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Serving: MI
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EXECUTIVE ORDER: An executive order closing restaurants to on-premises consumption as a COVID-19 risk mitigation effort means 51% of the meals normally consumed outside of the home will need to be prepared at home.

COVID-19 forces food industry to change distribution

Michigan restaurants, which normally provide 51% of all meals, are closed for on-premises consumption.

Escalated consumer purchases of many basic grocery items — in response to COVID-19 emergency orders temporarily closing Michigan restaurants for dining in — has taxed the logistical food supply chain throughout the state.

Gov. Gretchen Whitmer’s executive order has required all places of public accommodation, including restaurants, closed to the public for on-premises consumption until March 30 to mitigate the spread of COVID-19, protect the public health and provide essential protections to vulnerable Michiganders.

It’s also forced the food processing industry to expand hours of operation and redirect product processing and packaging that normally would have been destined to food service establishments as bulk goods to consumer-friendly packaged products, says Carl Bednarski, Michigan Farm Bureau president. That’s no small task.

According to John McNamara, Michigan Restaurant and Lodging Association vice president of government affairs, restaurants normally provide 51% of the meals consumed on a daily basis. Based on 2018 figures, Michigan is home to 16,543 eating and drinking establishments, with $17.9 billion in estimated sales, according to the National Restaurant Association.

“It’s important Michigan take the necessary steps to protect public health, but we also realize the importance of supporting local retail, eateries and stores,” says Gary McDowell, director of the Michigan Department of Agriculture and Rural Development.

“You can still get your favorite foods, just in a different way than before, as we work together to reduce the spread,” McDowell continued. “I urge you to continue to support your area businesses, who are often the foundation of our local communities, by buying gift certificates for later use, getting take-out or delivery.”

Michigan Retailers Association’s Meegan Holland says the organization is monitoring and interpreting the latest state and federal aid packages for its 5,000 member businesses — some of which are struggling during the COVID-19 spread.

“But some stores are doing well, like grocery stores,” she says, noting that Michigan Retailers is encouraging shoppers not to hoard items such as toilet paper, milk and produce.

Bednarski says the dramatic shift in consumer food-purchasing habits and consumption has caused a temporary price increase at the retail level for many basic household grocery staples, including eggs, dairy and meats.

Longer-term, Bednarski expects the price pendulum to swing in the opposite direction, at least at the farm level.

“We’re already hearing market forecasts calling for significant price declines in literally every major commodity sector of U.S. agriculture,” Bednarski says. “Market analysts are predicting that a COVID-19-induced recession will cause producer pay-price declines of 20% in dairy and 30% to 40% declines in pork and beef products, for example.”

Michigan Beef Industry Commission

One of the commodities affected is Michigan’s beef industry, where consumers’ purchasing power remains strong, said George Quackenbush, executive director of the Michigan Cattlemen’s Association and Michigan Beef Industry Commission.

“We are seeing retail demand and boxed beef prices increasing, yet the COVID-19 panic has resulted in a freefall for cattle markets with cash prices steadily decreasing," he said.

Because of this disparity, Quackenbush said the organization is requesting the packing industry “act in good faith” and participate in the cash market with “bids based on the increased cutout value rather than the futures, as well as increased participation in the Fed Cattle Exchange to provide further confidence to the producer segment of our industry.”

“Beef demand will be supported as long as the consumer remains optimistic,” he said. “With the volatile global landscape we find ourselves in, forecasting long-term demand and pricing is nearly impossible. Presently, the industry is focused on ensuring markets remain open and product continues flowing to the channels.”

National Milk Producers Federation 

Clay Detlefsen, senior vice president of regulatory and environmental affairs for National Milk Producers Federation, says shortages of consumer staples in grocery stores strained by responses to coronavirus-related restrictions should begin easing, as soon as within a week.

“There is plenty of food in this country. There is no food shortage,” Detlefsen said in an NMPF podcast. “We have a bit of a distribution problem caused largely by consumers, in essence, overconsuming.”

NMPF President and CEO Jim Mulhern said U.S. dairy farmers continue operating, and they understand the importance of steady production.

“Dairy supplies aren’t experiencing production interruptions at this time,” Mulhern said. “We’re working with all aspects of the dairy supply chain to ensure dairy products get to everyone who needs them and that — as has always been true — dairy will remain something consumers can count on.”

Michigan Allied Poultry Industries

Michigan’s poultry industry is improvising amid the spread of the virus, said Allison Brink, executive director of the West Michigan-based Michigan Allied Poultry Industries.

“Many farms are seeing increased orders from retailers, as grocery stores struggle to keep eggs, turkey and chicken on their shelves, while others who serve mainly food service and restaurants are seeing decreased orders,” Brink said.

“Regardless of the situation, our farmers are still farming,” she continued. “Hens are still laying eggs, turkeys and broilers need to be fed, and everyday, Michigan’s family poultry farmers are working together to supply consumers with healthy, locally produced proteins."

Michigan Pork Producers Association

While demand for pork product continues to be good, Mary Kelpinski, Michigan Pork Producers Association CEO, said producers and processors alike are on high alert to make sure essential functions across the pork supply chain are maintained.

“Pigs and basic ingredients for feed supplies are shipped on a daily basis — any disruptions could really compromise the pork industry,” Kelpinski said. “We need to make sure feed trucks, livestock haulers, supply deliveries aren’t disrupted.”

Labor availability, both on-farm and in the pork processing industry, is a major concern, said Kelpinski, noting that employees throughout the industry also are parents contending with school and day care closures.

“We also have a long-standing dependence on foreign workers to care for our animals and help run our processing plants,” Kelpinski added. “So, we have concerns that the COVID-19 situation will only exacerbate what is already a major industry challenge."

Michigan Potato Industry Commission

According to Michigan Potato Industry Commission Executive Director Kelly Turner, the COVID-19 pandemic has put U.S. potato markets in a state of flux. Chip companies are adding to orders to keep pace with retail demand. Grocery stores are having trouble keeping stocked with table potatoes and chips.

In contrast, fryers are no longer interested in purchasing contract overages, because of reduced movement of french fries to offshore markets and to domestic food service customers. A supply crunch for Russet, red and yellow variety table potatoes is intensifying.

Unsettled conditions are likely to continue for several weeks.

“Packing operations have added shifts, hours and employees to keep up with increased demands from grocers,” Turner said. “In several cases, packers who have ran out of inventory are networking with operations that have potato inventory in stock, but lack the packing capacity to meet the increased demand.”

Michigan Blueberry Commission

The Michigan Blueberry Commission reports that demand for fresh blueberries is up 20% to 25%, and supplies can’t keep up, MBC Executive Director Kevin Robson said. While this is normally welcomed news that benefits growers with higher prices, questions remain on how long higher consumer demand and prices will continue.

“Marketing experts from around the globe see the current volatility as not long-lasting,” Robson said. “Given the ongoing changes surrounding the COVID-19 pandemic, blueberry growers are optimistic, but concerned with labor availability needed to actually harvest what appears to be a promising crop.”

So far, Robson reports 2020 blueberry production looks favorable because of favorable weather conditions throughout the winter and early spring.

Source: MFB, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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