The food supply in the US is under pressure, from the plants to the store shelves

The US food system is under renewed pressure as the Omicron variant of Covid-19 stretches the workforce from processing plants to grocery stores, leaving gaps on supermarket shelves.

In Arizona, one in 10 processing plants and sales staff at a large food company was recently sick. In Massachusetts, employee illnesses have slowed the flow of fish to supermarkets and restaurants. A southeastern US grocery chain had to hire temp workers after about a third of employees at its distribution centers fell ill.

Food industry executives and analysts warn the situation could last for weeks or months even as the current wave of Covid-19 infections subsides. Recent virus-related worker absences have resulted in continued supply and transport disruptions, leaving some groceries in short supply.

Almost two years ago, Covid-19 lockdowns prompted a surge in grocery shopping, which cleared shelves of products such as meat, bakery ingredients and stationery.

Now some executives say supply problems are worse than ever. Labor shortages are leaving a wider range of products in short supply, food industry executives said, with availability sometimes changing daily.

The lack of labor leads to product shortages and leaves holes in the supermarket shelves.


Photo:

Friedrich J. Braun/Agence France-Presse/Getty Images

Supermarket operators and food manufacturers say overall supplies are adequate despite ongoing labor shortages and difficulties moving goods. They say shoppers are finding what they’re looking for but may have to choose other brands.

Eddie Quezada, production manager at a Stop & Shop store in Northport, NY, said Omicron has put a greater strain on its department than any previous wave of the pandemic, with one in five of its employees contracting Covid-19 in early January. Deliveries have also taken a hit, he said: earlier in the month he received just 17 of the 48 cases of strawberries he had ordered.

“There’s a knock-on effect in operations,” said Mr. Quezada.

At a Piggly Wiggly franchisee in Alabama and Georgia, about a third of the order pickers needed to organize produce and load trucks at the grocery chain’s distribution centers were sick in the first week of January, said Keith Milligan, the controller. The company has struggled to get groceries to stores on time due to driver shortages and staffing issues that have not improved, Mr Milligan said, leaving it to Piggly Wiggly to change its ordering and stocking schedules on a daily basis in some cases. Frozen vegetables and canned cookies are running out, he said.

According to data from market research firm IRI, stock levels of grocery products at US retailers hit 86% in the week ended Jan. 16. That’s down from last summer and more than 90% before the pandemic. Sports drinks, frozen cookies and refrigerated dough are particularly low, with inventories ranging from 60% to 70%. Inventories are lower in states like Alaska and West Virginia, IRI data shows.

“We expected delivery issues to be resolved as we move into this period now. Omicron has put a bit of a damper on that,” Vivek Sankaran, CEO of Albertsons Cos., said in a Jan. 11 call with analysts. He said the Boise, Idaho-based supermarket giant expects more supply challenges in the next few months or so.

Similar challenges at packaged food and meatpacking plants mean shortages could persist, industry officials and analysts said. The Department of Agriculture showed that cattle slaughter and beef production were down about 5% year-on-year for the week of Jan. 14, with pig slaughtering down 9%. Chicken processing was about 4% lower in the week ended Jan. 8, the USDA said. The labor shortage is also affecting milk processing and cheese production, according to the agency.

With meat often taking weeks to get from factories to store shelves, the current Omicron-related labor problems at producers could prolong supply problems, said Christine McCracken, managing director of meat research at agricultural lender Rabobank. “That could mean there’s going to be less meat for longer,” she said.

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Lamb Weston Holdings inc,

the top North American seller of frozen potato products, said in January it expects labor problems to continue affecting production rates and throughput at its plants, where labor shortages have already disrupted operations. Conagra Brands inc,

which makes Birds Eye frozen vegetables and Slim Jim meat snacks, said earlier this month that more of its employees have tested positive for Covid-19, at a time when increased consumer demand is already outstripping the company’s available supplies.

In Massachusetts, Tom Zaffiro is struggling to get fish into grocery stores and restaurants. Mr Zaffiro, president of Channel Fish Processing Co., said the company can only operate at 80% capacity on days when key workers are absent, while understaffing at trucking companies and breading suppliers makes it even more difficult to prepare and transport the fish the company. Channel has tripled lead times for customers, he said, and those who don’t meet a minimum order aren’t guaranteed at all.

Vegetable suppliers in the West, who supply most of America’s leafy greens during the winter, also face production challenges.

Steve Church, co-chairman of Church Brothers Farms, a California-based food company, said about 10% of employees at its Arizona vegetable processing plant and distribution facility were sick on any given day earlier this month. That number fell last week, and Mr Church said he’s still been able to fill orders, but he’s worried about the toll the extra work is taking on Church’s remaining staff, who work overtime to make orders freshly cut vegetables and pre-packaged salads keep moving to grocers and restaurants like Walmart inc

and Chipotle Mexican Grill inc

“These people are tired and want days off,” said Mr. Church. “It is a doom-loop.”

Channel Fish Processing can be as busy as 80% on days when key workers are absent.

Costs for food companies and supermarket chains are rising as they struggle with fewer employees. In Northport, Stop & Shop has offered unionized workers overtime pay to cover shifts for sick staff and asked part-time workers to work longer hours, said Mr. Quezada, the product manager, adding that staffing and deliveries are improving at his department.

Stop & Shop said it is experiencing the impact of the recent spike in Covid-19 cases like other businesses across the country. The company said it expects no disruptions to customers’ shopping experiences and plans to continue operations.

Midwestern Angelo Caputo’s Fresh Markets are running low on frozen breakfast foods, canned beans and other items, and are buying whatever they can get to keep their shelves stocked, said Dan O’Neill, director of the Center Store and perishable grocers .

“We don’t see any relief,” Mr. O’Neill said, adding that the company is looking to secure more inventory from alternative suppliers.

At Channel Fish Processing, labor shortages at trucking companies and breading suppliers have made it even more difficult to fill orders.

Brandon Johnson, president of Korth Transfer, a Wisconsin-based trucking company that moves goods from vinegar to beer, said the recent spate of Covid-19 cases has hit Korth employees almost as hard as the earliest phase of the pandemic. Mr Johnson said he had gotten used to telling customers he simply ran out of drivers to move their loads.

Mr Johnson said he spent about 20 days behind the wheel of his own truck last year, including a 500-mile round trip to haul a load of soy sauce from the manufacturer to a condiment supplier for use in a teriyaki recipe.

“It makes it easy to say we’re tapped,” said Mr. Johnson, referring to his days as a driver. “I can say, ‘I have nothing left to give. We’ve got all we can to work for you.’”

As the cost of groceries, clothing and electronics has risen in the US, prices in Japan have remained low. WSJ’s Peter Landers goes shopping in Tokyo to explain why steady prices, while good for your wallet, can be a sign of a slow-growing economy. Photo: Richard B. Levine/Zuma Press; Kim Kyung Hoon/Reuters

write to Jesse Newman at [email protected] and Jaewon Kang at [email protected]

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