Coronavirus affects everything in the food system.  Here’s what it’s doing to ethanol and alcoholic beverages.

Fuel ethanol

Q.  What does fuel ethanol have to do with food politics?

A.  About 40% of America’s corn crop is used for ethanol for cars, as a result of the fuel standards law requiring ethanol to be blended into gasoline.

Comment: Growing corn for ethanol seems absurd to me, particularly because the energy gain is so low—about 2% according to the USDA.

With that said, Covid-19 is unquestionably bad for the fuel ethanol business.

• Ethanol plants are in trouble.  People aren’t driving cars as much or using gas.
• Only about half as much ethanol is being used as was used last year—the lowest since 2010.
• The USDA is not providing emergency funding for biofuels.
• Corn farmers are upset.  There is less of a market for their overplanted corn.

Booze

Alcoholic beverage companies that donate to Coronavirus causes are seeing huge increases in sales—as much as a tripling.

But beer has a problem.  It—and sodas and seltzers—need carbon dioxide gas to make them bubbly.  Ethanol plants collect this gas as a byproduct.  If they shut down or reduce output, the gas supply goes down.  Expect shortages.

If Covid-19 does any good at all, it is to illustrate the interconnections and contradictions of our often bizarre food system.

Recall that Americans spend about half our food dollars on food consumed outside the home.   Therefore, the virus-induced closure of restaurants affects food supply chains, but it also affects restaurant workers, owners, operators, and patrons.

Restaurant workers

A survey by the New York State Restaurant Association says 80 percent of state restaurant workers have been laid off since the outbreak started—more than 527,000 people.

In a letter to Congress, the National Restaurant Association says 8 million restaurant employees have already been furloughed or laid off, or two-thirds of the entire workforce.

The New York Times reports that restaurants account for about 40 percent of COVID-19 related layoffs, the most of any industry.  This statistic is based on New York State Department of Labor data.

Restaurant owners

To get an idea of what this is like for small restaurant owners, read Gabrielle Hamilton’s account in the New York Times Sunday Magazine: My Restaurant Was My Life for 20 Years. Does the World Need It Anymore?  Hamilton is the award-winning chef-owner of Prune, a small restaurant in Manhattan’s East Village.

The Wall Street Journal reports that restaurant chains cannot adequately source masks and gloves for their employees.

Restaurant patrons

Tom Sietsema, the restaurant critic for the Washington Post, writes about what it feels like to not be able to go to restaurants.

Gee, do I miss the good old days. And boy, am I trying hard to summon them from home. Honestly, though, my new acquaintances Caviar, Postmates and Uber Eats can never replace all the in-the-flesh servers and chefs who have made Washington a premier restaurant destination in recent years.

The bailouts

Restaurants are having special problems with the government’s forgivable loan program.  It turns out, the expansion of unemployment benefits authorized by the $2 trillion stimulus package sometimes pay workers twice their restaurant salary.

What?  Unemployment benefits pay MORE than restaurant work?  The shocking figures: unemployment benefits go to an average high of $970 per week, but this is nearly double average weekly pay within the food industry.

The $350 billion loan program quickly ran out of money when more than 46,000 loans were approved.   Food services firms got $30.5 billion.

Most of the money went to large restaurant firms: ‘The Big Guys Get Bailed Out’: Restaurants Vie for Relief Funds”

The provision, in a section outlining which small businesses qualify for loans from the federal government, allowed big chains like Shake Shack, Potbelly and Ruth’s Chris Steak House to get tens of millions of dollars while many smaller restaurants walked away with nothing when the $349 billion fund was exhausted last week. On Monday, Congress and the White House were nearing a deal to replenish that fund with $300 billion in additional relief.  The inequity caused widespread outrage. Independent owners said it would create a post-pandemic landscape in which chains dominated and small, vibrant restaurants collapsed. Some lawmakers said the outcome had violated the spirit of the legislation.

Chains like Potbelly, Ruth’s Chris Steak House and Taco Cabana qualified to get the maximum $10 million in loans even though they employed thousands of workers.

