COVID-19 and the agri-food system in the United States and Canada

Abstract

Agri-food supply chains in North America have become remarkably efficient, supplying an unprecedented variety of items at the lowest possible cost. However, the initial stages of the COVID-19 pandemic and the near-total temporary loss of the foodservice distribution channel, exposed a vulnerability that many found surprising. Instead of continued shortages, however, the agri-food sector has since moved back to near normal conditions with prices and production levels similar to those typically observed in years prior to the pandemic. Ironically, the specialization in most food supply chains designed for "just-in-time" delivery to specific customers with no reserve capacity, which led to the initial disruptions, may have also been responsible for its rapid rebound. A common theme in assessing the impacts across the six commodities examined is the growing importance of understanding the whole supply chain. Over the longer term, a continuation of the pandemic could push the supply chain toward greater consolidation of firms and diversification of products given the increasing option value of maintaining flexibility. Other structural changes will be felt through input markets, most notably labour, as the trend toward greater automation will continue to accelerate as a response to meeting concerns about a consistent supply of healthy and productive workers. The economic fall out from the pandemic may lead to greater concentration in the sector as some firms are not able to survive the downturn and changes in consumer food buying behaviour, including movement toward online shopping and enhanced demand for attributes associated with resiliency, such as local. On the other hand, online shopping may provide opportunities for small producers and processors to shorten supply chains and reach customers directly. In the long term, COVID-19 impacts on global commerce and developing country production are more uncertain and could influence poverty reduction. While COVID-19's impacts on North American agriculture should have minimal effect on the Sustainable Development Goals (SDGs) through food prices, the ongoing global trends in trade and agribusiness accelerated by the pandemic are relevant for achievement of the SDGs.

Keywords: Automation; COVID-19 pandemic; Demand shifts; Disruptions; Labour health; Supply chains.

Fig. 1

Beef cattle supply chain and a summary of the impacts on COVID19 on each sector.

Fig. 2

Weekly wholesale prices for boxed beef for United States and Canada, 2019, 2020 and 5 year average. Sources: panel (a) by the Livestock Marketing Information Center (Livestock Marketing Information Center (LMIC), 2020a) with data from the USDA-AMS; panel (b) from Canfax (2020b) Personal Communication.

Fig. 3

Weekly steer slaughter in United States and Canada, 2019 2020 and 5 year average. Sources: panel (a) by the Livestock Marketing Information Center (LMIC 2020b) with data from the USDA-AMS and USDA-NASS; panel (b) from Canfax (2020a) Personal Communication.

Fig. 4

Weekly fed steer price on the United States and Canada, 2019, 2020 and 5 year average. Sources: panel (a) by the Livestock Marketing Information Center (Livestock Marketing Information Center (LMIC), 2020a) with data from the USDA-AMS and USDA-NASS; panel (b) from Canfax (2020c) Personal Communication.

Fig. 5

2020 Percentage Change in Weekly U.S. and Canadian Market Hog Prices, Baseline 2019. Data Source: United States―USDA National Daily Direct Hog Prior Day Report – Slaughtered Swine report (LM_HG201), compiled by the Livestock Marketing Information Center. We show the weighted average net purchase price across all producer-sold hogs. Canada―Agriculture and Agri-Food Canada W042C Red Meat Price Report – Hogs, complied by the Livestock Marketing Information Center. Futures―Chicago Mercantile Exchange (CME) Group, complied by the Livestock Marketing Information Center. All relevant price series were adjusted for exchange rate before year over year calculations were made. (For interpretation of the references to colour in this figure legend, the reader is referred to the web version of this article.)

Fig. 6

2020 Percentage Change in Weekly U.S. and Canadian Federally-Inspected Hog Slaughter, Baseline 2019 .Data Source: United States- USDA Actual Slaughter Under Federal Inspection Report (SJ_LS711), compiled by the Livestock Marketing Information Center. Canada- Agriculture and Agri-Food Canada Hog Statistics at a Glance, compiled by the Livestock Marketing Information Centre.

Fig. 7

U.S. Broiler chicken production, monthly federally inspected, ready-to-cook weight.

Fig. 8

Canadian Chicken Production, monthly federally inspected, eviscerated weight.

Fig. 9

Monthly farm milk and retail dairy product prices in the U.S. and Canada, January 2018 to October 2020 (January 2018 = 100).

Fig. 10

Shifts in U.S. wheat flour production in response to early COVID-19 shifts in consumer spending (U.S. Department of Agriculture, National Agricultural Statistics Service (USDA-NASS), 2020d).

Fig. 11

Weekly Potato Shipments, First 19 Weeks in 2019 and 2020 Retail Shipments in Colorado (CO) and Foodservice Shipments in Idaho (ID).