The rate and degree to which the Coronavirus spread to countries far and wide demonstrated how truly interconnected today’s world has become.
Initially, governments and industry grappled to contain the health crisis that ensued by imposing strict stay-at-home orders to curb the spread and ease the burden on hospital facilities. Next, they unveiled fiscal stimulus packages and relief measures aimed at easing the financial burden brought about by the temporary shut down of many facets of the economy.
Disruptions in food production chains and disequilibrium in the supply and demand for major agricultural commodities are now pointing to a third global crisis showing signs of possibly emerging; the collapse of national and international food supply systems.
Starting with the international flow of staple commodities and feedstock, and then moving up and midstream, in this week’s feature we assess the various ways in which COVID-19 is interrupting globally interconnected supply networks that many of the food products we consume are reliant on.Commodities Not Flowing
Many countries are addressing domestic food security threats by raising tariffs and in some cases outright banning the export of staple commodities. Major rice producers such as Vietnam have suspended new export contracts, while major grain producers such as Russia are prohibiting the export of processed grains.
With less volume to handle, outbound cargo ships and planes destined for major logistics routes are opting to sit idle, hampering the delivery of those commodities not facing export restrictions.
Domestic travel restrictions are also prohibiting the flow of commodities from making it to the country’s main export ports. In Argentina, for example, some municipal authorities have banned trucks from entering and exiting their towns due to health concerns, impeding the world’s largest exporter of soymeal from meeting its international order commitments.
From a recipient standpoint, many countries that are net importers of staple commodities are experiencing currency depreciation, leading to rising food prices that are exacerbated further by panic buying on the part of consumers who have become worried that imported products might run out.
The plummet in oil and gas prices brought about by the combination of a price war between the energy superpowers Russia and Saudi Arabia, and a sharp decline in demand due to the onset of COVID-19 is also impacting on the downstream production of by-products and petrochemicals.
As an example, in the US, beer and soda manufacturers are starting to feel unease over diminishing supplies of carbon dioxide from ethanol plants. Ethanol, which is blended into the country’s gasoline supply, is experiencing a drop in production as gasoline demand tails off. As a result, 34 of the 45 ethanol plants in the country have stopped or cut production.
Upstream: Migrant Labour
Many countries’ agricultural output and food security is heavily reliant on immigrant and seasonal migrant workers. This is especially pronounced in the industrial world where foreign labourers make up over half of the workforce on commercial farms.
With borders closing and travel grinding to a halt, the impact is going to be felt particularly hard should the lockdowns continue into autumn to correspond with peak harvest and planting seasons throughout Europe and North America.
- Canada relies on around 60,000 migrant farm workers each year. And although the federal government is granting visas conditional on new arrivals quarantining for two weeks, foreign embassy closures and cancelled commercial flights are presenting barriers to entry. The Canadian Honey Council, in partnership with the Department of Global Affairs, recently chartered a flight from the Nicaraguan capital of Managua that will carry 80 skilled foreign workers to Canada to help domestic beekeeping operations with the spring hive-building season; a crucial period for the cross-pollination of fruits, vegetables, and canola.
- In the US, where it estimated that over 50% of the agricultural labour force is made up of undocumented workers, the most recently passed economic stimulus package was met with controversy as it failed to include protections for the thousands of undocumented immigrants who serve as the lifeblood of commercial farm harvesting. The Trump administration has also imposed a temporary freeze on immigration, a move that could further hamper agricultural output.
- In the UK, the National Farmers Union has stated that due to restrictions on migration, they are set to face a shortage of 70-80,000 harvesters over the next two months.
- Spain has issued a royal decree to permit 100-150,000 unemployed people and undocumented immigrants to help close the gap in the current deficit of migrant labourers needed at this time of year to pick fruit ranging from cherries to nectarines, peaches and apricots.
- Germany, anticipating a shortfall of around 300,000 labourers, has instituted an emergency program to ease entry restrictions for foreign workers.
- Israel has opted to automatically extend expiring foreign work visas and has temporarily cancelled an age limitation that was previously in place.
