Phase Four – Supply Chain Prioritizes –
Proteins Return, Manufactured Processed Grain Products Still Lag
• Phase One was retail. • Phase two was distribution. • Phase three was the space between manufacturing and distribution. • Phase four is raw material supply to manufacturing. U.S. food processing and manufacturing is now operating at full capacity.
By now the majority of protein manufacturing has caught up. Beef and pork should be solid at your local market; however, chicken, while available, will lag to full replenishment capacity in the protein sector. The reason is: “chicken” is an ingredient component in many shelf stable items (soup etc.), that are still short as the manufacturing sector runs at capacity.
We enter a phase where grain commodities are now arriving at manufacturing.
♦ Between the Appalachian mountain range and the Colorado mountain range there is a massive amount of grain, meal, and derivative (farming) products generated.
Thin component inventories, now exhausted at processing, are the cause of the current manufacturing supply chain stress… This lag will take a little longer.
There are train-loads of grain products heading both East and West daily; but there is a process of background prioritization taking place within the grain (total), flour, meal, rice and dried beans, sector. The downstream ingredient system has a long-term and short-term priority schedule.
Example: total flour is prioritized to industrial bakeries for the production of bread. Nationally retail or consumer flour shortages are caused by prioritization in this part of the supply-chain.
Dry pasta will eventually catch up as manufacturers receive millions of metric tonnes of raw material. However, the canned pasta derivatives (think Chef Boyardee etc.) will come after. The same applies to macaroni (mac-n-cheese) manufacturing.
The grain and row crop farmers are loving the emptying of regional, industrial, dry storage silos; there will be a long-term benefit in the next harvest season.
Remember, chicken is a base ingredient for many shelf-stable items such as soup noodles (Ramen), as well as wet and dry soups. The temporary shortage of chicken will extend for an unknown time-frame as the retail chicken and manufacturing sector are both pulling from Chicken farmers. Because both segments are pulling inventory, the ability of soup manufacturers to catch up is a little limited. You are probably noticing that on retail shelves.
Chicken is also a big part of frozen processed food production. In addition to chicken nuggets, patties etc; it is also the primary ingredient for many blends of frozen dinner foods.
Rice is similar in that it is a base ingredient for a variety of sectors: plain rice, shelf stable blends, stuffings and many frozen prepared meals pull from rice harvests. The manufacturing sector will catch up, but the raw material is diversely spread into multiple manufacturing segments; so it takes a bit longer.
A note of caution, the dry pet foods category could also see a slight shortage in manufacturing as they draw from rice and grain supplies. You might see some empty shelves of dry dog and cat foods as a consequence. [Just an fyi]
Fruit juices are abundant as the seasonality of berries has left very little disruption in that sector. Water and enhanced water products that use fruit juices were only constrained by distribution issues (phases two and three), and those should be back to normal. Frozen fruit products, and desserts also unaffected (except for distribution).
Dehydrated potato products will also catch up soon, as the retail demand is never too extreme on an ordinary basis. They don’t need to manufacture too many dried potato varieties to catch up. Frozen potato products are only a distribution capacity issue. Good ol’ taters are solid.
Dried beans again are a multi-segment derivative. Used in dry and wet soups, shelf stable products, rice blends, pet foods etc. It might take a little longer to see raw dried beans back in stock as the manufacturing sector for the derivatives soaks up the beans. Wet beans (baked beans) should be back in business very soon; if not already.
Canned vegetable production is almost unimaginable in scale amid the big manufacturers. One can assume they are buying up the bulk row crops, wet beans and corn silos from all sources. However, on the positive side they can crank out canned vegetables at an astonishing rate and the restaurant bulk business doesn’t need it.
Overall, the majority of products should be back on our store shelves very soon, if not already (depending on region). It’s the manufactured shelf-stable items that are now playing catch-up. Meat cases should have ample products as the distribution was running 24/7 for almost the past month; again, with the single exception of chicken as noted above. Retail eggs may take longer as eggs are also needed as a raw material.
On the paper and chemical side, there is still a big void. However, that void is almost certainly an issue with “cube space” prioritization from phase two and three. Cube space is literally the amount of space it takes to ship products.
Paper goods take up a lot of shipping space, and with demands on food – paper good distribution is not as critical or urgent. That’s likely why the lack of toilet tissue has remained for so long… Sheesh, who knew.
Big manufacturing soap and chemical users also have been challenged with the extreme demand for sanitary products. Hand soap, hand sanitizing, personal hygiene and also surface sanitizing products are beyond extreme demand. Here I would place a note of caution… Again, prioritization has to happen.
When given a choice between laundry/dish detergent and personal hygiene products we can expect the manufacturers prioritize production of the latter first.
This *could* lead to a shortage in laundry and dish soaps. Just keep that in mind if you are seeing some of your favorite brands in those sectors missing.
In the interim, the total retail supply chain has done some exceptional work in handling this demand. With a little more patience, I’m confident all will return to normal within the next few weeks.
The United States of America has the greatest food production system in the world. From field to fork this massive network has operated almost invisibly to the majority of Americans. The coronavirus issues have highlighted just how critical our supply chain is within the U.S. As a result now we understand how important these confortably invisible people are, and we have the opportunity to thank them.
