The Post-Pandemic Pork Supply Chain: 9 Issues to Keep an Eye On
Ag and food tech innovation, inflationary pressures and food system realignments topped Purdue University professor Jayson Lusk’s list of potential disruptors that the pork industry may encounter in the next three to five years. During the National Pork Board’s monthly webinar, he also pointed out these additional nine issues to watch out for in the years ahead.
1. Animal disease.
Animal disease is a constant concern to the pork industry, Lusk said. However, a new wrinkle is how animal disease issues might be interpreted by the general public.
“Having come out of a human pandemic, I am a little worried about how consumers might respond to a big animal disease outbreak in light of all the attention and all the fear, all the concern we've just had over a human-spread illness,” he said. “I think people might be very sensitive to how some of those issues might play out.”
Even if those animal disease issues don't have an impact in terms of what people consume in the grocery store in terms of health or safety, people conflate those things in their minds, he said. It’s something that producers may not be able to do much to fix, but he advises producers to think about in terms of preparing for the future.
2. Accelerated trend to e-grocery.
Prior to the pandemic, the food industry saw an accelerated trend toward online food buying. Lusk said the pandemic helped push the world towards more e-commerce. He doesn’t think that trend will go away. He expects it to continue to accelerate.
“I did a survey six months ago asking consumers how many of them have bought meat online in the past month, and more than 25% said yes. I think that's something to keep an eye out for,” he said.
3. More food at home will bypass the store.
The trend to more e-grocery purchases may open up some opportunities to reach consumers in new ways, he said. Because of this, he believes it’s possible more food will bypass the traditional grocery store and reach consumers through either direct delivery to their homes by Amazon or grocery stores delivering groceries to consumers at doorsteps.
“I think even a few grocery stores have been toying with these ideas of micro-fulfillment centers or ‘dark grocery stores’ on the outskirts of town,” he added. “In larger, more urban centers, where when you place an order online at your grocery store, rather than a stocker going through the store that that you and I go through as a consumer, instead there are warehouses dedicated just to filling orders for delivery. That may be a more efficient way to do those things, particularly in larger, more urban areas.”
4. Labor-saving automation.
The pandemic has revealed that labor is an issue. Of course, it was an issue before the pandemic, Lusk said, but the challenges associated with packing plants shuttering or slowing down amplified these concerns. He believes these challenges incurred during the pandemic will incentivize packers to think more about how they can reduce reliance on labor, but also in food retailing, too.
One example may be the dark grocery stories, he said, and the possibility to automate some of that order fulfillment that happens online through consumer food buying.
5. Smaller groceries focused on fresh items.
What will grocery stores of the future look like? If more food bypasses, the store, how will that impact the typical grocery store? Lusk said it will be interesting to see what grocery stores do in the future in terms of their size and offerings.
“It may be that the grocery store footprint will look a little smaller and perhaps more focused on fresh items. I think there still is a preference to pick out fresh items, like meat, in person,” he said. “But will that always be the case? It’s hard to tell.”
The lines may begin to blur even more between what a grocery store is versus what a restaurant is, he added.
6. Shake-up in food service sector.
The food service industry is experiencing a big demand increase as people start getting out and about more. However, Lusk said there could still be a shake-up there. Some restaurants have gone out of business and the food service sector may look different when the pandemic is over, he explained.
7. Increased scrutiny over concentration and anti-competitive behavior.
“There is, has been and probably will continue to be increased scrutiny over concentration in the sector, anti-competitive behavior, partly due to the plant shutdowns we had due to COVID about a year ago,” he said. “But also because of some of the widening price spreads that we had between the wholesale and retail sector.”
He believes there are legitimate economic reasons why there was a widening gap between the farm price and the wholesale meat price. Regardless, it's caused a lot of concerns, he said, and will be a topic of conversation in this industry for months and years to come.
8. More ghost kitchens.
COVID-19 hit the restaurant sector hard and resulted in many restaurants closing down.
“I think we may be in for a bit of a shake-up in the food service sector as we come out of the pandemic,” Lusk said. “How will restaurants look, particularly as they've changed and altered their operation to do more home delivery to things like Uber Eats and DoorDash?”
He expects to see more ghost kitchens – restaurants that don't have the front of house but instead focus on fulfilling orders for food delivery service.
“This is what I mean by the blurring of the lines between what's a grocery store and what's a restaurant,” he explained. “If we have restaurants emerging that are ghost restaurants and all they're doing is delivering food, how different is that then what a grocery store could be? There may not be much of a difference between them.”
9. Rising interest among segments in local, direct farm delivery.
Lusk noted there are still some lingering issues and attitudes hanging over from the disruptions experienced in the food supply chain during the pandemic. Among some segments of consumers, there has been an increase in demand for more direct farm delivery to consumers.
“My suspicion is that will still remain a fairly small part of the overall segment, but one that there is going to be some demand growth in,” Lusk said.
Read more:
3 Pork Supply Chain Disruptors to Watch in a Post-COVID World
