Where did all the Flour Go Supply Chains and Covid

hi everyone

i’m really excited to be here today my

name is sasha ditchnowski

and i’m a business strategist what that

means is that i help companies and

non-profits and

other organizations make decisions about

what to do

what not to do and how to do it in order

to achieve their goals and ambitions

i focus on food and agriculture and the

work that i do with clients has taken me

to nearly 20 countries around

the world working on things like grains

and

produce cooking oils farmed fish wild

caught fish all sorts of animal

livestock

and what i want to talk to you about

today is the world food system

and also the us food system and why

maybe some of us during

the early stages of covid 19 and shelter

and place protocols

walked into grocery stores and saw very

very empty shelves

why did that happen how is it going to

evolve and

what should we take away from that

situation

let me start with the food system it’s

big

it’s a third of global gdp and 40

percent of employment

it’s grown a lot we produced two and a

half times the amount of food today that

we did back in 1970

which is good because we have 2.1 times

the number of people that we had back in

1970. so we’ve outgrown population

you cut all those numbers together and

that means we can feed every single

person on the planet a 2

000 calorie day diet but we don’t

our system despite all the amazing

aspects of it still

struggles in some ways to get food to

every person who needs it

every day at a cost that works for them

we still have hunger and we still have

obesity sometimes in the same community

in the us it’s a little bit of a

different story if you take data from

the world bank and fao

and cut it together in a similar way

you’ll see that the average american

consumes 2

900 calories per day that diet over the

course of the year

includes 115 kilograms of meat that’s a

third more than france and germany and

60

more than switzerland also wealthy

developed countries

and it’s not just the the quantity that

defines our abundance

it’s now sometimes hard to walk into a

grocery store in the produce section

and notice the changes of the seasons

technology and global supply chains

bring us food all year

round that used to only be available in

certain times of the year

so how does a system that does that for

us on such a regular basis

result in what many of us saw walking

into grocery stores in

in march let me talk a bit about that

in order to understand and remember

let’s go back to march 11th 2020.

