Coronavirus shutdowns have completely disrupted food supply chains from restaurants to supermarkets to distributors to processors, all the way down to farmers. Why is this? Well, America is under government-enforced lockdowns to flatten the pandemic curve, is preventing consumers from eating at restaurants and bars, which has shifted how they source food products to supermarkets entirely. Basically, what happened is that farm products for commercial clients that have yet to be packaged for consumers are being dumped as the restaurant industry folds, which has forced the Trump administration to intervene.
OpenTable data shows restaurant traffic has crashed through mid-April. At the same time, supermarket sales have surged.
We documented this seismic shift last week. Countless images poured onto Twitter detailing how farmers dumped tanker loads of milk down the drain as dairy demand via restaurants evaporated in the previous month.
We are dumping milk in South Florida because there is no home for it. We still have to feed and care for our cows, and our farmers are still milking cows, in hopes that we can sell that milk in the future... #stillfarming pic.twitter.com/tn4dpUBuUa— Ben Butler (@BenLButler) April 3, 2020
Heartbreak of dumping whole milk as the supply chain struggles. Photo via a Facebook friend pic.twitter.com/Q9j1dmkIyV— NYFarmer (@NYFarmer) April 2, 2020
The collapse of the restaurant industry has quickly rippled down the supply chain, and severely impacted farmers as stockpiles of milk and meat products continue to build, crushing spot prices. The Trump administration has recognized farmers are headed for a world of hurt once more, already reeling from trade war wounds.
Agriculture Secretary Sonny Perdue told Fox Business Wednesday that President Trump would like the USDA to start purchasing milk and meat products as part of a $15.5 billion rescue package for farmers.
"We want to purchase as much of this milk, or other protein products, hams and pork products, and move them into where they can be utilized in our food banks, or possibly even into international humanitarian aid," Perdue said.
While we don't believe future food purchases by the government will be transferred into "international humanitarian aid" programs, the likely end destination will be food banks that are experiencing the most significant demand surge ever as 17 million people have just filed for unemployment claims. The Trump administration understands that if food shortages appear at food banks, people will become hangry, and that is one trigger of where social unrest could be sparked.
As part of the coronavirus relief bill, Congress has allocated $23.5 billion in aid for farmers. And of that, it appears around $15.5 billion could be used to purchase milk and meat products that will likely be sent to food banks to support the working poor.