Food prices at risk as world runs short of workers

Labour woes: An employee holds a package of milk bottles at the Dairy Crest factory in the UK. Cancelled or delayed deliveries have forced some British dairy farmers to dump milk while stores run short. ― Bloomberg

SAO PAOLO: Across the world, a dearth of workers is shaking up food supply chains.

In Vietnam, the army is assisting with the rice harvest. In the United Kingdom, farmers are dumping milk because there are no truckers to collect it.

Brazil’s robusta coffee beans took 120 days to reap this year, rather than the usual 90. And American meatpackers are trying to lure new employees with Apple Watches while fast-food chains raise the prices of burgers and burritos.

Whether it’s fruit pickers, slaughterhouse workers, truckers, warehouse operators, chefs or waiters, the global food ecosystem is buckling due to a shortage of staff. Supplies are getting hit and some employers are forced to raise wages at a double-digit pace.

That’s threatening to push food prices –already heated by soaring commodities and freight costs – even higher. Prices in July were up 31% from the same month last year, according to an index compiled by the United Nations’ Food and Agriculture Organisation.

The coronavirus pandemic has helped spark a labour shortfall for many parts of the economy. But the impact is particularly stark in food and agriculture, which are among the world’s least-automated industries.

Food security is a sensitive issue in many parts of the world and thin margins mean rising costs generally pass through to buyers, according to Boston Consulting Group (BCG).

“Almost certainly there is disruption,” said Decker Walker, BCG’s agribusiness expert in Chicago. Effects vary among locations and products, he said, but “the general theme seems to be: The roles with the least desirable working conditions are actually the ones that we have the most pain with.”

There are signs the labour shortfall is curbing supplies. In the United States, wholesale distributors like Sysco Corp and United Natural Foods Inc are reporting production delays and slowdowns for items ranging from bacon and cheese to coconut water and spices.

In the UK, some stores are running low on staples like bread and chicken, while McDonald’s Corp ran out of milkshakes in August.

“We have family-wage, great jobs that have been open, that we’ve been recruiting really hard for and have had trouble filling,” said Patrick Criteser, chief executive officer of Tillamook County Creamery Association.

The Oregon-based dairy co-operative recently ran so short of workers that a board member had to skip an operational meeting to help out in the fields. “With the inflation we’re seeing in the business and the inflation that we’re seeing at the farm level, it’s going to translate to the shelf.”

Shortages are hitting farms, processors and restaurants alike. Shrimp production in southern Vietnam – one of the world’s top exporters – has dropped by 60% to 70% from before the pandemic.

And a fifth of tomato production in the South of Italy has been lost this year, due to the scorching heat and transport paralysis, according to the farmers’ association CIA.

“I have been in this business since the ’80s, but I have never seen a situation like this,” said Michele Ferrandino, a farmer in Foggia. “Tomatoes are very perishable goods. There were not enough trucks to transport the crop to the processing plants, in those crucial days” of the harvest, he said.

Cancelled or delayed deliveries have also forced British dairy farmers like Mike King in South Gloucestershire, England to dump milk while stores run short.

King estimated he had lost some 20,000 litres (5,283 gallons), and said some farmers had resorted to milking their cattle less frequently due to staffing shortfalls.

Even as restaurants and other businesses re-open in the US and parts of Europe – boosting demand for goods such as meat and bottled drinks – the Delta variant is spreading in places like South-East Asia, curbing primary production.

Other, longer-established pandemic effects are still causing problems too: Covid outbreaks continue to crop up in meat- and fish-processing plants, forcing temporary closures, and border restrictions in countries from the UK to Thailand are limiting the supply of migrant workers.

In some places, the scramble for staff is compounded by local issues, such as difficult and dangerous farmwork conditions caused by a record US heatwave, or the disruption of Brexit.

As a result, employers face another hurdle: Workers have plenty of options.

The current economy is creating “choice where choices may not have existed in the past,” said BCG’s Walker. When “the entire world is short-staffed,” filling less desirable jobs gets more difficult, he said.

Employment in the food supply chain can certainly be tough. Whether it’s backbreaking strawberry picking, insecure slaughterhouse work or the fast-paced, high-pressure environment of a restaurant kitchen, many jobs are physically taxing, short-term, poorly paid – or a combination of all three.

With more jobs available, Australian workers who might previously had settled for positions at meat processing plants in sparsely populated areas can opt for work in busier towns instead.

Many of the European Union citizens who might typically travel to the UK to work on farms, in haulage or serving coffees are choosing to stay in their home countries or on the continent. American labourers who have struggled with sweltering heat in the fields may choose the cool interiors of a store instead.

Jon DeVaney, president of the Washington State Tree Fruit Association, acknowledged that work such as fruit picking was demanding. “It is a physical job,” he said.

“You are picking fruit and carrying it up and down ladders, so if your alternative is pushing buttons on a cash register, that might be more appealing.”― Bloomberg

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