Shuttered restaurants, farm surpluses, and empty grocery shelves put a national spotlight on the Covid 19-related pressure points in the U.S. food system. The re-envisioning of that system has already begun, with mounting calls for localization and a greater emphasis on smaller, geographically distributed farms and food-processing plants. A more resilient food system will require greater innovations than these, however.

Little evidence exists that a less concentrated, more geographically distributed system would have performed better in the current disruption. Strategies to halt the spread of the coronavirus have focused on social distancing and stay-at-home measures; a food system requiring more farmers with small vans and trucks to move around urban centers in New York, Chicago, or Los Angeles hardly seems the best way to limit the spread of a viral pathogen. Moreover, labor-intensiveness, a purported benefit of the local food and farm-to-table movements, is a liability in a pandemic.

The initial disruptions to the food-supply chain occurred in mid- to late-March, and they were primarily a result of large, unexpected demand shocks. Demand for food eaten away from home was seriously diminished with the closure of restaurants, cafeterias, and food-service establishments. The disruptions were impervious to scale. Farms, small or large, local or distant, were significantly harmed if their primary customers were restaurants or restaurant-supply intermediaries.

Food production is not the problem. Farmers’ markets this summer, for example, have struggled because consumers have been reluctant to congregate with others, not because farmers couldn’t grow enough food. In some cases, farmers have dumped tons of milk and produce because anticipated demand for these commodities suddenly disappeared. Unlike other manufacturing systems, plant and animal growth can’t be stopped with the flip of a switch, nor can food-processing chains be quickly reoriented from wholesale to retail production.

While demand for food eaten away from home was falling, demand for food purchased at grocery stores spiked, leading to some empty shelves. Grocery stores can anticipate and plan for peaks in demand, such as the days around Thanksgiving and Christmas, or even regional disruptions related to natural disasters such as hurricanes. Global shocks that occur once a century are impossible to predict or plan for. Pressured to reduce food waste and cost, groceries operate on nearly just-in-time delivery systems. Holding excess inventory is costly, and in the case of fresh produce, wasteful. We can ask grocery stores to store more inventory, but with associated costs.

A second set of supply-side food-sector disruptions occurred when workers in meat-processing plants contracted Covid-19, resulting in slowdowns or shutdowns in beef and pork packing. At the peak of the crisis, these plants were running 40 percent below the prior year’s levels, which resulted in reduced availability and higher prices in grocery stores. Because most cattle and hog processing occurs in a handful of large plants, critics have called for the breakup of large meat packers or the creation of new small- or medium-size processing plants.

The problem, however, wasn’t scale, but rather the absence of extra processing capacity to absorb the excess supply that resulted when plants closed. Building excess capacity is extraordinarily expensive, and any processing plant that leaves valuable space and capacity underutilized is likely to lose out to competitors that use their capital efficiently.

To create a more robust food-supply chain, we need to take a thorough look at the legal and regulatory impediments that prevented food from flowing to areas of falling demand to areas of rising demand. In the pandemic’s early days, many locales not only shut down restaurants but also prevented restaurants from selling inventory to consumers because they lacked grocery licenses. Food and Drug Administration rules prevented farms that delivered eggs and egg products to restaurants from diverting supply to grocery stores, for example. Many of these rules were ultimately relaxed, but not until after the worst effects had been felt.

Facilitating markets that utilize prices to signal where food is most needed is vital to ensuring that food supply is not interrupted. While extensive public markets trade in agricultural commodities, trade is less expansive for retail foodstuffs, where supply is often centralized by large food distributors or grocers. Lessons can be learned from food banks that use the power of markets to aggregate information and get food to where it is most desired. Such markets can benefit large and small farms alike. One of my colleagues developed an online market platform for local farmers to connect with consumers facing Covid-19 related closures of farmers’ markets.

More innovation and automation in food distribution and retailing will also limit contagion while facilitating efficient markets. We have become accustomed to self-checkouts at the grocery; robots are already doing a good deal of cow-milking. Driverless cars and trucks could ensure the movement of food while minimizing risk of contagion. Online sales of food for delivery or in-store-pickup will continue to rise; centralized warehouses that stock and deliver directly to our doorsteps can go further to help prevent disease spread. The supermarket of the future may be much smaller and focused on fresh items like meat and vegetables that we want to pick by hand, with processed items coming directly from distribution centers. Developments that improve the shelf life of food will facilitate the development of emergency stockpiles—and reduce food waste.

In this time of concern about the food supply, some will turn to backyard chickens and spring gardens. Entrepreneurship in food and agriculture is healthy, and local food systems will likely be buoyed by consumer concerns arising from the pandemic. Nevertheless, most consumers will continue to depend on a modern, efficient network to provide their daily bread. An innovative and flexible food system, one that allows food to flow to where it is most needed, is the best way ensure that those calories are available when the next crisis hits.

Photo: kasto80_istock


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next