Supply Lines Latest: Dearth of Workers Risks Even Higher Food Prices - Bloomberg

Milkshakes are 

missing from U.K.’s McDonald’s branches, tomatoes are rotting on Italian farms, and  soldiers mingle with farmers on Vietnam’s rice paddies. All because of shortage of staff.

A dearth of farm and slaughterhouse workers, truckers, chefs or waiters is hitting global food supply chains hard, causing processing slowdowns, delivery delays and  empty supermarket shelves.

That’s adding to a long list of problems for the food supply chains this year — from extreme weather pounding crops to soaring freight costs and shipping  bottlenecks. All of that is threatening to compound inflation. After easing in the previous two months, global food prices resumed their climb back to near the highest in a decade, a United Nations’ gauge showed this week.

True, many parts of the economy are suffering from the  labor shortfall, but food and agriculture particularly stand out. These are some of the least-automated industries where thin margins mean costs may get passed on quicker onto buyers. Food also matters in a sense that it’s “inherently local and it’s also inherently political,” says Decker Walker, agribusiness expert at Boston Consulting Group. 

Solutions? Employers are already dangling higher wages, sign-on bonuses and other perks to lure workers, while seeking creative measures. Spicy chicken chain Nando’s, which was forced to temporarily close some of its U.K. restaurants, sent its own workers to help its troubled suppliers.

Governments are stepping in too, like Australia, which will start offering agricultural visas to overseas farm workers. That’s in contrast to the U.K. which so far has resisted call for broadening its visa program to fill a trucker gap. But with a long-term trend pointing to continued worker scarcity, it may come down to robots to come to the rescue.  

— Agnieszka de Sousa in London

Charted Territory

U.S. may need to rely on rail and barge shipments to the Columbia River post-Ida (Export elevators in yellow, major railways in blue)

American grain exporters are likely trying to figure out whether it’s worth waiting out shipping delays in the wake of Hurricane Ida or shipping grain using rail transport to lesser used elevators throughout the U.S., especially in the Pacific Northwest.

Today’s Must Reads

• Biofuel pact | Booming demand for renewable diesel is prompting another agriculture-energy tie-up, with Chevron and Bunge striking a pact to turn soybeans into less polluting fuel.
• Corn binge | China’s record corn-buying spree — a cornerstone of its trade deal with the U.S. — may be running out of steam, with risks growing that imports by the top buyer will fall short of U.S. estimates.
• Farmer lure | Amazon is taking the first steps toward cracking India’s outmoded agricultural sector, hoping to secure the farm produce that yields two-thirds of the country’s $1 trillion in annual retail spending.
• Meaty promises | Eat Just, a San Francisco-based startup making cultured chicken, plans to build a commercial facility in Qatar to produce cell-based meat as it looks to expand into new markets overseas.
• Prime cuts | Argentina’s beef-export limits are being felt so strongly that shipments from Uruguay topped its much-larger neighbor in July for the first time in more than three years.
• Ripple effect | Pakistan is stepping up food imports as it sees a surge in demand for staples in neighboring Afghanistan inflating prices at home.

On the Bloomberg Terminal

• Crushing needs | Grain processors such as ADM and Bunge may need to raise their soy crush capacity as U.S. climate change measures could alter global agriculture markets for decades, according to Bloomberg Intelligence.
• Food lobbying | A $3.5 trillion social policy measure Congress is weighing can accomplish President Joe Biden’s climate change and food- and health-equity goals should it boost funding for new agriculture producers and expand regional food systems, advocates say.
• Use the AHOY function to track global commodities trade flows.
• Click HERE for automated stories about supply chains.
• See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
• Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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