Ruminations

Industrial Food Producers Under COVID Impact

"The bottom fell right out of the hospitality business just as everyone was building for a busy summer."

"We're carrying a lot of overhead and capacity to supply the market and all of a sudden we have no sales to offset that. It's a huge lost opportunity."

"Now we have 20,000 kilograms of product sitting in storage. Once the product is broken, it's all in the pipes and pumps [destroyed once the one-year shelf life expires]."

MikeVanderpol, president, Egg-Solutions, Abbotsford, British Columbia

"Like everyone else, we've seen the restaurant business disappear, maybe even more so for the eggs sector, because a lot of people are doing takeout or curbside pickup, but it's not breakfast, it's not egg-centric meals."

"We are vulnerable to having a surplus of eggs particularly on the processing side. On the grading side, demand has been high, because people are at home and they want their big breakfast."

Margo Ladouceur, egg sector director, Canadian Poultry and Egg Processors Council

Egg prices are up as consumer habits change during the COVID-19 global pandemic. Mandel Ngan/AFP via Getty Images

The massive slump in restaurant sales and service, the tourism industry, hotel accommodation, cruise vacations have all had a disastrous impact from the lockdown imposed by the need to practice social distancing as a result of the widespread infection of the SARS-CoV-2 virus causing COVID-19 disease worldwide. The response to the massive inroads on the health of unprotected populations has been the imposition by government decree of closures of business, manufacturing, schools, sports, social and exercise clubs and government offices.

Workers ordinarily busy in office cubicles, those who work in construction, and those in the hospitality industries have been either instructed to work from home when feasible, or just to remain home, socially isolated from all that is familiar from the ordinary workday to after-hours social interaction. Massive unemployment has resulted. Businesses, both family-owned and corporate, are teetering on the edge of bankruptcy, while others have simply shuttered not only for the duration of the lockdown, but going entirely out of business.

Restaurants are among the worst hit, and when they no longer have a need to procure food products then that industry becomes impacted and its longevity too is questioned. In 2019, Canadian egg farmers produced 740 million dozen eggs and of that number approximately 70 percent were graded large or extra-large size, supplied to grocers and sold as "table eggs". The balance, 222 million dozen graded as smaller or with a lower shell quality are destined for egg processors, to be broken and manufactured into other products.

With travel restrictions in place and hospitality industry lockdowns the usual markets for processed egg products have shrunk disastrously, leaving processors with product that has become unsaleable. Canadians themselves are buying more eggs under the lockdown regime, to prepare themselves, at home. Small eggs traditionally meant for processing are now being redirected to grocery stores.

The Vanderpol processor in British Columbia supplied over ten percent of Canada's processed egg market, some two million dozen eggs monthly, half of them turned into liquid eggs and the rest dried, then used at industrial bakeries or as ingredients in cake mixes and other products. While the dried egg factory in Abbotsford is managing, the liquid egg operation representing the major portion of the business through the company's operation in Ontario, has been deleteriously impacted by the COVID-19 pandemic.

Vanderpol's contract supplying processed eggs to an Alaska cruise line, to restock the ships anchored in Vancouver and Seattle ports has now fallen through; the delivery of several trucks'-worth of processed eggs to the ships weekly has been disrupted by the collapse of the hospitality industry. The situation is not unique to Canada needless to say, but is reflected world-wide as major adjustments to various interlocked industries have taken place in response to the global pandemic.