May 20, 2020
Here’s How the Coronavirus Pandemic is Shifting America’s Food Supply
People are buying more groceries, and suppliers are having a hard time keeping up.
You might be surprised by how much you’ve spent at the grocery store—and what you’ve put in your cart—in the midst of the coronavirus crisis.
In fact, as of mid-March 2020, sales at grocery stores had increased by 79% from the previous year as people stocked up for stay-at-home orders in place in many states. The Covid-19 pandemic has also reportedly shifted what people are buying at the grocery store too. The increased demand from consumers, as well as shutdowns caused by the virus, has put a strain on food suppliers and is expected to cause shortages of some items, such as meat.
Here’s a closer look.
How the coronavirus has affected the way Americans shop:
Because people are eating at home now more than ever, what they’re shopping for has changed, increasing the demand for some common items, and in some cases driving up prices, at the store during the pandemic:
- The price of avocados reportedly shot up 60% between early March and late April, 2020, as demand has increased. The price of one box of avocados from Mexico increased from 300 pesos to 490 pesos, or nearly $20.
- Between March 2019 and March 2020, sales of citrus increased 50%. Futures for frozen orange juice concentrate, which is a metric that demonstrates how prices are likely to shift, increased 25%.
- Purchases of flour have climbed as consumers bake away the boredom and the panic. In March, 2020 flour-maker King Arthur experienced a 268% increase in flour sales, to 6.1 million bags, compared to March 2019.
- Shoppers reportedly spent 3% more on cereals and bakery products in April 2020.
- Meat sales increased by 101% in March and April 2020, compared to the same two months in 2019; Over the same time period, potato and onion sales increased by 81%. Frozen meat, poultry, and seafood sales surged 77%, and frozen meal sales increased by 60%.
- Sales of plant-based meat alternatives increased by $25.7 million in the nine weeks ending on May 2, 2020, a 264% increase. (Fresh meat sales increased by $3.8 billion during that timespan.)
- Shoppers also flocked to frozen comfort foods since the beginning of the pandemic. Pizza sales have increased 94%, and purchases of appetizers and snack rolls have increased 82%. Frozen cookie dough sales also increased by more than 450%.
- Americans also bought more alcohol than they did in March, 2019. Sales of tequila, gin, and pre-mixed cocktails increased 75%, sales of wine increased 66%, and beer sales increased 42%.
How the supply of food has changed:
Groceries, like everything else you buy, depend on supply chains. When demand for something increases, the supply has to rise to meet that demand, or prices will increase. When there’s an excess supply of an item and the demand doesn’t match that supply, prices are likely to decrease.
The coronavirus has shifted the supply chain of groceries. On one hand, demand is stronger than ever for grocery staples and factories and production facilities haven’t been able to keep up, leading to shortages. Meanwhile, while farms are sometimes packed with animals that can be turned into meat, some of the processing facilities have closed because of the virus, also contributing to shortages. And on the other hand, the closure of restaurants, some of the biggest purchasers of groceries, has led to a surplus of supply of some products.
Here are some examples:
- Confronting an excess of milk, farmers have dumped an estimated 3.7 million gallons of milk daily, according to the Dairy Farmers of America. Growers of berries, squash, and other produce are destroying their own crops rather than see it rot.
- While demand for meat and poultry remains high, the virus has forced some production facilities to close in the U.S. As a result, beef production decreased by about 25% and pork production decreased by 15% in April, 2020 compared to the same month a year ago.
- Examples of meat processing facility closures include pork processor Smithfield, which shuttered plants in South Dakota and Illinois after employees at the plants contracted the coronavirus. Tyson Foods also closed two of its pork plants temporarily. Meanwhile, Hormel Foods shut down two Jennie-O turkey facilities in Minnesota and JBS stopped operations at a beef facility in Wisconsin.
- Farmers have started shooting and gassing their pigs to manage their surplus. Those pigs would’ve gone to those facilities to be slaughtered for pork products.
- The coronavirus has also forced processing facility closures in Brazil and Canada, which together with the United States, account for 65% of the world’s meat production.
As a result of the squeeze on meat production, some grocery stores including Kroger and Costco are reportedly limiting the number of meat products shoppers can purchase. Also as a result of shortages, one-fifth of Wendy’s locations have run out of hamburger meat during the pandemic.
Budgeting for the grocery store
You may have already experienced meat shortages at the grocery store. As you continue to make your runs to the store, remember that you can freeze meat, usually for several months.
As your life and habits shift, your budget is likely to change too. If you find yourself spending more at the grocery store than you usually do, you may want to adjust your budget. And if you don’t have a budget, now is a great time to create one. Figure out your monthly income, and your expenses, both fixed and variable and then categorize your income according to the expenses, leaving some room for savings and investing if you’re able.
If you’re able to invest regularly, you can start investing in single stocks and ETFs on Stash with any dollar amount today.
For more resources on the coronavirus, visit Stash’s page on managing your money during the pandemic.