The food industry is in a much better position going into a second phase of lockdowns. But some risks remain.
Many Canadian regions will likely go through a second COVID-19 lockdown soon. And questions about the resiliency of our food supply chain are emerging again.
With potentially 60,000 new COVID-19 national cases a day within weeks, it seems inevitable. Further lockdowns could well include even the Atlantic bubble.
The COVID-19 virus knows no borders and is now spreading like a wildfire. Toronto and Peel region are experiencing a second lockdown in nine months.
As news of a vaccine in reach gives hope, public health officials will naturally want to buy precious time and save as many lives as possible.
Rest assured though, this new cycle of lockdowns will be different.
In March, the virus caused an abrupt standstill to our daily lives. Most of the food industry didn’t anticipate such a shock. Two things happened that likely made the occurrences in the spring a once-in-a-lifetime event.
First, we saw the complete collapse of one major sector: restaurants. According to Statistics Canada, monthly food retail sales in Canada were approximately $7.7 billion, versus $5.3 billion for food service. By May 2020, the last month before restaurants started to reopen, food retail generated $7.8 billion in sales versus $891 million in food service.
Since many food service outlets have changed their business models, sales will never reach such lows again.
The other noteworthy factor is the consumer. Back in March, many of us went to the grocery store without knowing when we would be allowed to go back again. That’s one main reason why panic buying occurred. The virus was still quite foreign to us and most didn’t know how public health was going to deal with the pandemic.
The pace of how new regulations are implemented is more manageable now. Decisions from governments now are also much more predictable.
Our behaviour has also changed. Before the pandemic, Canadians went to the grocery store slightly more than twice a week and spent just under 25 minutes per visit. Today, for the first time in more than 20 years, the average Canadian visits the grocery once a week and spends about the same amount of time per visit. Shoppers are more disciplined, focused and tend to stick to a predetermined plan without buying more than they need.
As we have all become better food inventory managers at home, better cooks and better gardeners, the Canadian average household is wasting less food than during the first few months of the pandemic, according to some reports.
We’re also much more methodological as shoppers. We just needed a pandemic to make that happened.
Food e-tailing in Canada is also much more developed. In fact, since March, the experience of buying food online has changed dramatically. Initially, food orders took days to be delivered but now orders are processed within hours. Many processors, farmers’ markets, restaurants and grocers have pivoted, and consumers have more options.
Kraft Heinz is now operating a restaurant. Loblaws, Canada’s number one grocer, now sells meal kits from restaurants. Loblaws went from a grocer to a food broker.
According to a recent survey by Dalhousie University, 63.8 per cent of Canadians have ordered food online in some capacity over the last six months. The same survey estimated that 4.2 million more Canadians are ordering food online at least once a week than before the pandemic.
And when asked if they intend to order food online at least once a week after the pandemic, 49.4 per cent of Canadians said yes.
So COVID-19 has helped create new habits.
Going into a second phase of lockdowns, the food industry is in a much better position. But some risks remain.
The border has remained fluid throughout the pandemic. With a new tenant in the White House, we know the Joe Biden/Kamala Harris administration in the United States will have a different approach to the virus. Let us hope it doesn’t involve compromising the operability of food supply chains on both sides of the border.
Analytics are another issue. Food supplies are primarily determined by historical sales order data, not by actual consumption and market data. The disconnect between the two caused shortages in some foods and surpluses in others. So the need to digitize the food supply chain is greater than ever. As the industry adopts different analytical methods and embraces the use of new technologies, this will certainly help.
Food processing remains the Canadian supply chain’s greatest weakness. The need for more near-shoring, local sourcing and domestic food manufacturing is much more acute.
Costs of distribution in Canada and access for food manufacturers to domestic production of raw materials and packaging are major headwinds. This needs to change. The need for more investments in logistical infrastructure can’t be underscored enough. Any trucking company will tell you that Canada urgently needs work in this area.
And finally, human capital.
Several incidences during the initial lockdown made the food sector look bad. First, the “hero pay” affair was mismanaged by grocers and was a complete public relations disaster.
And with many closures in food processing and farming, particularly as a result of foreign workers succumbing to COVID-19 this summer, recruitment has become much more challenging. Food manufacturing in Canada has over 28,000 vacancies, the highest ever.
We can invest and reskill all we want, but overly generous publicly funded financial aid programs for Canadians will only make our food supply chain more fragile and less resilient. The last thing the food industry needs is more incentives to stay home. The food industry needs workers, desperately.
But we should still trust our food supply chain. The food industry has delivered and will continue to do so.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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