Similar to other major systems, the current pandemic has generated significant disruption to the global food system. From suppliers scrambling or closing and feared shortages choking off exports, to the dearth in labor to support operations, the business of food is taking a hit up and down the value chain. With the pandemic now bringing inherent vulnerabilities into sharp focus, this crisis should serve as a catalyst to accelerate the critical conversation that needs to take place about updating and reforming the global food system.
One of the main issues with this system is its focus on one objective over others: delivering calories at the highest level of efficiency possible. And while it has helped reduce undernutrition significantly, it has also created some challenges. For example, in recent years, grocery stores and food processors conserved capital by reducing inventory levels, relying on complex supply chains to deliver the products they need when they need them.1 In fact, many only carry a four-to-six week supply of food, as compared to 20 years ago when they would carry a six-month supply.2
It seemed like a reasonable approach up until the point COVID-19 hit. Panic buying and hoarding cleared shelves and depleted inventories at an alarming rate in grocery stores. With food staples in high demand, retailers were forced to limit the number of items purchased. All this while farmers have been plowing under crops they cannot find a market for. The restricted availability and affordability of healthy and nutritious food has disproportionately affected the most vulnerable populations.
Suppliers and shipping shutting down around the world due to the virus has added even more strain. As many as 29 countries have placed restrictions on the flow of food to protect domestic supplies, causing further disruption.3 Vietnam, Thailand, Russia, and Kazakhstan—all major suppliers—barred exports of food products such as rice, eggs, grains, and potatoes.4
Because this modern food system is so interlocked, disruptions to one link in the chain are having staggering effects on others. And though the dust has not yet settled in this crisis, it’s becoming increasingly clear that the system needs to be more resilient. Food security—the reason the system exists, after all—is dependent on the system’s ability to respond to volatility.
Uncertainty persists right now. No one knows for sure when this pandemic will ease. But improved planning can build flexibility into value chains going forward so that they can adapt to supply and demand shocks. Diversifying and increasing the range of sources—size, location, product mix—and distribution channels can help maintain the effective functioning of supply chains. A scenario analysis of the crisis and the food system can also help leaders pressure test their current strategies.
Addressing some of the systemic challenges of the food system will take time and a coordinated approach that involves governments, the private sector, consumers, and civil society. Data, transparency, supply chain visibility, sophisticated modeling, and improved coordination and knowledge transfer between actors along the value chain will all be critical tools in this reform.
This pandemic has been a real shock to the food system. But there might be some good coming out of this crisis if we use it to establish the foundation for much needed improvements.
In a way, this is the stress test for the system. And while it didn’t break per-se, we should not neglect addressing the vulnerabilities the crisis has exposed.
Shay Eliaz is a Principal with Monitor Deloitte, Deloitte Consulting’s Strategy practice. He is the Innovation leader for Deloitte’s Manufacturing Practice and advises clients globally, helping them respond to the myriad of complex growth, technology, regulator, and innovation challenges present in today’s competitive marketplace. He specializes primarily in chemicals and specialty materials companies, and agro-based clients, but has experience across multiple industries including: aerospace and defense, industrials, and automotive. Shay also serves as the Project Advisor for the World Economic Forum’s New Vision for Agriculture initiative. Shay holds an MBA in marketing and is based in New York City.