The Last Refuge recently published an article analyzing why we’re experiencing shortages of certain goods, and why the consumer supply chain is disrupted. It’s one of the best explanations I’ve yet read on the subject. Here’s an excerpt.
Most consumers are not aware food consumption in the U.S. is now a 50/50 proposition. Approximately 50% of all food was consumed “outside the home” (or food away from home), and 50% of all food consumed was food “inside the home” (grocery shoppers).
Food ‘outside the home’ includes: restaurants, fast-food locales, schools, corporate cafeterias, university lunchrooms, manufacturing cafeterias, hotels, food trucks, park and amusement food sellers and many more. Many of those venues are not thought about when people evaluate the overall U.S. food delivery system; however, this network was approximately 50 percent of all food consumption on a daily basis.
The ‘food away from home‘ sector has its own supply chain. Very few restaurants and venues (cited above) purchase food products from retail grocery outlets. As a result of the coronavirus mitigation effort the ‘food away from home’ sector has been reduced by half of daily food delivery operations, possibly more. However, people still need to eat.
That means retail food outlets, grocers, are seeing sales increases of 25 to 50 percent, depending on the area. This, along with some panic shopping, is the reason why supermarkets are overwhelmed and their supply chain is out of stock on many items.
There is enough food capacity in the overall food supply chain, and no-one should worry about the U.S. ever running out of the ability to feed itself. However, the total food supply chain is based on two segments: food at home and food away from home.
The seismic shift toward ‘food at home‘ is what has caused the shortages, and that supply chain is not likely to recover full service of products again until the ‘food away from home’ sector gets back to normal. No need to panic, but there will be long-term shortages.
At the top of the food supply there is ample product and capacity. Its the diversion of customers to the retail grocery sector causing the shortages.
There’s much more at the link. Highly recommended reading.
At the end of the article, the author asks, “What do things look like in your neighborhood? Are things improving?” As I write these words, 493 readers had responded, giving details of how things were in their neck of the woods. Their feedback makes very interesting reading, particularly comparing rural areas with urban, and the crowded coasts with less populated inland areas. It’s definitely worth clicking over there to read their feedback, if you have the time.