What do plant closures mean to the U.S. food supply?

With the recent closures of several meat processing plants (Smithfield Foods, JBS, Tyson, and Cargill, among others), what will it mean to the food supply system in America?

It could mean a significant change in how companies look at inventory, says Jack Bobo, the CEO of Futurity, a food and agriculture consultant. “There’s going to be a need to rethink what inventory means,” Bobo says.

Today, companies have evolved into a just-in-time inventory system, in order to reduce costs, they increase efficiency and speed to market. This could change in light of the COVID-19 pandemic and access to food supplies, according to Bobo. “There’s a real danger in not having inventory on hand,” he says. Bobo made his comments April 14 on a webinar entitled, “Food & Supply Chain in a COVID-19 World” that was sponsored by The Land Report and Peoples Company.

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Companies will think long and hard about not having inventory vs. the reduced risks of having inventory on hand coming out of this pandemic, he says.

Bobo’s outlook isn’t dire, however, especially for the ag sector. We should assume that facilities will reopen, Bobo says. There will be continued consumer demand – even pent-up demand near the end of the year, since people have spent several months NOT spending.

Things will be better for the ag sector more than other sectors, Bobo said, because people need to eat.

Plant-Based Foods

How will the current strain on the food supply system affect the plant-based movement in the United States? According to Bobo, “it’s definitely going to accelerate the conversation” but may not impact sales of alternative foods. As the price of beef rises, consumers may try protein alternatives, he says; on the other hand, animal products will become more in demand – a “premiumization” effect of the high-quality perception of meat.

Bobo does see a continued growth in sales of plant-based products, but farmers and the agriculture industry shouldn’t be too concerned. “Many people in ag feel they are under attack or under siege,” Bobo says. When we look forward to 2050, we need to double the amount of proteins produced on Earth, saying it could be a $4 trillion business in 2050. “There’s room for everybody in this.”

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Hamburger is a good example in the U.S., where 50% of hamburger is imported. If the plant-based market grows, we would still produce 50% of the hamburger needed; it will just lower our imports, and not impact producers here.

The biggest impact may not be on the plant-based alternatives, Bobo says. “I don’t think there’s a great concern about it. But it is undermining the confidence in our food supply between food producers and plant-based producers,” he says.

“It undermines faith in our food system, generally, and that doesn’t help anybody.”