Socioeconomic Disparities Are Laid Bare by COVID-19

26 June 2020 | Blog Post

The following article is part two of a two-part series on COVID-19 and its impact on supply chain and employee liability. Read part one here.


While many white-collar workers around the country are sheltering in place and working from home, food industry workers like the employees at Smithfield are deemed "essential" and must remain on the front lines.

Food processing plants throughout the country are experiencing coronavirus outbreaks which have the potential to disrupt the country's food supply chain. A JBS meatpacking plant in Colorado has shut after five deaths and 103 infections among its employees. Two workers at a Tyson Foods plant in Iowa also died, while 148 others were sickened.

The closure of a large meat processing facility like the one in Sioux Falls causes massive upstream disruption, stranding farmers without a place to sell their livestock. About 550 independent farms send their pigs to the Sioux Falls plant.

 

Milk Down the Drain

Meanwhile, and still in the US, milk down the drain or unused milk is becoming a supply chain concern. With coffee shops closed in most countries, oversupply of milk is emerging as a real side-effect of the pandemic.

Dairy Farmers of America, the country's biggest dairy co-operative, is estimating that farmers are having to dump 3.7 million gallons (14 million litres) of milk every single day because of disrupted supply routes.

This issue is not only being seen in the US, with dairy farmers in the UK asking for government help because of their own surplus problems. Peter Alvis, chair of the Royal Association of British Dairy Farmers, says about five million litres per week are at risk.

Closures are impacting all areas of agriculture. Some producers have tried to pivot to supplying ordinary shoppers, but changed market demand and excess stock remains a problem across the sector. The New York Times, which interviewed some US producers, cited an example of one chicken processor having to smash 750,000 unhatched eggs every single week. They also spoke to an onion farmer who was having to let most of his harvest decompose, unable to re-distribute his onions in high enough qualities and without the facilities to store them.

Crops go to Waste

In India, tea planters are warning that lockdown measures have already caused the first wave of their precious Darjeeling crop to go to waste and there are fears for the second.

On top of oversupply and the difficulty in pivoting toward retail consumers, farmers in a lot of places are also encountering problems because of staffing shortages says the BBC. Self-isolation and social distancing guidelines are reportedly slowing picking efforts in places, and national lockdowns are disrupting the usual international flow of labour across the industry.

Last week Germany made an exception to its country's lockdown to allow thousands of Romanian and Polish workers to fly in to help with the spring harvest, especially with picking strawberries and asparagus. There has also been a 'Feed the Nation' campaign launched in the UK to encourage domestic workers to plug any labour gaps to avoid food waste.

The pandemic has led to some changes in what we are trying to buy. For example, the UK has seen demand for flour soar in recent weeks as people stuck at home increasingly turn to home-baking. According to new data, cited by BFMTV, French shoppers have increasingly been buying more organic food since coronavirus fears took hold of the country.

 

Eating Healthy and Local

This could be because they are shopping at smaller, local stores - experts say - or because people want to eat more healthy and local food during the outbreak. Stock is also sitting unused. Take UK pub closures for example. Much of the industry's current supply of lager and ale could now go to waste under government rules which mean they could be closed for the foreseeable future.

Some beers have a best-before date of just weeks - which means thousands of unused barrels in pub basements could be undrinkable by the time the lockdown is lifted.

But it's not bad news for everyone. Some parts of the food industry are benefiting from our changing consumption habits. US sales of orange juice, which had been on a gradual decline, are said to be up 38% on last year's figures.

The so-called "futures" price of orange juice has soared in recent weeks. "The Covid-19 outbreaks are hitting both the supply and demand for orange juice," Stephen Innes, chief global market strategist at broker AxiCorp said last month.

"The immune-boosting properties are the demand-side attraction,” said Innes who explained that there are supply side challenges across the transportation layer in bringing the product to markets as well as issues with not having enough workers as plantations introduce restrictions such as social distancing.

Good News for Orange Growers

The demand is good news for orange growers, especially in Florida and Brazil - who supply big brands like Tropicana. In this environment, firms must identify what work activity or situations might cause transmission of the virus, think about who could be at risk, and decide how likely it is that someone could be exposed. They must act to remove the activity or situation, or if this isn’t possible, control the risk.

The UK’s Health and Safety Executive (HSE) says that as an employer, firms must protect people from harm. This includes taking reasonable steps to protect their workers and others from coronavirus. This is called a risk assessment, which help to manage risk and protect people.

Stress is another factor that could introduce liability in a COVID-19 affected workplace. Employers have a legal duty to protect employees from stress at work by doing a risk assessment and acting on it.

HSE defines stress as ‘the adverse reaction people have to excessive pressures or other types of demand placed on them’.

 

Prevention Better Than Cure

Employees feel stress when they can’t cope with pressures and other issues. Employers should match demands to employees’ skills and knowledge. For example, employees can get stressed if they feel they don’t have the skills or time to meet tight deadlines. Providing planning, training and support can reduce pressure and bring stress levels down.

Stress affects people differently – what stresses one person may not affect another. Factors like skills and experience, age or disability may all affect whether an employee can cope.

As Lockton concluded in the blog mentioned earlier, prevention being better that the cure, businesses need to review their procedures and implement appropriate measures to protect their workforce taking into account their work type, vulnerability and individual requirements.

This should ensure employee safety in carrying out their work and if a claim should arise then employers have the best possible chance of rebutting negligence allegations.


Further Reading Suggestions

Why COVID-19 will continue to be a real liability for Casualty (re)insurers



Casualty Exposure, Casualty Risk, Connected Risk, Corporate Risk, Corporate Risk Managers, COVID-19, Economic, Financial Services, Insurance, Political Exposure, Political Risk, Re/Insurance, Supply Chain Exposure

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