Canadian Food Business
By Jessica Wei
As the coronavirus pandemic swept across the world in the first few months of 2020, an unprecedented shutdown impacted shops, restaurants and agricultural businesses, along with transport. By March 21, every province in Canada was called into a state of emergency. During this period, restaurants were ordered to pivot to takeout and delivery only or close completely, leaving business owners scrambling for survival and thousands of restaurant workers facing unemployment. Grocery stores quickly went into the first phase of pandemic pandemonium: shelves were cleared of toilet paper and hand sanitizer, while shoppers wandered aisles filling their carts, unsure of how long to stockpile for.
While the country slowly reopens, shops are seeing shortages of yeast and flour, but not much more. The food supply chain has proven itself remarkably resilient. Many restaurants kept themselves afloat through contactless delivery and curbside pickup, some even adding pantry essentials and delivery food boxes to their offerings. Society has settled into a “new normal,” but uncertainty remains close ahead of us: The agricultural sector is reeling from a shortage of temporary foreign workers, while outbreaks are impacting both large-scale meat-packing facilities and small family greenhouse operators. Across the country, the unemployment rate continues to balloon while the death toll increases daily, and healthcare workers continue to bravely plant themselves in the line of fire and are paying with their lives. Moreover, the larger question of just how much society will have changed from this global pandemic remains unanswerable.
Supply
According to 2017 figures from Statistics Canada, the average Canadian household spent around $2,593 (or just over 30 percent) of its annual food budget for meals outside the home, in restaurants, cafeterias and cafes. As nationwide lockdowns have decimated the restaurant industry, that money was rerouted back to the grocery stores, which were scrambling to keep up with demand – particularly in that early period, when consumers were panic-buying across the country.
“Holy cow, the supply chains had to adapt fast to restaurants and cafeterias and food courts closing, and all that extra food being purchased through grocery stores,” says Evan Fraser, the director of the Arrell Food Institute and Canada Research Chair in Global Food Security. “And it has revealed that actually our dining habits are very different at grocery stores than in restaurants.”
Potatoes, usually a reliably popular commodity, have seen a massive hit. Two-thirds of the potatoes purchased in Canada are usually eaten at restaurants, and this year, potato farmers in Manitoba alone are sitting on a reported 254 million kilograms of potatoes that are unsold. Meanwhile, yeast and flour have been flying off the shelves, due to more time spent at home and an increased appetite for comfort carbs.
“There’s a fundamental shift going on, not only where we’re buying our food but also in some key ingredients of what we’re buying,” says Fraser.
Restaurants
Before COVID-19, commercial food service in Canada was a $93-billion industry and on the rise. But after the government-mandated lockdowns were announced, 800,000 restaurant workers were laid off across the country throughout March, and business owners themselves were facing the uncertainty of how long these closures would last.
As the lockdowns continued to stretch into May, restaurants had to think creatively. Some expanded their offerings from take-out and delivery to offering pantry essentials, prepackaged goods, hard-to-find wines and even produce and specialty meats. Guy Rawlings, the owner of Montgomery’s Restaurant in Toronto, maintained his relationships with suppliers and producers by pivoting to a delivery food box model. Rawlings and his wife Kim, the restaurant co-owner, had always wanted to offer a Community Supported Agriculture (CSA) box, and the lockdowns shifted the plan into high gear.
“When we realized it was going to be a much longer break, we just went for it immediately,” Rawlings explains. The Grassroots Box is a customizable box with goods from producers that the restaurant has maintained long-standing relationships with. The food box was met with immediate demand, and a growing waiting list. But there’s also a learning curve to such a dramatic pivot. “Little things that nobody ever thinks about, like the packaging of the boxes and how much space it takes,” says Rawlings. “We’re reorganizing our restaurant, moving fridges, moving shelving, so each process is way more efficient.” They plan on continuing the delivery food box even after reopening.
But other businesses have not been able to weather the transition as nimbly as the Rawlings. Paul DiGiammateo owns a wholesale food distribution company, primarily servicing restaurant clients. His business also specializes in imported goods from Italy. (The country’s lockdowns called into question the crucial promotion and distribution season for imported gourmet goods.)
