The impact of lockdown on the agriculture sector

The pandemic has highlighted just how vital food production is for our society. However, agriculture has become one of the hardest-hit sectors during the UK lockdown. From supply chain disruption to the dumping of stock and labour shortages, farmers and food suppliers have faced countless challenges. At the same time, the pandemic has shed light on a path forward for our agricultural systems and how they can be improved to serve both suppliers and consumers better. Here’s how Covid-19 has impacted the agricultural sector and how it may be reshaped by it altogether.

The negative impacts of lockdown

Coronavirus and the lockdown in the UK led to many restrictions and hardships for the food industry.  Of these, there were three major issues:

Supply chain disruption – Within days of the announced lockdown, empty supermarket shelves became the image haunting every news channel and media outlet. The massive surge in demand from panic buying coupled with the industry’s ‘just-in-time’ approach meant that there was no backup available for immediate restock. While panic buying quickly subsided and shelves went back to normal, it brought to light the fragility of modern food supply chains.

Destruction of stock – Among some of the adverse effects caused by the lockdown were milk dumping and vegetable under-ploughing. That was the case for processors who had overly focused on restaurants as their sole customer segment. Finding it too challenging to switch to serving the consumer market through supermarkets, they began to offload their stocks.  

Foreign labour restrictions – The closing of borders, restrictions on travel and apprehension surrounding the virus led to extreme shortages of foreign seasonal labour. Fruit and vegetable producers, in particular, have suffered the most from this labour shortage. Many have resorted to hiring locally but have faced challenges in training these new employees from the ground up.  

How agriculture can move forward

While the global pandemic has led to challenges for the agricultural sector, it’s also resulted in some timely lessons and benefits. Furthermore, the crisis has brought to light how the industry can improve its food distribution and supply chains. Here are just a few ways in which agriculture can recover and move forward.

Higher appreciation for agriculture – During the pandemic, a newfound appreciation developed for certain workers. Nurses, delivery drivers and care home workers are now considered essential workers. Similarly, the pandemic has shown just how vital food production is to our survival. That is already moving policy-makers and the public to help bolster and protect farmers, land managers and the institutions in charge of food production.

Restructuring supply chains – Larger strategic stocks, broadening supplier pools to include more regional producers and prioritizing more local products over others are all ways the supply chain can be reshaped and strengthened. Furthermore, track-and-trace solutions to reduce bottlenecks and artificial intelligence for better demand prediction could also be employed to create a supply chain that is more resilient to future disasters. 

Food provenance – A shift to local production and sourcing was already starting to happen from the consumer side. However, the pandemic has revealed just how vital local shopping might be to weather future disasters. Shifting systems away from reliance on imports and foods grown miles away means the economy will be in a stronger position next time. 

Empowering farmers – Given the pivotal role farmers play in our food production, the balance of power between price-setting supermarkets and their suppliers is likely to shift. That could result in discussions of increased pay for farmers while maintaining fair prices for consumers. It could also mean better government rulings that benefit farmers in the form of Agricultural Property Relief and public funding tied to sustainability efforts.  

Flexibility in marketing channels – Suppliers learnt from the pandemic that there are inherent risks involved in only serving one customer segment that could easily fall through (e.g. restaurants). As such, food producers may look to diversify their marketing channels.

From more bolstering supply chains to more local sourcing, there are clear lessons that agriculture can learn from this crisis. However, these lessons also hold opportunities which are likely to benefit suppliers and customers in future significantly.     

Arrange a free consultation with our team of experienced and approachable tax incentive advisors today. At Kene Partners, our mission is to help innovative companies access millions of pounds of government money set aside to foster innovation. Your business could be next.