KANSAS CITY, MISSOURI, US — The global coronavirus (COVID-19) pandemic, which has sickened millions and caused hundreds of thousands of deaths, has had a wide-ranging impact on the grain and grain processing industries.
Results from a World-Grain.com readership survey conducted in mid-May revealed that these sectors, which include the grain storage and handling, flour milling, feed milling as well as related industries, were experiencing both positive and negative repercussions in terms of demand for their products, as well as challenges in their workforces and along their respective supply chains.
Most of the 226 readers from all over the world who responded to the anonymous survey, sent in early May with a response deadline of May 15, reported some aspect of their business being negatively impacted by the outbreak. Only 13% said demand for their products had not been impacted by the pandemic, with another 10% saying they hadn’t been impacted but expected to in the future.
Around 40% of respondents from the flour milling and feed milling industries reported an increase in demand for their products. Roughly the same percentage of respondents in those two industries reported a decrease in demand for their products, with 20% reporting no change.
Flour millers noted that demand soared for small bags of flour for retail outlets worldwide, with one flour miller noting a steep increase in the demand for 1-kilogram bags as people who were ordered to shelter in place bought inexpensive and durable wheat-based products and did more baking at home.
“From an operations perspective, we had to totally revamp our business,” one miller said.
Converting to more bagged flour led to unforeseen problems for several milling companies.
“We needed to have new flour bags designed and printed quickly, but in our small town the mayor had closed all the print shops, which forced us to travel to (a nearby city) for rapid printing services,” a miller noted.
However, flour demand from the larger customers dropped steeply since many countries ordered restaurants, schools and other places that attracted large social gatherings closed to prevent the spread of the virus.
“We have seen a decrease in flour consumption,” a flour miller explained. “Retail has increased but restaurant usage has declined more for a net decline.”
In terms of overall sales, the majority of respondents from both the grain storage and handling and feed milling sectors reported sales decreasing or staying the same, with 50% of the grain storage and handling respondents and 47% of feed milling respondents reporting a decrease. Meanwhile, 35% of the flour milling respondents reported an increase in sales, compared to 65% reporting a decrease or staying the same.
Representatives from all the sectors surveyed said the pandemic limited their ability to obtain raw materials or other ingredients used in their production processes. But by far the most impacted was the feed milling industry, where 60% of the respondents said they had problems obtaining raw materials.
In particular, the feed millers said the shutdown of ethanol plants due to significantly reduced gasoline consumption worldwide had caused a shortage of DDGS, an ethanol byproduct used in feed rations. Others reported problems in obtaining feed ingredients, particularly from China, where the virus originated, in the early stages of the pandemic.
“Some of our ingredients are directly imported from China or our supplier buys from China,” one feed miller said. “However, since the outbreak started in China, all port and shipping activity were stopped. This forced us to look for other suppliers or change our ingredients to ensure business continuity.”
Roughly one-third of respondents said the pandemic had adversely impacted their ability to ship their end products, noting that it has been “harder to organize logistics” during the COVID-19 crisis.
They listed problems such as being prohibited from transporting across country borders, having fewer trucks available, and an increase in freight prices as barriers to moving their product efficiently.
“Ocean freight on the West Coast of North America has been spotty with no-show vessels, late vessels, and a lack of empty containers due to the decreased output by China,” one respondent said.
Another added: “There was already a shortage of drivers heading into this crisis. This further exacerbates an already tight market for quality drivers. The net effect is delivery costs are increasing.”
Many also reported having problems receiving spare parts and equipment during the lockdown, with 45% of respondents saying the pandemic impacted their ability to obtain equipment and services from suppliers.
Several respondents noted that obtaining spare parts and equipment was particularly troublesome if the supplier was from a country that had been locked down.
“Spare parts are not available, and the machinery repair staff has not been able to come to our factory to attend to breakdowns,” one miller said.
Another noted that “technicians from other countries are not allowed into the US, which has delayed some capital project startups.”
Respondents from grain storage facilities said obtaining personal protective equipment such as N95 facemasks as well as leg belts, elevator buckets and other industrial operating supplies has been difficult.
From a labor standpoint, the pandemic has impacted companies in numerous ways. Nearly 90% of respondents said social distancing measures were implemented in their facilities. About one-third reported having to reduce the number of workers in their plants per shift. Fourteen percent said they had to temporarily shut down operations, and 9% reported having an employee test positive for COVID-19.
Editor’s note: World Grain would like hear directly from our readers about their experiences in dealing with the COVID-19 pandemic. Please feel free to submit your thoughts on this topic to World Grain Editor Arvin Donley (firstname.lastname@example.org) as we strive to communicate to our readers important lessons that our industry partners have learned in dealing with this crisis.
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