International update: Changes in the agriculture, food and beverage supply chain

Published: Monday 23 August 2021

The COVID-19 pandemic has strongly impacted the agriculture, food and beverages sectors. HLB’s 2021 survey found that 81% of businesses consider the consequences of COVID-19 their biggest business risk.

In many plants, production ended up reduced, suspended or temporarily discontinued due to workers who tested positive for COVID-19. Crops were rotting in the fields due to a lack of farmworkers and, even when produce got harvested, some food processing plants had to scale back or shut down to contain COVID-19.  

The measures put in place to contain the spread of the virus disrupted both the market and consumers within and across borders, leading to a substantial change in their eating and buying habits. This resulted in a shift in demand from food service to retail - the number of trips to supermarkets increased, and consumers preferred home delivery and takeaway options.

Businesses along the food chain had to adapt to these shifts in demand by, for example, switching production lines, increasing their capacity to manage larger inventories, moving to online platforms, offering direct delivery to households and hiring temporary staff.

International trade disruption

Trade routes are crucial, with few food and beverage companies being able to survive without international trade. COVID-19 affected international trade in many ways, and transport of fresh foods became difficult due to border controls and freight restrictions.

As an example, when the pandemic first began, ships in Chinese ports dealt with movement restrictions, which caused a shortage which then led to a rise in the price of containers. Lockdowns and the rise in COVID-19 cases also impacted labour available to unload ships at ports. Other trade disruptions also posed a problem for supply chains, with 58% of those participating in the HLB survey reporting concerns about international trade flow disruption.

To date, supply chains remain affected by increased health and safety measures which affects both timings and costs.

The future for the food and beverage industry

Post-pandemic life will not necessarily look the same as it did before COVID-19 for the agriculture, food and beverage sectors.

The 2021 HLB survey found that a high percentage of agriculture leaders believe that improving operational efficiency is a key way that they will enhance their business this year, with 51% also planning to launch new products and services. The survey also found that three-quarters of business leaders feel confident about their ability to grow in the next twelve months. If food and beverage companies do improve the operational efficiency of their supply chain in order to keep up with post-pandemic demand, then this growth will indeed be possible.

Read the full HLB survey of business leaders here.

For importing and exporting queries, please contact Partner, Scott Lawrence and for food and drink queries, please contact Associate Partner, Rebecca Copping.

Key contacts

Scott Lawrence
Scott Lawrence
Partner
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Rebecca Copping
Rebecca Copping
Associate Partner
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