Early-pandemic calls to localize supply chains unfounded

With a year's worth of data, three agriculture economists revisit early-pandemic predictions on the food supply chain

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With a year's worth of data, three agriculture economists revisit early-pandemic predictions on the food supply chain

A year of data shows early-pandemic calls for radical changes to food systems and risk management programs were unfounded, say some economists.

Particularly in the early days of the COVID-19 pandemic, food supply chains struggled to adapt to changing consumption patterns and processors shut down due to virus outbreaks.

“Into that void of uncertainty came a lot of voices on suggestions and policies,” said Ryan Cardwell, an economist and professor from the University of Manitoba. He spoke during a University of Manitoba online webinar on April 14.

Cardwell saw two common themes from commenters: food production and security were seriously threatened and must be transformed, and that farm incomes and production were in jeopardy.

“I felt that a lot of the commentary that I was reading was perhaps unwarranted, and even worse, perhaps misguided and may have resulted, had it been followed, in policies that made things even worse,” he said.

There were several short-term shocks like the shift of food expenditures from food service to retail, said Jill Hobbs, an agriculture economist from the University of Saskatchewan. This required realignment of supply chains.

However, she called these short-run issues.

In broad strokes, however, food production was up, said Cardwell. Ag exports were “at or near a record,” he said.

The food consumer price index showed that in most months, the rate of food price inflation was below the rate of food price inflation in 2019.

“Food prices were very stable in 2020 relative to history,” said Cardwell.

Statistics for farm income in 2020 are not available but Cardwell said Agriculture and Agri-Food Canada is forecasting that farm incomes will approach record levels.

Cardwell said even economists who were confident the food system would adapt were surprised how well it held up. This data suggests that early calls for transformational change were unwarranted, he said.

“There were sort of often ulterior motives to these things,” Cardwell said. “You know, people who had preferences for smaller scale, or whatever, were sort of capitalizing on this as an avenue forward for change.”

There’s no evidence that a more localized or regional food system would have fared any better if faced by the same shocks, Hobbs said.

Small meat processors, for instance, would be vulnerable to the same labour issues as large packers, she said. Several large packers had to shut down as COVID-19 spread among workers.

Initial calls for huge sums of money for farm risk management programs also proved to be unwarranted, said Alan Ker, director of the Institute for the Advanced Study of Food and Agricultural Policy at the University of Guelph.

“There was a lot of talk, rhetoric out there about that these programs would fall apart or farms would fall apart without sufficient funds going into these programs,” said Ker.

In April the Canadian Federation of Agriculture called for $2.6 billion in emergency funding for impacts not covered by existing risk management programs. The Grain Farmers of Ontario ran an ad which said “the food supply chain is breaking.”

The government put aside $125 million through its AgriRecovery framework for additional expenses caused by processing delays; however, Ker said he can’t tell that many farmers have capitalized on those funds.

FCC was given additional lending capacity, but there’s no evidence that a lot of it was used, said Ker. “These programs amounted to very little,” said Ker.

Cardwell and Ker agreed the suite of risk management programs would have held up, even if things went worse than they did.

The markets were nimble and responded quickly, said Cardwell. Government policies aren’t nimble so if considering a big change in policy, he said; we need good evidence to support it.

Last spring Ker, Hobbs and Cardwell wrote articles for a special issue of the Canadian Journal of Agriculture Economics in which they predicted how the food system would hold up during the pandemic. This spring they’re revisiting their predictions in another special issue of the journal.

About the author

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Geralyn Wichers

Geralyn Wichers grew up on a hobby farm near Anola, Manitoba, where her family raised cattle, pigs and chickens. Geralyn graduated from Red River College’s Creative Communications program in 2019 and was previously a reporter for The Carillon in Steinbach. Geralyn is also a published author of science fiction and fantasy novels.

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