Some of these companies had been making money but spent it to buy back their own stocks.  As the New York Times reported “Some Companies Seeking Bailouts Had Piles of Cash, Then Spent It.” Those companies, includingd KFC, Wendy’s, and Papa John’s, among others, asked for $145 billion in relief.

These companies had been highly profitable in recent years, yet they were seeking help from the federal government. Where had all their money gone? Like much of corporate America, the restaurant chains had spent a large chunk on buying back their own stock, a practice aimed at bolstering its price. Some were even more vulnerable to the economic shock because they had previously increased their borrowing — including to fund buybacks or pay dividends — and strained their credit in the process.

Some companies, embarrassed by the uproar, returned the funds.  The first to do so was Shake Shack (see Danny Meyer’s statement) 

Now the restaurant industry wants its own targeted recovery fund, as it explained in a letter to Congress.

What will restaurants look like in the future?

For sure, they will be different.

The National Restaurant Association, which represents chain restaurants, issued new general guidelines.   These largely defer to government regulations, but leave most practices to owners’ discretion.

Independent restaurant groups are trying to develop more detailed protocols.  They refer to a set of guidelines  issued by the founder of Black Sheep Restaurants in Hong Kong.

I hope that the revelations about how badly restaurant workers are treated and paid will inspire legislative action.

To me, the most shocking revelation is how restaurant workers who rely on tips do not qualify for unemployment insurance in some states because their salaries are so low that they do not meet earning requirements.  That has to change.

Q.  If you are running a fast-food place, how to cope with having to close and lose sales during the Coronavirus pandemic?

A.  Run an ad: “Stay Home of the Whopper”

Your country needs you to stay on your couch and order in…Do your part. Staying home doesn’t just make us all safer, it makes you a couch potatriot.”

Never mind that couch potatoism puts you at higher risk of obesity, type 2 diabetes, hypertension and, therefore, higher higher risk for the most damaging effects of this virus.

The company is also offering 250,000 free sandwiches to health care workers.

Thanks to a reader, who wished to remain anonymous, for alerting me to this one.

The International Panel of Experts on Sustainable Food Systems has produced a useful report, COVID-19 and the crisis in food systems: Symptoms, causes, and potential solutions

The lockdowns and disruptions triggered by COVID-19 have shown the fragility of people’s access to essential goods and services. In health systems and food systems, critical weaknesses, inequalities, and inequities have come to light. These systems, the public goods they deliver, and the people underpinning them, have been under-valued and under-protected. The systemic weaknesses exposed by the virus will be compounded by climate change in the years to come. In other words, COVID-19 is a wakeup call for food systems that must be heeded.

Covid-19 has three lessons for systems

1.  Industrial agriculture is driving habitat loss and creating the conditions for viruses to emerge and spread.
2. A range of disruptions are testing the resilience of food supply chains and revealing underlying vulnerabilities.
3.  Hundreds of millions of people are living permanently on the cusp of hunger, malnutrition, and extreme poverty, and are therefore highly vulnerable to the effects of a global recession.

Its recommendations

1. Take immediate action to protect the most vulnerable
2. Build resilient agroecological food systems
3. Rebalance economic power for the public good: a new pact between state and society
4. Reform international food systems governance

Comment: This thoughtful, well documented report establishes a strong basis for action.  If only….

 

Leo Wilson, an editor at CyberPet, sent me his graphic advice to pet owners worried (for good reason) about Coronavirus.  His Infographic has 12 pieces of advice.

Here’s advice #7 about basic health care.

The crisis caused by Covid-19 reveals deep flaws in America’s health care system but also in its food system.  The food system flaws are showing up first in the meat industry, reliant as it is on a low-wage, immigrant work force.

Cattlemen estimate virus-induced losses at more than $14 billion

Using existing market data and futures market data, the total actual and future impact is forecast to exceed $14.6 billion, broken out by sector in the table below.

U.S. Food Supply Chain Is Strained as Virus Spreads

The nation’s food supply chain is showing signs of strain, as increasing numbers of workers are falling ill with the coronavirus in meat processing plants, warehouses and grocery stores.  The spread of the virus through the food and grocery industry is expected to cause disruptions in production and distribution of certain products like pork, industry executives, labor unions and analysts have warned in recent days. The issues follow nearly a month of stockpiling of food and other essentials by panicked shoppers that have tested supply networks as never before.

