The coronavirus crisis has exposed glaring shortfalls in America’s supply chains. The country’s complex system for producing and distributing food is the latest to show the strain.
At the weekend, meat processor Smithfield Foods announced a shutdown. Its plant in Sioux Falls, South Dakota closed indefinitely after 238 workers contracted the virus. It is one of the largest pork processing facilities in the US, accounting for 4-5 per cent of the country’s pork production in normal times.
Labour shortages in food factories and on farms are under-recognised threats to food supplies. Panic buying and social distancing in stores have made far more headlines. But Smithfield chief executive C Larry Pope warned the closure — coming on top of similar moves by rival meat packers — was pushing the country “perilously close to the edge” in supplies for grocers.
The workers who keep America fed are also some of the country’s poorest. They live and work in close quarters. This makes them particularly vulnerable to contracting coronavirus. Social distancing and self-isolation are luxuries unavailable to those working shoulder-to-shoulder in food factories or on farms.
These workplaces cannot count on America’s newly unemployed millions to replace workers who fall ill. The work is back-breaking and the pay low. In California, which produces a third of the nation’s vegetables and two-thirds of its fruits and nuts, growers are worried that they will not have enough workers to plant and pick this year’s harvest.
This year, border restrictions threaten to cut off the flow of migrant labour. Crises give the whip hand to available labour, however temporarily. America should remember, no food workers, no food. Employers who charge workers for protective masks, for example, are financially short-sighted as well as mean spirited.
Investors can expect extended volatility in prices for agricultural commodities and in the shares of food producers such as WH Group, Smithfield’s Chinese owner. The stock fell by a third from mid-February to mid-March before rallying by a quarter. Tyson Foods has been just as volatile. US hog futures point to steeply rising prices. It is in the multiple and interlinked effects of the pandemic that investment profits will be made.
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Source: Economy - ft.com
