Brendan Kennedy
April 30, 2020
It's not a supply problem, it's a demand problem - and it's got a lot to do with the sudden closure of so many restaurants
The panic buying that went on during the early days of the coronavirus lockdown has largely subsided, so why are some food items - flour and eggs, for example - still hard to come by six weeks later?
The supermarket shelves still seem besieged by random shortages in some aisles. Meanwhile, other items, such as potatoes, mushrooms, and pork, are in such abundance that potato and mushroom farmers are throwing out valuable crops due to lack of storage, while pork producers are euthanizing pigs they can't sell for slaughter.
The COVID-19 pandemic has forced the sudden closure of restaurants across the country - which has never before happened - and it's having a huge impact on the way we eat and how we shop, food industry experts say.
In short, everybody's baking bread and nobody's eating french fries.
"None of these issues are supply based," says Michael von Massow, a food economist at the University of Guelph. "They're all demand-based. These are all driven by the fact that restaurants are closed and we're eating different volumes of different products in different places."
The shift in demand from the foodservice sector to retail has strained supply chains that aren't easily reconfigured, creating both surpluses and shortages. We're also doing bigger grocery shops in fewer trips, which can make it more difficult for retailers to keep a steady supply.
In some cases, an empty shelf might have more to do with a lack of packaging than a lack of product, because food producers package their products differently for grocery stores than for the foodservice industry, and in different volumes. The supply chain is still working to catch up with the heightened demand, von Massow said.
"We're not short of wheat. We're not short of milling capacity. We're short of getting the wheels going so that we get the wheat to the stores in the volumes that people want."
Even if the overall demand for a product is technically the same today as it was prior to the pandemic, it can be difficult to shift the supply that would have been sold to restaurants or food-service companies to grocery stores. Take eggs, for example. The average grocery store customer buys a carton of a dozen in their shells, while the foodservice sector might want large quantities of liquid eggs in a bag.
"I suspect that most people underappreciate the tsunami created by the fact that restaurants all closed almost at the same time," says Sylvain Charlebois, director of Dalhousie University's Agri-Food Analytics Lab.
Restaurants make up about 40 per cent of the agri-food economy at retail, he said, and while many are still doing takeout and delivery, it's still a massive shift in spending from one sector to another. "And the consumer walking into a restaurant is certainly not the same person as someone who walks into a grocery store."
Egg sales in retail outlets were up by 27 per cent last month, according to the Egg Farmers of Canada. But Burnbrae Farms, one of Canada's largest egg producers, says its overall sales are basically the same, with increases at retail offset by declines in the foodservice sector.
Shifting their supply from one stream to the other hasn't been easy, however. In an email, company president Margaret Hudson said packaging has been a big issue. Burnbrae's fibre carton supplier has "struggled to keep up with the demands of the North American carton market," Hudson wrote. As a result, Burnbrae plans on reintroducing plastic packaging, "which we had eliminated due to concerns around plastic waste."
Some grocery stores are also now selling 30-egg trays, which typically would only be sold to restaurants.
This month, the Canadian Food Inspection Agency relaxed some of its labelling requirements to allow food products that would normally be used only by hotels, restaurants, and institutions to be sold in grocery stores. "This will help to support the economy, alleviate supply disruptions in Canadian grocery stores, and avoid food waste," the agency said in a statement.
To keep up with the surge in demand, Robin Hood has started selling its all-purpose flour in white or brown bags with less-colourful branding. "We've temporarily dressed down, but what's inside has stayed the same," the company wrote on its official Facebook page.
The food we make for ourselves at home is also different than what we order when we eat out. Three-quarters of all french fries are eaten in a food service setting or restaurant, said Simon Somogyi, a professor of food business at the University of Guelph. The supply chain that delivers fries to restaurants is different than the one that delivers them to grocery stores, which has led to an oversupply of potatoes.
"It's the underlying wicked nature of taking out one end of the food supply chain and then having to try to push it all into the other end of the supply chain to meet that demand," Somogyi said.
Consumer behaviour has also changed. The home-baking trend has made flour and yeast the golden tickets of the grocery aisles.
"Anything involved with baking is in great demand," said Jason McLinton, vice-president of the Retail Council of Canada, which represents retailers, including grocery stores.
"There is yeast here and there," Charlebois said. "You just need to work a little harder to get it."
On the bright side, Charlebois said, the price of bread has gone down in many stores.
Although all of the experts interviewed for this story said Canada's food supply is robust, one area of concern is the recent closures of meat-processing plants due to COVID-19 outbreaks.
McDonald's Canada announced Tuesday it will start importing beef as a result of slowed production in the beef supply chain.
Canada's grocery stores are not anticipating significant meat shortages, McLinton said, "but it's something we're keeping a very close eye on."
Charlebois said the closures - namely Alberta's Cargill and JBS meat-packing plants, which process 75 per cent of Canada's beef - could reduce the beef supply, but shouldn't lead to a major shortage. (Cargill said Wednesday it would be reopening its plant on Monday.)
"You may not have your favourite cut waiting for you at the grocery store," Charlebois said, "but there will probably be plenty of meat."
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This article was written by Brendan Kennedy from The Toronto Star and was legally licensed by AdvisorStream through the NewsCred publisher network.
