ÎÞÂ붯»­

Longer Term Impacts of the COVID-19 Pandemic on the UK Food System

Posted 27 April 2020

The food security of the United Kingdom in the post-COVID-19 pandemic depends on decisions made now. The media is full of reports about the short-term effects of the pandemic and lockdown: empty supermarket shelves; dairy farms dumping milk; vegetable producers plowing under crops; fruits and vegetables rotting in the field for lack of harvest labour; and everyone in the food system turning toward online ordering and home delivery.

But how will the pandemic affect agriculture and the broader food system in the longer run? In a couple of years, when there is a COVID-19 vaccine and effective treatments, what changes in consumer, business and farm behavior will persist?

To respond to this longer term question ÎÞÂ붯»­ (HAU) staff have been discussing together remotely. This piece summarises the key questions identified and knowledge gaps needed to answer those questions.

The HAU discussion is built on the awareness that pandemics can change agriculture and society dramatically. For example historians tell us that the bubonic plague killed so many workers in the Middle Ages that wages rose, farmers shifted from grain production, which was labour intensive in those days, to sheep which required much less labour, and over the longer term the feudal system was undermined, laying the basis for the Renaissance and modern agricultural systems.

Around the world a few academics have started to think about post-pandemic agriculture. Professor Jayson Lusk of Purdue University in the USA writes that the pandemic will spur efforts to automate the whole food system, from primary production through food processing and retail. Dr Tihomir Ancev, University of Sydney, Australia, wonders whether this automation will lead to further mergers and concentration of food supply firms. Professor David Zilberman, University of California Berkeley and former president of the Agriculture and Applied Economics Association, worries that food supply chain disruptions will result in barriers to trade, holding greater inventories, reduced reliance on imported food, and thereby higher food costs. The post-pandemic food systems challenge in the UK is worth thinking about because geography, history and political choices are likely to result in some problems that require UK specific solutions.

The HAU exchange was organised around some key questions, including:

Will the COVID-19 pandemic permanently change consumer preferences? – Human beings have short memories and soon consumer behaviour will go back to being driven by price, convenience and habit. Most British consumers are unlikely to willingly pay more for food because it is produced in the UK, even if that supply is more reliable. However, the pandemic may have changed some habits. Some consumers have tried online ordering and home delivery for the first time, and they may continue

because they like the convenience. This is particularly true of older consumers who were not ordering food online before the pandemic.

Vegetable and meat box companies report being overwhelmed with orders after the March 23 lockdown. This is their opportunity to convince new customers that the convenience and quality are value for money.

While it would be possible to create a wholesome, nutritious diet entirely from foods grown in the UK, British consumers will probably maintain their taste for citrus fruits, bananas, pineapple, tomatoes, peppers and other food products from warmer climates and continue demanding out of season produce, but companies may diversify their supplies; instead of relying on products from one country, they may decide to source from several.

The pandemic has revealed the fragility of long distance supply chains. Will that realisation lead to the end of globalisation? - Company changes due to the pandemic may be greater than those likely to be seen among British consumers. If a company experienced major losses due to supply chain disruptions, resilience may be a higher priority in planning. The cost and probability of a disruption may be added into the estimates of expected profits when deciding on a strategy.

A strategy to increase resilience is processing, logistics and marketing flexibility. Specialised supply chains too focused on a single type of buyer reduce costs, but they are also vulnerable to disruption if those buyers dramatically change their orders. This is what led to the milk dumping and plowing under vegetables when processors focused on products for restaurants and institutions could not quickly switch to serving the individual consumer market via supermarkets and home delivery during the lockdown. Will food supply companies post COVID-19 build in the flexibility to serve alternative marketing channels?

To reduce costs most UK food companies have developed a so-called “lean supply chain” with just-in-time deliveries. For less perishable foods one of the options is holding greater inventories. But who would hold those inventories? The narrow margins in the food sector make it unlikely that the supermarket chains would hold those inventories without some tax or other public policy incentive.

The contradictory trends in UK supermarkets are likely to be exacerbated post-COVID-19, including “range rationalisation” which reduces the variety of products stocked to cut costs and “premiumisation” in which supermarket handle more premium products for consumption at home as consumers attempt to compensate for not going out to eat. Those trends can occur simultaneously as discount supermarkets include some premium products among their inventory.

