% of their respective respondents were not employed due to health issues associated with COVID-19. By combining these survey findings with COVID-19 case rates and the prevalence of long-COVID symptoms, researchers have estimated a loss of approximately 1.5 million workers from the labor force ^[33]^[34]^[35]. However, it is important to note that the existing survey evidence has certain limitations, such as the absence of control groups, reliance on self-reported reasons for non-employment attributed to long-COVID, and, in some cases, samples that may not be representative. Furthermore, while ^[35] discovered that COVID-19 negatively impacts worker performance in the context of professional soccer, these findings are in just one profession/field and may, of course, not be universally applicable.

Logistics became another major problem during the pandemic as harvested products were not reaching to the market. Researchers have explained that in the UAE, cargo drivers and their assistants took regular COVID-19 tests to make sure that they were virus free. This obviously took time in terms of administration of the tests and obtaining the results, and this caused delays.

Whenever a driver tested positive, they had to keep themselves in quarantine, of course, hence companies had to find replacements in a short timespan as the perishable products could not be kept for long periods of time, and so the situation was quite challenging. Since most of the labor in the UAE came from other countries, processing of documents of new entrants also became an issue as the borders were closed. Some officials were also afraid of contracting disease and employed unusual strategies, which caused further strains in the movement of goods. As a result, the shortage of labor in the UAE caused delayed logistics, which impacted the whole supply chain.

COVID-19 Illnesses and Work Absences

It has been demonstrated that absences due to illness result in consistent reductions in the labor force. According to studies, workers who miss a full week of work due to suspected COVID-19 diseases are 7% less likely to be employed 1 year after their absence than workers who did not leave work due to illness. COVID-19 diseases force older employees into retirement, which is one reason why there was a decrease in the labor supply.

Along with producers, distributors, and consumers, the supply chain also has an impact on labor-intensive food processing facilities. Many workers were determined not to be COVID-19 positive and who were thus unwilling to go to work because they believed that they would get sick there at the time of the epidemic, and, therefore, many firms temporarily stopped, postponed, or decreased production. Due to these factors, it was estimated that by the end of April, the output capacity of facilities producing pork, to take just one example, had fallen by around 25% ^[36].

In the United States, there were 93 farms and production facilities affected by COVID-19 infections, as well as at least 462 meat packaging and 257 food-processing industries. At least 232 workers died and at least 54,036 workers were found to have been COVID-19 positive. In Brazil, 2400 workers of meat processing plants in 24 slaughterhouses across 18 towns were found to be COVID-19 positive. In Ghana, 534 workers of a firm that processed fish tested positive for the virus. More than 100 cases were reported at slaughterhouses in France, and 1553 cases of COVID-19 were discovered at meat-processing facilities in Germany ^[36].

Health-related absence rates have increased faster during the epidemic among workers in occupations with potentially higher rates of COVID-19 exposure. The monthly counts of excess absences due to illness and COVID-19 cases during the CPS reference week are shown in Panel A in millions ^[37]. Excess health-related absences are calculated by deducting actual health-related absences from the seasonal (monthly) trend number of absences, which is predicted from January 2010 through to February 2020. Before the pandemic, health-related absences were growing with age, but the pandemic increase was substantially attributed to younger workers ^[37].

The link between health-related absenteeism and occupation-level indicators of COVID-19 exposure risk before and during the epidemic ^[37].

4. Shortages of Raw Materials

The imbalance in the supply of raw materials, which impacts the worldwide market in all economic sectors that depend on these resources for their production processes, is one of the main problems caused by the COVID-19 pandemic.

The worldwide lack of raw materials has caused supply bottlenecks in all industries and the movement of the materials has come to a standstill. The reasons for this are, on the one hand, rising demand due to the pandemic-related economic slowdown and, on the other hand, that raw material suppliers have further reduced their production capacities. Moreover, other elements of business are suffering as a result of the disruption to the flow of materials and goods, including a sudden end to incoming financial flows and a shift in the workforce’s skill distribution. Every supply chain was interrupted by the obstruction of material and people’s movement ^[38].

4.1. The Labor Dilemma

One of the main reasons for the raw material shortages is labor-related problems brought on by the pandemic, such as absenteeism, rising unionization, and the difficulties filling unfilled positions, all of which continue to restrict the industrial sector’s potential for expansion ^[8]. For example, a labor shortage at JBS, the world’s largest meat supplier, is affecting operations in every developed country, limiting production increases and rising costs.

4.2. Raw Material Scarcity

Due to the gradual lifting of the continuing nationwide lockdown, the country’s industries are experiencing raw material scarcity. Indian industry, for example, struggles to import materials for which locally manufactured substitutes are very difficult to obtain due to limited capacity at India’s major ports for both sea and air freight ^[38].

An insufficient supply of raw materials signifies that manufacturers have to start working with different suppliers. For example, this means different types of raw materials with different consistencies, quality, etc. This will increase the variance of raw materials used in production and affect production and throughput ^[39]^[40].

4.3. Movement Restriction

Distribution of basic goods suffers from restrictions between cities, provinces, regions, and nations ^[36]. High-value products require a lot more labor to produce than everyday necessities.

The difficulties brought on by consumer demand shifts and transportation restrictions (such as national or international border closures) are significant. Due to the limitations, consumers prepare their own meals at home instead of dining out. Additionally, customers are reluctant to visit marketplaces and supermarkets, since they risk contracting COVID-19 in such establishments ^[36].

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