do you remember where you were i

remember where i was i was working from

home

it was a practice work from home day

that my firm did and at the time it felt

strange

it’s now kind of strange to think about

how strange that felt because i’ve been

working at home ever since for many

months until today

but at the time it was really strange

and it freaked us out

so i went to the grocery store and

started to stock up on food and to be

honest it wasn’t that extraordinary of

an experience

in general we found everything that i

wanted

there was no whole wheat pasta there was

only whole wheat flour which was kind of

weird but by and large i walked out with

everything

that i needed nine days later march 21st

chicago went into shelter in place

a couple days after that we had eaten

through the mountain that i had brought

home

back on march 12th and so i had to go to

the store again

it was a very different experience i

walked in and

could immediately notice that i wasn’t

going to be able to buy potatoes

onions oranges apples bananas eggs

flour milk bathroom tissue like many

other americans

i stood there and i thought how is it

that this came to be

am i going to struggle in order to feed

my family

as we go through this pandemic and

that’s not a feeling i’m used to feeling

so how do we get there there’s two

factors i’d like you to consider

the first is stockpiling i was not the

only person that did what i just

described in fact a lot of americans did

that

analysts will point to data that shows

that u.s debit and credit card spending

in grocery stores was

double what it normally was during that

period that’s a big increase for grocery

stores

let’s look at one specific example here

you can see some data from iri

that shows weekly tune-up purchases

through 2019 and into early 2020

you’ll see that on average americans buy

30 to 35 million dollars of tuna each

week

doesn’t really fluctuate that much

outside of that band relatively constant

now let’s look at march 2020. the week

of march 15th

we bought 3.5 times as much tuna as we

typically do

and a little bit less than that the next

week about 120 million dollars of tuna

just for context there’s 130 million

households in the united states and a

can of tuna is about a buck depending on

where you live it’s like every household

in the united states went to the store

and bought a can of tuna that week which

is totally abnormal

in fact i didn’t even get any that week

which means that if it was available the

sales would have been even higher

if there were more people like me

stockpiling was a big deal

the second factor that i want you to

consider is how food actually gets to us

and the channels that are part of that

system

so here’s an example of wheat so wheat

in the united states

starts with farmers they grow it harvest

it and send it to food processors

who mill it into into flour or bake it

into bread

from there it goes one of two ways the

first way it could go

is through what we call food service

that’s large restaurant chains schools

things like that the companies that are

part of this channel buy

lots of flour they buy 50 pound bags

pallets of 50 pound bags

trucks of pallets of 50 pound bags they

are making a lot of food for hundreds

thousands of people every day on the

other side is retail

with single loaves of bread pound of

flour at a time

that’s where i shop right so one bag of

flour lasts my family for a while i

can’t imagine having a 50 pound bag of

flour in my house

and having it go having us go through it

in any reasonable amount of time

so that’s important to note that we

can’t transition from one to the other

very quickly i can’t buy a 50 pound bag

and that packaging machinery

takes more than a day or a week to

transition out

perhaps even more stark of a difference

there are companies in food service that

are

only there to to serve food service

companies

they make they make products to very

specific specifications

for very large food service companies

they can’t get their product to retail

very quickly

it’s this so if you think about what is

our typical purchasing pattern within

these two systems

an example is shown here 50 from food

service 50

from retail which is by the way what we

typically buy

in a given week or month let’s remember

that shelter in place happened and food

service shut down

well it didn’t entirely shut down but it

went down a lot let’s say it went from

50

to 20 percent and then on the other side

of that retail went up from 50

to 80 one side gets more than cut in

half and the other side goes up by 60

which is a big change and because the

system can’t move

back and forth because the system works

so efficiently

on one side we have capacity idling we

have food that can’t get through and get

to market

on the other side we have it bursting at

the seams and that’s why in the same

day or the same week you might read

newspaper articles that are talking

about farmers dumping milk or breaking

eggs

while at the same time you go to a

grocery store and you can’t find those

products or maybe they’re there but

they’re a lot more expensive than you’re

used to paying

so that was march as we fast forward

through

april and may i don’t know what it felt

like for you but for me it felt started

to feel better

now as we get into june i can go to the

store and i don’t have that same concern

that i stood there with in march when

this all started

why is that well a couple things have

changed

first on the food service side if you

remember walking through your

neighborhood

during those months food service started

to figure out how to service food again

at first they were just closed then they

were open

and they were doing pickup and they had

figured out social distancing and that

will continue to evolve

on the retail side they put policies in

place to stop stockpiling so you may

only

have been able to buy one of a product

that was prone to that

they also figured out what it was that

we were buying and so they changed the

way that they got those products to us

whereas before maybe we could walk into

a soup aisle and see 150 different types

of soup

now you can maybe see 10 or 20. the

choice has gone down but they’re getting

us more of the products that we need

so from a consumer perspective it’s

gotten a lot better

right it doesn’t feel as dire as it used

to there is one product category that

i’d like to touch on where things have

stayed pretty bad

and that’s me so couple things i’d like

you to take away about meat from this

discussion

one is that at the very beginning of the

process we start with whole animals

that whole animal is broken into pieces

and then it flows through retail and

food service in different ways depending

on what the product is but it always

goes back to an animal

and what that means is if we take a

product like

