The grocery Industry is an obvious essential component of Bermuda’s day-to-day life. Keeping Bermuda’s people fed and healthy is a responsibility taken very seriously. The system is a flow of food stuffs from producers to wholesalers (local or overseas), sometimes through overseas jobbers, then via the shipping routes, ending with local grocers and restaurants, with all of the parties working to adjust to the rapidly changing environment of Covid-19.
Covid-19 has brought unprecedented change to these supply chains.
We have observed major producers being impacted as production facilities have been forced to close. Some because of infection outbreaks, some owing to government mandates. The topical example that has been in the news is Smithfield Farms’ ham production. Some facilities have narrowed their production from a dozen products down to three, think types of soup as an example.
Our system has compensated by shifting to alternate suppliers, alternate brands or alternate source countries. This is not a trivial task, particularly while working to hold pricing stable during these difficult times. The public will perhaps begin to notice shelves looking different at their favourite store, but there is food for everyone.
These closures are affecting the available inventory on a North American or even global scale. Scarcity is driving up the cost to purchase, particularly chicken, pork and beef products. These fresh meats are a leading indicator for the challenges ahead. To this point much of the increases have been absorbed by the local wholesalers and grocers in an attempt to protect the consumer. How this affects the Bermuda consumer depends on how effective the United States is at containing the pandemic, regaining lost production capacity and the time it takes.
As inventory levels at the distribution points fluctuate on a weekly basis we are seeing orders partially filled. Decisions are having to be made regarding shipping. Does one wait until the container is full, or does one ship and protect inventory levels on the island? Shipping containers that are less than full have an immediate impact on the costs of the contents as the shipping costs are allocated across fewer goods.
Some of these incremental costs have been absorbed by the system. Wholesalers and grocers together are facing higher costs of goods sold while working to maintain consumer pricing where possible. In some cases the system can not absorb the increase and the price on the shelf is adjusted. This balance is a difficult one and a responsibility taken very seriously.
We must thank the local wholesalers and grocers for the work they are doing on our behalf to protect our lifeline. We thank their staff, who have been on the front lines during the shelter-in-place. We thank the management teams, who have been flexible and adjusting to changing information, regulations and guidance from the Department of Health as new information becomes available during these volatile times. • Dennis Fagundo is the president of the Bermuda Chamber of Commerce