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Purchasing peaks, the expected and unexpected

Summary of advice provided by key stakeholders in the agri food sector

The choices we make as consumers can have an influence on the food system. The supply chain is informed by data and can predict spikes in demand. However, panic-buying results in an unpredictable spike which results in temporary empty shelves.

In week one of the course we introduced the beef supply chain. In this article we will use this beef supply chain as an example of how the supply chain works and the consequences of panic-buying.

The Beef Chain

At the start of the beef chain, the suckler herd (the breeding stock for beef bred cattle, i.e. cattle that are destined for the beef market), produce approximately 1 calve every 12 months. The gestation period is approximately 283 days (roughly 40 weeks, similar to humans!). Once the calve is born it will grow for the next 24 to 36 months (depending on sex and breed) until it reaches the ideal weight for slaughter. If we take into account gestation period and growing period, it can take up to 45 months from start to finish (that’s almost 4 years!) before cattle is available to the market in the form of beef products. This means the reactivity of the sector is hampered by the production time. This essentially applies to all basic raw materials for foods: plants and animals alike have varying times for production. The likes of the poultry sector can react faster, as breeding/gestation and production times are significantly shorter (for example, it takes approximately 6 weeks for a new-born chick to reach slaughter weight).

Processing, logistics, distribution and retailing can generally mobilise swiftly, but only if there is a regimented and planned supply in the pipeline. Demand can’t be met by increasing production of beef cattle in the present. The increase in production at farm level now will only be realised a minimum of 3 years into the future, without the assistance of beef imports from other countries.

Peaks in Consumer Demand for Beef: Expected Vs Unexpected

Food retailers operate on yearly, monthly and weekly forecasts for the produce they need to bring into their supermarkets. Generally, demand for beef is relatively steady throughout the year but there are two notable time points in the year that demand for beef will peak among consumers; mainly Christmas and the start of the summer months.

Expected peaks in demand can be managed, as retailers can ensure sufficient supply in the chain through forecasting and working with processors and producers to ensure breeding and growing seasons of animals are matched, thereby ensuring adequate supply at these two peak times.

When there is a crisis or an unexpected peak in demand because of panic buying (for example, due to the covid-19 pandemic), the supply chain is taken by surprise and is unable to meet the demand. This is because they have not planned for it and, therefore, there is not sufficient numbers of domestic animals available for slaughter at the right time. This might mean that retailers and processors may need to rely more on beef that is imported from other countries. However, the same rules apply; an increase in production of beef in Poland, will not benefit the supply chain in the short term. Imports can close a temporary void in the short term but generally can’t be sustained in the medium to long term, as countries in which produce is imported from have their own commitments to domestic and other international customers.

While shortages of beef haven’t been widely reported during this pandemic overall, the trend of consumer panic buying has the potential to lead to shortages of beef (and other food products). The risk is not that there isn’t enough beef, but rather a sudden upsurge of panic buying which could lead to a shortage. That said, a recent news report suggests that the retail demand for beef cuts such as mince has gone up but demand for more premium products such as steaks has reduced. We will look at this more in ‘Globalisation and Mobilisation of the Beef Market’ below. Nevertheless, the risk of shortage of any product lies in consumer buying behaviour, i.e. if consumers continue to purchase normally, the supply will keep flowing as it always has done.

Globalisation and Mobilisation of the Beef Market

As we learnt earlier, the beef supply chain / market (like most foodstuffs) is truly global with product being used to supply the home (domestic) market but also being exported to supply customers in international markets (typically with products we do not eat domestically). Likewise, the UK/Ireland may rely on imported product to top up domestic produce at certain times as discussed above (remember the UK is 75% self-sufficient in beef!).

Beef processors serve both retail based customers (i.e. supermarkets) but also food service based customers, including restaurants, wholesalers, butchers and Fast food restaurants such as McDonalds, both domestically and internationally. With a significant reduction of food service outlets open for business during the pandemic, reports of oversupply of premium cuts (e.g. steaks) has been reported by processors, due to downturn in sales from food service markets. If the economics of the supply chain (i.e. it is commercially viable) and the consumer demand allows, processors may have some capacity to redirect the products normally entering food service markets into the retail market (e.g. supermarkets, butchers, farm shops).

You may be more acutely aware than ever of the well-stocked shelves in butcher shops. Butcher shops tend to purchase their meat from wholesalers who would also normally also supply food service outlets such as restaurants, in bulk. With many restaurants now closed under social distancing measures, this produce may be more readily available to butcher shops, farm shops and other retail markets, and are therefore an important retail avenue for consumers. This should provide reassurance to consumers that there is plenty of product available, provided we continue to practice normal purchasing behaviours.

Because of mobilisation and redirection into retail markets, you may soon find differing pack sizes of standard products becoming available in the retail market, e.g. bulk bags of rice or flour that would have traditionally made its way to food manufacturers and food service based customers. However, it is important to note that processors are often hindered by the operations within their factories. Food factories have been configured to support their normal ratio of volumes and pack sizes for retail vs food service/manufacture and therefore redirection into retail may not be that easily achieved. Processors may have to spend time reconfiguring their factories to service the increased demand in the retail environment, and as a result you may see shortages of some products persisting for some time. Continuing to panic buy and buy more than you need when a small amount of your desired product becomes available will only prolong the supply chain’s ability to play ‘catch up’.

Supply Chain Recovery

An unexpected sunny summer weekend can often lead to a shortage of certain beef products such as burgers and mince for summer BBQs, and as a result, processors and retailers have not had sufficient time to prepare and react as they normally would. However, the one clear difference between a few sunny weekends and panic buying during a pandemic, is that an exceptionally sunny weekend is significantly more temporary (particularly in the UK and Ireland!) than a global disease pandemic, and therefore the supply chain can recover faster from the shortage.

The supply chain is unable to recover quickly from a sustained period of consumer panic buying, it will takes weeks, if not months. Therefore, it is important that as a consumer you continue to shop as you have always done, only buying what you need to ensure a shortage is not created in the beef market. The supply will continue to come, if consumers continue to purchase normally. As consumers, we are all important in ensuring responsible buying behavior normally but even more so during the covid-19 pandemic.

What would we like you do to

Please answer the following questions in the comments section:

  • List one thing you have learnt about beef production that you didn’t know before?
  • Are you surprised about how long it takes to produce beef?
  • How will you change your shopping habits knowing what you now know?
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Understanding Food Supply Chains in a Time of Crisis

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