With the right technology and policy, are there products that UK farmers could produce cost-effectively and reduce the likelihood of disruption? For instance, could highly automated “indoor agriculture” in the UK produce some of the tomatoes, peppers and

fresh winter vegetables that in the recent past were imported from southern Europe and elsewhere?

How will farm work in the United Kingdom be done in the future? – The pandemic has revealed the flaws in a fruit and vegetable production strategy that depends on seasonal foreign labour. Some firms have been able to hire British workers for the 2020 season, but this is unlikely to be a long term solution. Some newly unemployed British workers might be willing to do farm work as a way to earn some money and get out of the house during the lockdown, but they probably will not change their long-term career plans.

If there were practical, reliable robots to grow and harvest fruits and vegetables today, many producers would probably order them immediately. But the development of horticultural automation is in its “early days”. For example, several UK universities have worked on robotic strawberry harvesting, but HAU engineers say that creating a robot that can recognise a ripe strawberry and pick it without crushing it is still some years in the future. Robotics for grain and other broadacre crops has fewer technical barriers. The Hands Free Hectare project has shown that grain crops can be completely automated and at a lower cost than many expected. But the farm labour shortage is mostly in horticulture, not in broadacre crops.

What are the public policy challenges raised by the pandemic impacts on food security and the viability of the UK food supply? – In the 2019 UK election campaign the focus of the agricultural policy debate was on environmental management. Political parties competed with plans of how many trees they would plant, with almost no mention of the crops and grazing livestock displaced. The draft Agriculture Bill 2019-21 hardly mentions food security. But the pandemic has highlighted the fragility of the UK food system and the number of food insecure UK citizens. One of the key public policy challenges of the post-pandemic period will be to better balance food security and environmental management concerns.

The impending departure of Britain from the European Union (EU) is a mixed blessing in the context of post-pandemic planning for the food system. In many ways Brexit complicates the post-pandemic agriculture and food supply challenges. The pandemic has highlighted the benefits when countries cooperate. It has also revealed the limits of such cooperation, even where there are long standing relationships as within the EU. In an unexpected way, Brexit may facilitate the UK adaptation post-pandemic because it gives Britain greater flexibility in deciding on the path forward.

One of the key food system public policy issues will be support for robotics, automation and agri-tech in general. If Britain waits for the technology to be developed elsewhere it probably will not fit the specific needs of the UK agricultural sector and British entrepreneurs would miss out on the business opportunity. For public funding of research and development to be effective in making the food system more resilient it must from the beginning involve the whole technology chain from researchers, to

product developers, manufacturers and farmers. Economic research at HAU indicates that both technology design and the regulatory framework will determine the impact of robots and automation on the food system. Robotics could result in larger firms and greater concentration as some economists fear, or it could create new opportunities for small and medium scale farms.

Conclusions – COVID-19 has shown again that in times of great uncertainty, data, analysis and expertise count in making decisions. That is true in public health and it is also true for decisions about agriculture and the food system.

Now is the time to begin counting the cost of food supply disruptions and collecting data on how consumer preferences have changed. It is the time for researchers, agri-business and farmers to work together to understand how food supply chains can be shorter and more resilient. What technologies are needed to cost-effectively produce the foods that UK consumers want? What food products could be produced closer to home? For which products does holding great inventories make sense? For which products does diversification of sources hold the greatest promise? How can public policy balance the needs of food security and the environment? The COVID-19 pandemic has disrupted the UK food system, but in the longer run it could also create opportunities for those ready to adapt to the changing realities.

Written by  Professor James Lowenberg-DeBoer, Elizabeth Creak Chair of Agri-Tech Economics at ÎÞÂ붯»­ (comments and questions are welcome to be sent to: jlowenberg-deboer@harper-adams.ac.uk)

Contributors (in alphabetical order) - Karl Behrendt, James Bell, Alastair Boot, Richard Byrne, Luis de Aguiar, Carrie de Silva, Jane Eastham, Iona Huang, Simon Keeble, James Lowenberg-DeBoer, Daniel May, Mary Munley, Dimitrios Paparas, Eva Schroer-Merker, Simon Thelwell, Lee Williams