Monday 13 July, 2020

Foster: There has been a reduction in access to US food supplies

“Everyone in the food supply business in Cayman has had to make new relationships in order to broaden their reach on finding products.”

These are the words of Woody Foster of Foster’s Supermarket, who reveals that with COVID-19 there have been shortages experienced in a number of areas, including rice, pasta, canned goods and cup soups as well as in soap, toilet paper, paper towels and cleaning supplies. Foster also indicates that there has been reduced variety among many products and local retailers have “had to get creative with where and how we buy.”

As a small island that imports almost all of its food from the United States, local supermarket stocks are highly vulnerable to US COVID-related supply chain impacts.

“There has been tremendous disruption, as the entire world has felt, but living on an island simply puts a little more pressure on trying to figure it all out,” says Foster.

From the perspective of meat imports, for example, JBS USA Holdings Inc., which slaughters 23 per cent of US cattle and produces nearly one-fifth of its pork, indicates that coronavirus is likely to hamper US meat production for months. Between January and September 2019, Cayman imported $25,945,450 in meat, primarily from the United States.

Output from the United States is also being impacted by the temporary closure of various food operations as well as the shortage of labour in all areas of the supply chain including production, inputs, transportation, harvesting, processing and shipping.  These breakages in the US and global supply chains are also affecting supermarket stocks that are then exacerbated by panic buying.

Supply-side impacts are affecting US exports on dual fronts. Due to the financial crisis, aggravated by the outbreak, many Americans are struggling to find enough food. This is also causing export restrictions from US markets, as well as globally in order to protect their own food security.

Article 11.1 of the GATT-WTO prohibits restrictive trade policies such as export bans. However, “export restriction is allowed as long as it is applied temporarily to prevent or overcome critical deficiencies in food or other essential products” such as in the event of emergencies, to which a pandemic would most certainly apply.

All of these factors are working together to cause a surge in prices.

While local food retail operations or cargo have not slowed down, due to proactive measures put in place by the government, Cayman is highly vulnerable to these global dynamics in supply and trade.

Acting Port Director, Joseph Wood, confirms that cargo volumes have started to decline, affirming that these have not been due to local COVID-19 supply-side disruptions, as public health measures were implemented at the port at the beginning of the pandemic and as such, everything is running smoothly on the domestic front. On April 2, Premier Alden McLaughlin also confirmed that supply lines remain open.

The Premier has indicated that if US exports cease or US ports close, that he was assured by local supermarkets that they would turn to alternate suppliers, but this has not been straight forward.

“We have had to purchase goods from these new suppliers cash upfront as we had no relationship with them,” laments Foster. “We have been purchasing more product than we need, to try and ensure we do not run out as we had no visibility into whether our orders would be fulfilled. Suppliers are no longer honouring ad pricing as they face the same issues with their suppliers.”

Local chains are waiting to see what happens in the coming months, especially with the opening up of US businesses and the likely resurgence of the virus in many states.

“If they cannot contain resurgence and the food producers or indeed any part of the supply chain succumbs to major outbreaks then we could see shortages as we did in March and April,” says Foster.

That said, despite all that is currently happening, Foster stresses that the country is still relatively well-stocked and continues to do all that it can to maintain local supplies.

“By and large we are keeping the country well stocked with food and other goods,” says Foster, explaining that even during the difficult months of March and April, “our suppliers and those of our competitors were able to keep us in a decent supply of product and they have committed to continue to do the same moving forward. We all weathered the shortage storm really well when we look at our peers in the US and what the condition of their stores looked like… Our respective teams are up to the challenge and will do everything we can to protect our country’s food security.”

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