a pork belly which becomes bacon by and

large

which primarily flows through food

service by and large

and we cut that off then that that pork

belly loses value

and as that works its way back up

through the system either the pork

bellies that we can buy in the form of

bacon need to be a lot more expensive to

cover that cost

or because we have to cover the cost of

a whole animal the other pork products

that you can buy have to

increase in cost or we have to start

paying farmers that are giving us those

animals a lot less or we have to start

buying a lot less from them

either of those things is a struggle

because they’ve been raising those

animals for months anticipating to get

them to market

right now the other thing i want you to

remember about meat coming out of this

conversation is that the production

environment

is not set up for a pandemic environment

i’ve been to about half a dozen

production facilities meat packing

plants around the world and they all

have a few characteristics in common

one is a very labor intensive there’s a

lot of people in those production

environments

two is as those have gotten more complex

and the buildings haven’t gotten that

much bigger

there’s a lot of people all those people

are packed in very close to each other

cutting and slicing and

butchering the animal they’re not

standing six feet away from each other

and the only way to get them to stand

six feet away from each other is to slow

the production facility down

and take people off the line or to close

it all together which is why we read so

much about that happening

that is an issue that that part of part

of the industry is going to have to

continue working through in the months

to come

again but how do we as consumers

interpret that are we going to walk into

a store

and for most of us are we going to feel

a challenge getting our caloric and

protein needs on a daily basis

no probably not is it going to feel like

we don’t have the choice and we aren’t

getting it at the cost that we’re used

to

yes probably for the producers in meat

and then other

products especially those producers that

are focused on food service

are going to continue to struggle and

have to work through issues as

everything slowly hopefully gets back to

normal but for us as consumers

we can have some confidence that we’ll

probably be able to feed our families

so given all of that what should we be

taking away from this

especially for with the consumer lens

unfortunately i think this is going to

be a conversation that probably

raises more questions than it does

answers

the first question is what about our own

communities

so for me that feeling standing there in

a grocery store seeing no food on the

shelves was the first time i even got

close to feeling food insecurity in my

life

that i remember but there’s a lot of

people in the united states that

feel that on a regular basis even in

good economic times like

2017 there were 15 million households in

the united states

that felt food’s insecurity at some

point during the year

that’s a lot of people when things are

going well it’s probably not that good

now even

and so one of the things we should take

away is that feeling of food insecurity

remember what i said about the abundance

of food we have in the united states

what is the right level of food

insecurity for our communities

are we willing to accept what the

current level is what are the things

that we as individuals or communities

can do

in order to ensure that we get that to

the level that we we are willing to

accept

that’s the first question the second

question has to do with more of a global

picture

one of the reasons why i’m confident in

my ability to

get food from my family is because of

what our retail environment looks like

here you can see a picture of a grocery

store taken in the early stages of covet

19 and shelter in place

what you’ll notice is things are

organized it’s inside

you can’t see it in the picture but

there’s a door to get into this building

so you can control the number of people

that are there

the environment can be sanitized and

cleaned and the gentleman in the picture

isn’t wearing a mask but

if the picture were taken now he would

be so we can get food to people in a

clean way

what we see in this picture is a woman

selling cassava in a

food market in ghana what’s different

about this picture than the other one we

just looked at

well she’s selling to a food stall it’s

maybe only six feet at most

wide there’s a bunch of other food

stalls around her

it’s outdoors there’s multiple points of

entry and this is how her community gets

food

it’s much harder to control the

environment and people are going to pack

in there

during the day but cities like the one

that she’s in are going to have to make

a choice on whether or not they control

access to food or if they allow people

to go to gathering places like this and

potentially get infected with virus

and no matter what they choose that’s

going to increase food insecurity

there’s either a i got sick and i can’t

provide for my family the way i could

or you’ve restricted my access to food

that’s a tough choice and

what it means is that the hundreds of

millions of people that experience food

insecurity

in a good time are that’s going to

increase by another hundreds of millions

of people

as things get more comfortable and

normal for us are we looking around

our global communities and seeing if

what we can do for the most vulnerable

populations

the last question i’m going to leave you

with is probably the biggest and the

toughest

one observation as part of that though

is

think about how quickly the food system

did adjust to give us what we needed

when our needs changed

when we started purchasing different

things in different places it adjusted

it was not great but it moved relatively

quickly

that shows us that we as producers have

power over how the food system works and

yes there’s a lot of companies that

operate

there that can make choices that

influence what’s available to us but we

do have power

and when i told you the stats about the

world where we do have the capability to

feed everyone on the planet the 2 000

calorie day diet

we have the capability there’s also a

lot of people involved

in this 40 of global employment

there’s also a lot of land and water and

other natural resources that are used to

make the system work just by

function of what this is so our

purchases

helping the system migrate to something

that is the right level of

humane and sustainable given what we

want our world to look like

it’s tough because there’s a lot that

that a person needs to know in order to

make

those decisions and there’s a lot of

nuances but i’ll leave you with that big

question

particularly as we think about what we

want the world to look like postcovid

i hope you stay safe and healthy thank

you