DiGiammateo says his business as a distributor dropped by about 70 percent, with the remaining 30 percent coming from restaurants offering take-out and delivery. Much of his business was from large event banquet halls, ramping up orders for the upcoming wedding season – which was effectively cancelled. He cut his staff of about 20 people to six employees. And as the restaurants they supply to close, the unpaid invoices continue to mount.
“They’re just saying, look, they were working on a month-to-month, week-to-week basis, and once their revenue stream stopped, they just sort of froze,” DiGiammateo says. “So we’re just not getting paid right now.”
Agriculture
Over the course of an ordinary May in Ontario, harvesting asparagus would begin, and vegetable crops would be planted in fields across the province. While that was underway this year (during an unseasonably cold spring), farmers were reducing their planting acreage, guarding themselves against a growing season that will see a vastly reduced labour force, new social distancing measures and the creeping fear of an outbreak of COVID-19 in their operations.
“I think growers are looking at it and thinking it may be a bigger risk to plant a full crop this year, we might try to do 50 or 70 percent of the crop,” says Bill George, chair of the Ontario Fruits and Vegetable Growers’ Association (OFVGA). “[There’s] lots of anxiety and stress put on the producer.”
The shortage of temporary foreign workers stemmed from an announcement made on March 16 by Prime Minister Justin Trudeau that barred all foreign nationals from entering Canada. By March 24, that ban was lifted to allow temporary foreign workers, provided that they follow quarantine measures for 14 days following arrival. After the ban was lifted, about 20 percent less temporary foreign workers arrived at the beginning of the planting season.
“We made good strides, but we are concerned about Visa processing delays in Mexico especially, which could lead to a shortfall of workers ahead of fall harvest,” says Stefan Larass, the policy adviser for the OFVGA.
Another well-known problem is the issue of COVID-19 outbreaks at food processing facilities. Meat processing plants have been severely impacted; in Alberta, Cargill Inc.’s processing plant in High River and the JBS plant in Brooks were both temporarily shut down due to hundreds of confirmed cases. These two plants account for 70 percent of the country’s meat processing operations.
According to a statement from the Canadian Cattlemen’s Association (CCA), the outbreaks and reduction in operations created a backlog of 100,000 head of cattle waiting for processing. Economic forecast figures from the CCA estimated that the revenue losses could surpass $500 million by the end of June, impacting 60,000 beef operations across the country.
Future
The post-pandemic future is hard to predict for many industries, including food supply and demand. In the coming months, Bill George of the OFVGA anticipates higher produce prices due to reduced crop output, and limited vegetable selection on the shelves.
Evan Fraser also predicts higher prices in meat due to the backlog and limited operating capacity of the meat processing plants. “There, you’ve got an effect on the people who are on the plant floors, you’ve got an effect on the farmers, and then ultimately, you’ve got an effect on the consumers,” he says.
However, food producers and advocates believe that COVID-19 has revealed holes in the food supply system that could lead to a significant correction. In light of unreliable global systems, there’s a renewed urgency for solutions to shorten and localize the supply chain.
“I think there will be tremendous interest in technologies and processes to shorten supply chains,” says Fraser. “I have no doubt at all that there will be an increase in that alternative food movement – the buy-local movement, community-supported agriculture, the farmer’s market, the direct marketing thing – and it will be enabled and amplified by technology e-commerce platforms, which are suddenly becoming more acceptable.”
One solution may be in vertical farming and indoor growing, a market that was steadily increasing in the last few years but is predicted to shoot into a $12.77-billion-dollar market by 2026, according to Statista records.
The pandemic’s impact on meat processing plants also is likely to impact meat consumption. Over the last few years, Canada already was seeing a decrease in meat consumption due to broader availability of meat alternatives and concerns over climate change. Evan Fraser is predicting an even faster decline due to rising prices of beef and skepticism over safety.
“One of the things I’m anticipating is that COVID isn’t creating new trends, it’s actually accelerating trends that we’re on,” says Fraser. “Trends towards increased automation, trends towards increased transparency technology, trends towards increased alternative protein products. My expectation, or anticipation, is that COVID will push the pedal on those.”
