Supply chains disappearing into the COVID Vortex

23 Apr 2020 Supply chains disappearing into the COVID Vortex image

We are all focused on doing our level best not to catch COVID-19.

Our omission is that getting sick is not the only COVID impact. There is an enormous COVID Vortex that is sucking in most of what we know and do. Some people are talking about resilience planning, and what we do as we come out of the COVID Winter. The massive challenge we have is to climb out of the COVID Vortex in our household bubbles, work, as a country and as a world. The critical difference between COVID and most other disasters is everyone in the world is affected.

All most of us can do is influence our immediate family and work circles. So, what’s your plan for climbing out of the COVID Vortex?

Before you can make a plan, you need to understand the situation that you are in, but this cannot be a superficial understanding. One of the key areas where understanding is currently lacking, at least by many decision makers, is how supply chains across the world and within countries work. Global and in-country supply chains are not simplistic and are inter-related.

Across the world, the restaurant and fast food market has collapsed. There are three immediate consequences. The first and, from a COVID perspective the most concerning, is that fresh and healthy food is not getting to everyone. The second consequence is that the growers of that produce now have nowhere to sell their produce and so, across the world, they are stopping planting. This decision will reduce the supply of fresh and healthy food worldwide. But paradoxically, the third consequence is there will be a massive oversupply of the food that used to be supplied to the restaurant and fast food market.

Two problems arise here. Existing supply chains are not able to distribute this extra food, so it will not get to those consumers that need it, and the glut will further discourage growers from planting vegetables in particular.

Those on lower incomes are the people across the world who are missing out the most on fresh, healthy food. In New Zealand, their independent neighbourhood fruit and vegetable retailer and local produce market are closed. Apart from foodbanks, Iwi and community food distribution, those on low incomes are not getting access to the fresh and healthy food they need. In turn, the growers that grow this produce are not planting, as they have nowhere to sell it and the nurseries that grow seedlings for planting are probably out of business too. In other words, closing farmers markets has a crippling ripple effect right through the community.

A non-food example is the shutdown of timber processing. Take two important by-products that come from timber processing: sawdust to keep baby animals such as calves warm, and off cut timber to make pallet bases for fruit that is exported by pallets, such as kiwifruit.

My last example is that palm oil production is down by 20% across the world, which for our dairy industry means that there will be less palm kernel available to feed cows during winter.

Of course, a failure in one part of the supply chain can open up opportunities for others. However, the issue with other opportunities is that they are often more expensive but, in their favour, they are usually based in the country of need. Palm kernel can be replaced by more fodder crops being grown in New Zealand which has the added advantage of creating in-country resilience to off-shore influences.

Innovation and imaginative supply solutions are now required more than ever. Whether it is developing each country’s resilience by sourcing from within, or expanding existing supply chains to get fresh and healthy food to those people who are missing out.

Here’s an example of the latter, with 5+ A Day delivering 5,000 fruit and vegetable boxes to families in need [click here].

We must unite and avoid the COVID supply chain void, making sure we can continue to grow enough healthy and fresh food and get that food to everyone in our country.

Mike Chapman, Chief Executive