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Effect of pandemic on packaging & processing sector: Emerging scenario
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Wednesday, 13 January, 2021, 15 : 00 PM [IST]
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Prerna Puri
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The global outbreak of Covid-19 pandemic has created an unprecedented situation for the manufacturing and processing sector, owing to the mandated lockdowns. It has been no different for the food processing and manufacturing industries either. In the initial days of the crisis, supply chains were severely disrupted, drastically stopping the flow of raw materials, intermediate parts and finished goods. Only the packaged food business could recover and revive earlier on because of the products being essential and the rise in home consumptions with panic buying.
The pandemic has posed some serious challenges to the food supply chain, and in light of the arising adversities, there is considerable concern with regard to food manufacturing, processing, and distribution. Even consumer demands have seen a monumental shift. Covid-19 led to movement restrictions of labourers, closure of food production units, restricted food trading policies, and financial pressures within food supply chain.
Impact of Covid-19
The pandemic has shone a light on the social factors across all sectors. In the food processing industry, particularly prevalent is the scrutiny on factors like workers’ health and safety. And a lot of other factors are at play here.
Primarily, four major issues have arisen in the food processing industry and the food supply chain during the coronavirus outbreak. Firstly, people are now following healthy diets for protecting themselves and strengthening their immune systems. Hence, demand for foods containing bioactive ingredients increased dynamically. Secondly, food safety has gained renewed importance to prevent virus transmission among manufacturers, retailers and end consumers. Thirdly, food security concerns also abound among people due to being under lockdown restrictions. Lastly, the pandemic has led to the rise of issues surrounding food sustainability.
In developing and underdeveloped nations, seasonal or temporary employment is common, especially for planting, harvesting, sorting, processing or transporting crops to the markets. As a result, the supply chain was significantly disrupted due to the absence of local or migrant workers on account of them falling sick or restrictions imposed on their travel. This further weakened production for others, as well as their own food safety, in instances where the disease affects their health or movement directly.
The affected workforce in farms, food and beverage manufacturing and processing plants, and the distribution channels are being continually assessed to know the risk of spreading the virus further, the transmission of which is likely to occur during various co-ordination activities. There is also a risk of transmitting the virus through various mediums of product outputs, causing serious food safety concerns, when cross-border trade occurs, which has in turn led to a labour shortage.
Even the corporate level workforce is at a high risk of contracting infection as it is constantly exposed to different stakeholders of the industry, potentially affected public and in some cases contact with virus-affected persons. The travel bans imposed by different countries also contributes to the scarcity of critical personnel needed for key decision-making. This has adversely affected business plans and industrial production of essential food and beverage products. Trade and travel restrictions have also affected global logistics and transportation, increasing the shipping and freight costs. Furthermore, due to these reasons there has been a severe shortage of food supply and a negative impact on the revenue of food businesses.
The pandemic has posed intense challenges for food retail and food service outlets as well right from the get-go. Food retails outlets will have to deal with irregular footfall of consumers and the probability of stockpiling food and beverage products so as to maintain continuity in consumer’s access to goods they wish to purchase. Food manufacturers are also witnessing a rise in the sales of their products due to the rising trend of home dining. More consumers are isolating themselves in home quarantine or just steering clear of public places to protect themselves from the virus. As a consequence, foodservice outlets are facing a hard time attracting customer footfall.
How to Overcome the Adverse Effects
The events triggered by the coronavirus outbreak have the potential to drive significant change to the food & beverage supply chain. Government needs to play an integral role here and step in to facilitate the movement of agri-products and workers. Previously, food processors and manufacturers were reluctant to have extra capacity in their warehouses or in the production units. However now, following the learning derived from Covid-19, the existing model will be altered to make space for additional capacity.
The surge and shift in consumer demand will lead to more attention being paid to the manufacturing of packaged goods, which is expected to see a corresponding rise in volume, revenue and profits. To meet this growing demand, food manufacturers may have to upgrade or renovate facilities to better address flexibility in producing different food items as well as to ensure best practices for employee safety are adopted.
Improvements and overhauling of the food processing and manufacturing units will require more funding.
Greater funding will allow food companies to build a facility for their anticipated future needs. This can be enabled either by traditional bank financing or by asking for extended payment terms from the vendors. The older facilities will need to be updated to meet future demands as well as the food safety compliance standards. Also, as the demand for unique and innovative products and packaging is growing, more investments are being made in new processes and production lines.
In addition, small farmers need to be supported financially. The production and processing facilities need to be set up to improve the overall working conditions and ensure the health and safety of the employees. The supply chain needs to be made more flexible to respond to the challenges present in the food supply chain. Food protectionist policies must be avoided so that food prices do not increase.
The post-pandemic era is expected to have digital manufacturing and supply chains globally. The advantage of tech adoption was evident during the lockdown as the global health crisis had minimal impact where factory automation was already in place within food production lines. Thus, the onset of Covid-19 has led to acceleration of technology adoption in the manufacturing and processing sector.
The pandemic has had adverse influence on the global functioning of the food processing and manufacturing industry as well as the mind-set of consumers due to health risks. Covid-19 is having seismic effect on businesses across the globe, but there are serious lessons to be learnt from it. This is a significant opportunity to fine-tune and improvise business continuity and contingency plans but it is also a time to lay out what is truly important and find out novel ways to grow.
(The author is CEO and founder of Prerna's Handcrafted Ice Cream. She can be reached at sweet@prernasicecream.com)
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