Despite COVID stay-at-home orders, a shuttered food service sector and now a recession, consumer demand for animal protein remains stronger than ever.
Why this trend started and whether it will continue was the subject of a panel during the Future of Ag Forum.
“From March to June, we saw consumers stockpiling and that benefited packaged foods across the board and especially benefited protein,” explained Kim McAndrews, senior vice president of Edelman. “Proteins were seen as an essential stockpile item. We had one in five consumers at that time tell us they were struggling to find proteins in their supermarkets.”
Normally, recessions would have a depressing impact on demand for relatively high-priced perishable products like animal proteins. But that hasn’t been the case, indicating there are other factors at play.
“Maybe more psychological things, people returning to things that are more familiar that they want to eat,” said Jayson Lusk, Purdue University distinguished professor and head of the Department of Agricultural Economics. “The other thing I think is this a very different kind of recession then we’ve had in the past. Often when you think about recessions, the last great recession, it was from the financial sector. Sometimes it’s housing, sometimes it’s a collapse in manufacturing. This is something that is imposed on us from the outside and has mainly hit the service sector.”
As a result of these dynamics, consumer’s aggregate incomes are actually up, thanks to stimulus payments from the government, less traveling and less eating outside the home.
The food service sector disruption has caused undeniable financial hardship and food supply chain disruption.
For example, Sysco, the largest North American food distributor, saw around 70% of its business disappear in five days at the start of the pandemic. But by leveraging its supply chain, it has been able to shift to providing for the retail grocery sector. That’s because retail companies like Kroger added about 100,000 employees in eight weeks in order to meet consumer demands.
“The changes that people expected to happen over five years happened in about five months,” observed Charlie Arnot, CEO of Center for Food Integrity. “An incredibly accelerated pace that’s restructuring how food comes to market, how it comes to our homes, how it’s delivered and how we think about it.”
So, despite all the challenges of the past year, the food supply chain continues to quickly adapt, and consumers continue to desire animal protein in their diets.
The virtual Future of Ag Forum was cohosted by Illinois Farm Bureau, Illinois Beef Association, Illinois Milk Producers Association and Illinois Pork Producers Association.