COVID-19 cases in Iowa packing plants a big part of 389 new cases, state’s largest single-day increase

Iowa had its largest single-day increase in COVID-19 cases Sunday, driven largely by new positive tests at meatpacking plants. State officials said 261 of the 389 new cases of COVID-19 reported Sunday were discovered as part of testing done at Iowa meat processing plants.

The food chain’s weakest link: slaughterhouses

Yet meat plants, honed over decades for maximum efficiency and profit, have become major “hot spots” for the coronavirus pandemic, with some reporting widespread illnesses among their workers. The health crisis has revealed how these plants are becoming the weakest link in the nation’s food supply chain, posing a serious challenge to meat production.

South Dakota Meat Plant Is Now Country’s Biggest Coronavirus Hot Spot

That all appeared to be in jeopardy this week, when the Smithfield plant became the nation’s largest single-source coronavirus hot spot. Its employees now make up about 44 percent of the diagnoses in South Dakota, and a team of researchers from the Centers for Disease Control and Prevention has traveled there to assess how the outbreak spiraled out of control. Smithfield is the latest meat processing facility to close in the face of the coronavirus.  The startling toll on the workers has drawn criticism from union leaders who say the facility’s owners waited too long to introduce safety measures, and instead encouraged employees to meet the demand for their products that has surged amid the pandemic.

Smithfield Foods Shuts U.S. Bacon, Ham Plants as Coronavirus Hits Meat Sector

Smithfield, owned by China’s WH Group Ltd, is shuttering a plant that processes bacon and sausage in Cudahy, Wisconsin, for two weeks, according to a statement. A facility in Martin City, Missouri, that processes spiral and smoked hams will also close.  The Missouri plant, which employs more than 400 people, processes pork from the Smithfield slaughterhouse in Sioux Falls, South Dakota, that the company closed indefinitely. More than 200 employees became infected with the coronavirus at the South Dakota slaughterhouse, which produces 4% to 5% of the nation’s pork.

US Pork Farmers Panic as Virus Ruins Hopes for Great Year

Instead, restaurant closures due to the coronavirus have contributed to an estimated $5 billion in losses for the industry, and almost overnight millions of hogs stacking up on farms now have little value. Some farmers have resorted to killing piglets because plunging sales mean there is no room to hold additional animals in increasingly cramped conditions.

Poor Conditions at Meatpacking Plants Have Long Put Workers at Risk. The Pandemic Makes it Much Worse

The meat processing industry, where workers toil shoulder to shoulder in crowded, enclosed spaces, has been battered by the novel coronavirus in recent days. Multiple plants have closed after several thousand workers fell ill and tested positive for COVID-19 and a dozen have died—including three other workers at the JBS plant in Greeley, one at a Cargill plant in Fort Morgan, Colorado, four at a Tyson plant in Camilla, Georgia, two at another Tyson plant in Columbus Junction, Iowa, one at another JBS plant in Souderton, Pennsylvania, and one at the Smithfield  pork factory in Sioux Falls, South Dakota. As of Wednesday, the Smithfield plant had become the country’s top COVID hotspot, with more than 640 cases linked to the plant.

Corporate focus on profits literally kills workers

The circumstances that engulfed the Sioux Falls pork plant are illustrative of many things: political denial, corporate greed, a Trumpist skepticism toward experts. But the Smithfield plant also epitomizes the stark differences between many wage earners and the professionals of the so-called information economy….The nation needs a stronger social safety net that includes, among other things, paid sick leave and parental leave, guaranteed health care and assistance for child care.

Food safety lawyer Bill Marler on unprotected workers and meat inspectors

• You cannot slaughter animals without workers to do the work, and you cannot sell meat without inspectors.
• We need to protect both workers and inspectors or we will see more plants shutter and our grocery stores empty.
• Forcing workers and inspectors to work unprotected is not the answer

Resource

The Counter has a nifty interactive map of closed meatpacking plants as part of a useful Q and A (go to the link to use the interactive parts).

