Covid-19 is already having an impact on global food supply chains and the full extent of the damage caused by the pandemic will become clearer in the next “five or six weeks”, said compliance and risk management software company Decernis chief executive Kevin Kenny.
“We are at the very tip of this iceberg, there is so much going on right now,” Kenny said in a conference call. “We are probably five or six weeks away from real problems with the supply chain, but, you are feeling it right now on a daily basis because logistics is slowed down, transport is slowed down – they don’t have enough truck drivers – and ports are making new restrictions day after day.”
Kenny is a regulatory attorney who founded Decernis in 2003, which helps businesses manage global supply chains and compliance. The firm was acquired by Paine Schwartz Partners-backed FoodChain ID in 2019.
Supply chains for food additives and sweeteners have already been impacted, said Kenny, adding that businesses in need of dietary supplements, medical ingredients and botanicals are also likely to soon face difficulties in securing supply. Though many supply chains are generally still turning, he said, Decernis has received reports of pricing spikes, scarcity and substantial delays that he expects will continue.
Customs officials worldwide are also asking more detailed questions at a time when their own staffing levels are dropping due to the virus, further slowing the pace of trade, Kenny said.
In addition to complexity stemming from nation-wide lockdowns in countries including Thailand, India and China, Kenny highlighted early steps to limit imports and more recent statements suggesting impending grain export controls from Kazakhstan, Russia, Serbia, Vietnam. Other governments, he said, are responding in different ways that could present significant challenges later.
“You still have real deniers out there right now – think Bolsonaro in Brazil and AMLO [Andrés Manuel López Obrador] in Mexico,” Kenny added, describing statements by both leaders encouraging citizens to keep shopping and socializing to support local economies. “There is going to be a price to pay on that. Most of Latin America has reacted correctly; half of the population of Latin America, though, is still denying that there is a problem.”
Within the US, Kenny highlighted how producers of crops like strawberries and raspberries are likely to be challenged by disruption to the flow of migrant workers. Decernis expects that Germany will also face the same challenge.
“It’s going to start causing problems where things are in the field right now, but if this isn’t under control fairly quickly, you are going to have problems with getting from farm to fork,” he said.
Another key challenge likely to become more prevalent as supply chain disruptions continue, said Kenny, is food fraud. Decernis is already aware of instances of companies receiving phishing emails disguised as reputable covid-19 information and expects alterations of food products will increase as supply chains become more challenged and prices rise going forward.
“There are incredible amounts of fraud going on around this,” Kenny said. “It’s really unfortunate that in this time when everybody is working together, there are people who are trying to take advantage.”