COVID-19 food supply, demand shocks disrupt consumer behavior

The COVID-19 global pandemic caused two major disruptions to the U.S. meat supply chain, Jason Lusk explained May 18 during a panel discussion that was livestreamed on the Purdue University Krannert School of Management Facebook page.

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digitalista | Bigstock.com
digitalista | Bigstock.com

The COVID-19 global pandemic caused two major disruptions to the U.S. meat supply chain, Jason Lusk explained May 18 during a panel discussion that was livestreamed on the Purdue University Krannert School of Management Facebook page.

Demand shift affects meat supply

The first supply chain shock began with the implementation of stay-at-home measures in mid-to-late March. Consumers flocked to grocery and other retail stores, stocking up on fresh meat, poultry and other goods, in preparation of self-quarantine measures.

“This was mostly caused by a demand shock. Food away from home was shut down and we had a peak of demand hit in grocery stores,” said Lusk, a distinguished professor and head of the Department of Agricultural Economics in Purdue’s College of Agriculture. “The way we deliver food to restaurants and cafeterias is different than the way we deliver food to grocery stores.”

The retail sector worked hard to fill empty shelves and meet the increased demand. Within weeks, most grocery stores started looking more like what consumers expected.

Meat supply chain gets interrupted

“The second major wave of disruptions was due to a supply shock in the meat processing sector. In early April, some big meat processing plants began to close or slow down,” Lusk added.

In the U.S., meat processing is mostly centralized. The 10 largest beef processing plant process 60% of the nation’s cattle, while 15 large pork processing plants are responsible for processing 60% of all hogs.

“We have a handful of large plants that process meat in this country,” he said. “Any one of these plants is large enough that when it goes down, we have significant market disruption.”

More than 20 meat processing plants temporarily halted operations in April to help mitigate and slow the spread of the virus. These closures resulted in meat shortages that were felt by consumers. Some stores implemented purchase limits for certain cuts or the total number of packages that could be purchased by each customer.

What’s next?

Today, the food supply chain is regaining some of its lost momentum, although some experts have warned that the country could see meat shortages throughout the summer. In addition, the high level of unemployment means that, in many cases, consumer income has fallen, which could lower demand for meat.

For more information on the ways COVID-19 has affected consumer behavior, sign up for the Chicken Marketing Summit series of webinars. These webinars, held every Wednesday through July 1 and sponsored by Zoetis, also focus on issues that will continue to impact the poultry supply chain long after the pandemic is over.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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