The USDA has established a new Coronavirus Food Assistance Program (CFAP).

This has $19 billion to distribute to farmers, ranchers, and consumers.

Cutting through the rhetoric, the new program has two parts:

1. Direct Support to Farmers and Ranchers—$16 billion: for direct support and marketing costs.  [Note: producers say this is not enough].
2. USDA Purchase and Distribution—$3 billion: for buying fresh fruits and vegetables, dairy products, and meat products at the rate of $100 million per month, each.  “The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits serving Americans in need.”  [Note: Fruit and vegetable producers say this is not enough].

In addition, the USDA says it will:

• Allocate $873.3 million to purchase a variety of agricultural products for distribution to food banks, as determined by industry requests, USDA agricultural market analysis, and food bank needs.
• Under previous acts, allocate $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases, as determined by food bank need and product availability.

Comment 

• The bulk of this program goes to Big Ag—on top of the $22 billion or so Big Ag got in compensation for trade losses last year.
• The much smaller Purchase and Distribution program is to deal with the shocking problem of producers destroying foods while hungry people line up for food distribution from food banks overwhelmed by the demand.
• USDA is using this to reinstate its “harvest box” proposals as a means to replace SNAP benefits.
• USDA is not backing off from its other long-term strategy to do all it can to reduce SNAP enrollments and benefits, or from Trump Administration public charge policies that put anyone who is not a citizen at risk of never getting citizenship or of deportation if they apply for public benefits.
• These measures are expensive band-aids.  They do not address fundamental flaws in agricultural support programs.
• Maybe this crisis will at last cause Congress to start supporting sustainable, resiliant agriculture?  Hey, I can dream.

Here is everything else the USDA says it is doing

the USDA announcement also says what it is already doing  “to make sure children and families are fed during a time of school closures and job losses, as well as increase flexibilities and extensions in USDA’s farm programs to ensure the U.S. food supply chain remains safe and secure.”  What follows is a direct quote.

Feeding Kids and Families

• USDA expanded flexibilities and waivers in all 50 states and territories to ensure kids and families who need food can get it during this national emergency.
• USDA is partnering with the Baylor Collaborative on Hunger and Poverty, McLane Global, PepsiCo, and others to deliver more than 1,000,000 meals a week to students in a limited number of rural schools closed due to COVID-19.
• USDA authorized Pandemic EBT in Michigan and Rhode Island, a supplemental food purchasing benefit to current SNAP participants and as a new EBT benefit to other eligible households to offset the cost of meals that would have otherwise been consumed at school.
• USDA expanded an innovative SNAP online grocery purchase pilot program in Arizona and California, Florida and Idaho, and DC and North Carolina, in addition to Alabama, Iowa, Nebraska, New York, Oregon and Washington.

Actions to Ensure a Strong Food Supply Chain

• USDA is working to ensure the food supply remains safe and secure.
• USDA announced flexibilities to ensure food distribution for certain food products like dairy and eggs reach retail settings.
• USDA announced farm loan flexibilities, deferrals (PDF, 243 KB), and maturity extensions.

Whole of Government Response in Rural America

• USDA released The COVID-19 Federal Rural Resource Guide (PDF, 349 KB), a first-of-its-kind resource for rural leaders looking for federal funding and partnership opportunities to help address this pandemic.
• USDA opened a second application window (April 14, 2020 to July 13, 2020) for $72 million of funding under the Distance Learning and Telemedicine (DLT) grant program.
• USDA Rural Development lenders may offer 180-day loan payment deferrals without prior agency approval for Business and Industry Loan Guarantees, Rural Energy for America Program Loan Guarantees, Community Facilities Loan Guarantees, and Water and Waste Disposal Loan Guarantees.
• USDA will use the $100 million provided for the ReConnect Program in the CARES Act to invest in qualified 100 percent grant projects.

For all the information on USDA’s work during the COVID-19 pandemic and resources available, please visit www.usda.gov/coronavirus.

 

 

Lucy Sullivan, the executive director of Feed the Truth, has been collecting examples of food industry exploitation of the COVID-19 crisis for marketing purposes.

Here are a couple of examples, but click on this link to see the Twitter Thread.