Moving further midstream, it is not just farms and fields that are labour intensive. Processing and packaging facilities play a key intermediary role in agricultural products making it onto supermarket shelves in the form of finished goods. These facilities often have a high concentration of workers interacting in close quarters, placing them at especially high risk for coronavirus outbreaks.
In the US, over 30 meat processing plants have reported outbreaks, with over 3,000 workers being diagnosed as having contracted the virus. This has led some major meat processors, including Tyson and Smithfield, to close some facilities; slowing meat production by at least 25%.
On April 28th, President Trump invoked an emergency order to keep meat processing plants open, justifying the edict by declaring it as an essential service. Union and labour activists have criticized the decision, arguing that without the provision of adequate PPE’s (personal protection equipment) the plant workers, many of whom are low paid people of colour, are putting their health and safety at risk.
North of the US border, Canada’s even more highly concentrated meat industry is facing similar challenges. Two of the country’s meat processing plants that make up approximately 70% of the country’s beef output have experienced shutdowns due to outbreaks.
The closing of processing facilities is not unique to North America. In mid-April, Malaysia, the world’s second-largest palm-oil producer had to close several mills in the province of Sabah due to workers testing positive for the virus.
As some agricultural products experience suppressed production volumes, others are facing a supply glut.
Regrettably, at a time when many are going hungry and food banks are unable to meet the sustenance needs of the economically vulnerable, perfectly good milk is being dumped and crops such as potatoes and onions are being left to rot due to the closures of key food service customers (i.e. restaurants, hotels, airlines and schools).
Produce has a limited shelf life, and without financial assistance to help transport these products on a large scale to urban food banks, farmers are left with no choice but to let their yields go to waste.
In Canada, it is estimated that three-quarters of french fry consumption takes place at restaurants. A special breed of potatoes is farmed for french fry consumption, and this is not substitutable with the variety of potatoes typically found in grocery stores. With restaurants across the country shut down or only open for take-out and delivery, millions of potatoes are at risk of being thrown away.
Facing a similar situation in Belgium, where nearly 750,000 tonnes of potatoes were in danger of going to waste, a national campaign was launched asking Belgian families to support local farmers by eating ‘fries’ twice a week in their homes.
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Focus on Employees: the Constant in the Pandemic
If there was any question about the importance of employee engagement, this pandemic has elevated it to A #1 status. Certainly, all companies would have admitted that having an engaged team and ensuring the health and well-being of their associates was important pre-crisis. But was it THE most important aspect of their business or at times was it an afterthought? The vast changes during the virus and the extreme pressures put on the workforce have not only raised the awareness of employee engagement but escalated it to priority status as business leaders retool their organizations to manage the demands for essential goods and downsize their workforces to adjust to declines. Through this, they are having to consider their most valuable assets, their people, as they plan for the short and long-term survival of their businesses.
Retailers and Suppliers, in particular, have committed and dedicated employees on the front lines at manufacturing sites and point of sale who are being battered with long workdays, steep learning curves with new roles/additional responsibilities and/or are in environments with large numbers of people in close proximity, escalating the risk of exposure. In addition to front-line workers, the grocery industry and others were forced to totally change the work environments for office-based staff around the world. Displaced from their cubicles, associates shifted to home-based work environments where they have encountered new stressors: new tools and ways of working; juggling the needs of business and family as they sheltered in place together; and have undergone immense daily pressures to keep product moving through the value chain to consumers. Clearly, businesses and their associates have encountered way more change than would normally be the case in such a short time, and it is having detrimental effects on peoples’ well-being, mental health and trust that their jobs will be there long term.
Business leaders not only must respond to employee concerns given the gravity of these emerging issues but also are feeling some of these same pressures personally. Thus, they can understand and empathize with the need to care for the individuals who were dedicated and committed during the pandemic. Their actions today will stay with their associates long after the pandemic has subsided. Some of the ways in which companies are bolstering their toolkits to support employees and drive their level of engagement during the crisis and for the future include: communication and messaging, benefits and support, and expressions of appreciation and gratitude.
