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
- 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