The Global Supply Chain & Food Why do they Matter?

If you have gone outside anytime in the past year and 2 months I’m sure you have experienced a shortage of something at some point. It might have been during the beginning of the pandemic when toilet paper was hoarded or later on when silicon saw all time price highs resulting in the spike in price for electronics. The most recent example though far from critical is the shortage in boba seen in bubble tea shops across much of North America. All these shortages have caused spikes in pricing. As the supply is limited with constant or increasing demand prices are bound to rise.

Yet can COVID be completely to blame? On the surface yes COVID has undoubtedly thrown a wrench in the world's normal operation. No longer can factories produce at the same rate due to shutdowns, social distancing also lowers the amount of manpower available. Other factors also need to be considered, when businesses saw the pandemic on the horizon production was limited if not halted in fear of a recession and in general less demand. What was not considered is the fact the world rebounded relatively well and demand rose much quicker than expected.

This quick rise in demand gave supply chains across the world quite a shock. Manufacturers were unable to meet this new demand which was greater than typical, creating backlogs. These backlogs were made worse by the fact shipping in particular cargo shipping was slowed due to covid and a general lack of containers. Much of the international goods received in North America land in one of two ports within California. Without good alternatives cargo ships were left to anchor out in the sea until there was room. These restrictions have made the problem exponentially worse.

In particular, agriculture was especially hard hit. Prices in grocery stores are higher than ever. Added costs of PPE combined with strain systems have increased the price of all goods. While the world is adapting farmers are being hit especially hard. In particular goods with medium to short shelf lives struggled. In the beginning, there was massive waste, as restaurants cut down orders upon tonnes of food that went to waste. Now farmers face a new issue due to the expensive equipment. The volume of food sold was critical to their success. Forecasting the right amount of crops to plant is now near impossible. Businesses continually opening up and shutting down provides no clear picture.

Prior to the pandemic economic systems were set up in such a way that everything was incredibly monetarily efficient. Yet this streamlining has exposed the fragile nature of today's supply chain. It will be quite a while before things and prices return to normal. Manufacturing and agriculture is now a global affair with pieces coming from all over. WIthout the whole world being relatively COVID free supply chains will remain in limbo.

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