Communication and Messaging
Clear and transparent communication is critical to employees during this crisis. It provides reassurance, encouragement and builds trust. As explored in Edition 3 of InFocus, new virtual collaboration tools are being put to good use by socially distanced workforces as the go-to medium to replace in-person interactions.
- Messaging from senior management shows employees that they are not alone and that they have management support. It also personalizes what they are going through and shows empathy for their situations.
- Adopting a team-based approach to reaching every associate is a more personal level of connection that leans on team leaders and peers to maintain on-going connections with smaller groups of associates for work-based support and on-line team building activities.
- Virtual socialization encourages interaction with the company and teams not only as it relates to the workplace but to generate social interaction, such as on-line activities, weekly challenges, or celebrations to keep the team motivated and engaged.
Benefits and Support
Extreme stress and other uncertainties associated with the pandemic are leaving employees with feelings of anxiety, isolation and doubt about their futures. Responding with increased levels of flexible benefits and support will acknowledge that their feelings are legitimate and help them manage through the crisis.
- Improved mental health benefits are becoming ubiquitous with showing care and understanding for associates. Some businesses provide mental health therapy sessions, well-being coaches, on-line resources and apps for relaxation, meditation and proper sleep habits to promote an overall sense of well-being and ‘happiness’.
- Flexible work hours and Work from Home (WFH) gave new meaning to a ‘day at the office’ as shelter in place restrictions were imposed. In recognition of the challenges some associates face with adjusting their daily lives to work from home while also needing to look after their loved ones, some businesses are offering flexible work hours to put these associates at ease. While, there has been a period of initial disruption, WFH and the flexibility it affords, has shown productivity improvements and given employees a sense of empowerment as it has taken hold around the world.
- New cross-business employment opportunities have emerged to safeguard loss of employment or furlough. This has taken two forms 1) companies’ personnel may be able to shift from low demand to over-extended departments internally or 2) companies may team up to manage peaks and valleys in their businesses by sharing employees (e.g. Delhaize/Colruyt and McDonald’s/Aldi).
Expressions of Appreciation and Gratitude
In times of crisis, acts of kindness and gratitude not only make people feel good, but research shows that it improves their productivity and motivation.
- Hero pay and appreciation allowances have been frequent gestures to support employees during the pandemic.
- Extended leave and paid time-off are additional incentives provided by businesses to show their appreciation for long hours and days worked.
- Appreciation campaigns remind team members that others see their contributions and are thankful for them. Even communities are posting signs as a way of saying ‘Thank you’ to front-line heroes. As an example, here are some of the companies and communities taking the initiative to recognize employees and other front-line heroes in the crisis: Walgreen’s Recognizes Essential Employees, Pepsi AMESA Thanks the Team for Q1 Progress, L’Oreal Gives A Massive Shout Out to their Employees, Abbotsford grocery store employees thank for appreciation as panic-buying subsides, AB InBev Thanks Associates in South, Central Europe & Middle East, Kraft Heinz Credits Employees for Strong Q1 Results, Essity Recognizes Employees by Working Together During the Pandemic, RB Recognizes Employees for Courage and Determination During the Crisis.
Employee engagement is critical to keeping teams positive, motivated, and working at peak performance levels. The ability to effectively craft and execute the engagement tactics described above requires an objective view of your employees’ engagement level today. This perspective starts with a commitment by senior leaders to ‘listen’ to their associates. Keeping a pulse on employee well-being in an anonymous way may also shed light on the level of engagement within employee ranks. A simple survey collecting information anonymously will encourage open and honest feedback from teams.
As we come out of the crisis, retailers and suppliers who have put their people first will be positioned to thrive. Businesses, their strategies and models will continue to change and morph long after the crisis has subsided. However, people are and will continue to be the constants that drive change, innovation, and ultimately business success. Those that maintain a focus on their employee base and keep them engaged will be set up and fit for the future.
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