How corona virus affects pasta’s complex supply chain

“Please get ready for the storm – because it will be hit,” Mark Schneider, managing director of Nestlé, the world’s largest food manufacturer, told employees on Monday. “We have to concentrate on securing supplies, production and logistics at every step. Prepare for the areas that are not yet affected by taking inventory of critical deliveries and products. “

To fill their “pandemic pantries”, consumers have hurried to buy non-perishable staple foods such as toilet paper, canned goods, and pasta – especially pasta. In the United Kingdom, for example, pasta sales increased by 168 percent in the week ending March 14 compared to the previous year.

Tracking the pasta trip from the farm to the fork shows all the processes that must be carried out during the outbreak of the corona virus. Like many foods, pasta relies on a highly complex international supply chain, which often leads through several countries on the way to the consumer plate.

Most pasta consumed in the UK is made from wheat shipped from Canada. This is then processed by companies such as Barilla and De Cecco in Italy, which exported $ 3 billion in pasta last year. After being transported by truck across Europe, British wholesalers like Princes will then resell it to supermarkets.

Wheat production itself should remain relatively unaffected by the corona virus. In Canada, grain production and harvesting is largely mechanical.

“One person can plant hundreds of acres,” said Chuck Penner, an analyst at LeftField Commodity Research in Winnipeg. Wheat is transported to the ports by rail and handling is largely automated.

According to Mintec, the raw material data group, the price of Canadian durum wheat has risen by 8.5 percent since the beginning of the year. However, many large food manufacturers are still hedging against price increases for a few months at this time, said Andrew Searle, managing director of consultants AlixPartners.

However, if port workers in Europe get sick, Italy’s supply could be affected. The country imports about half of the 5 million tons of durum wheat it uses for pasta every year.

According to Ivano Vacondio, president of the Italian food and beverage association Federalimentare, production in Italian factories is currently operating at full capacity, compared to the usual 75 percent, as producers find it difficult to meet demand doubling. This was despite a 12 to 15 percent decrease in the workforce at the factories, mainly due to childcare problems among employees.

“You can imagine the pressure the factories are facing,” said Vacondio, who is also chairman of a leading Italian flour producer, Molini Industriali. “But things are under control. Factories are not closed. “

Even if production can be maintained in Italy, analysts warn that further disruptions could occur if border controls clog the highways and stop drivers from delivering products. “Food is a priority and things should move freely, but nobody wants to get into a row of 1,000 trucks,” said Stefan Vogel, an analyst at Rabobank.

Governments also fill up with staple foods. Countries like Algeria and Turkey are issuing new tenders for wheat, while Kazakhstan has stopped exporting foods like onions and buckwheat.

For the UK, the canal crossing is a potential sticking point in the food supply chain. Bob Sanguinetti, General Manager of the UK Chamber of Shipping, warned that more than half of freight from Europe is carried by ferry, which could endanger the health of the shipping sector.

Lloyd Giles climbs on his combine to relieve his wife Tara, who drove the afternoon shift on a 160-acre field south of High River, Alberta, on September 28, 2013, during the annual harvest. Alberta farmers have completed 71 percent of the crop harvest, the province's government announced on Friday in its latest September 24 crop report. The completion of the harvest after harvest: summer wheat 76 percent; Durum wheat 84 percent; Barley 74 percent; Rapeseed 60 percent. REUTERS / Mike Sturk (CANADA - Tags: AGRICULTURE BUSINESS COMMODITIES SOCIETY TPX IMAGES OF THE DAY) - GM1E99T0W5601

Wheat production should remain relatively unaffected by the Coronavirus © Reuters

“The country needs shipping to keep it moving for the supermarkets to work,” he said, noting that most ferry companies carry both passengers and freight. However, passenger traffic has dropped 90 percent, which is causing companies to struggle.

Dealers closer to the hallmarks of consumers are hiring employees to keep pace with increasing demand. “We work with a food distribution center and the workforce has tripled in the past two weeks,” said James Mallick, Compliance Director at Pro-Force, the UK recruiter.

Part of this demand may subside when households’ closets are full, Mallick said, but the move away from food is likely to fuel sustained strong demand for grocery products and the need for additional labor.

While grain production can escape the devastation of the coronavirus crisis, perishable fruit, vegetable, meat, and dairy products are likely to have fewer choices for buyers if the crisis persists, analysts and advisers say.

The pandemic could disrupt the flow of fruits and vegetables into households, as labor-intensive planting and harvesting could be disrupted by immigration restrictions.

Aside from a possible labor shortage that affects harvesting and harvesting, the crisis could affect transports such as shipping and flights. Products from other continents such as some exotic fruits may be in short supply, but also products that consumers eat regularly, such as avocados, mangetout and baby zucchini.

“Certain types of fruit and vegetables may be affected,” said David Howorth, executive director of Scala, UK supply chain advisor, who notes that industrial food supply chains are more robust.

In the UK, 90 percent of the food we consume is unlikely to be produced domestically or in Europe if food is on the table. However, for the remaining 10 percent, “there may be some reduction in the amount of food we are normally used to,” he said.

To a certain extent, this also applies to less import-dependent countries such as the United States: Despite its large domestic agricultural sector, the country imports more than half of its fresh fruit, for example.

There are currently no problems with the overall supply, while companies along the chain are feverishly adapting their business to demand.

“People will get their pasta,” said Mr. Vacondio in Italy. “At the moment they are producing, packaging and shipping. . . Of course we don’t know what will happen in a month. It is difficult to predict. ”

Write A Comment