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COVID-19: Continuing To Meet The Challenge And Safeguarding Our Food Supply – Food, Drugs, Healthcare, Life Sciences – Canada – Mondaq News Alerts


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The unprecedented COVID-19 outbreak is not only a health crisis;
it’s also impacting business models and the food, beverage and
agribusiness (FBA) sector has also been affected. In this article,
we outline the key developments in six key areas to help your FBA
sector business manage this rapidly changing environment.

For further information on COVID-19’s impacts on the FBA
sector, please see our April 2020
Blakes Bulletin: Keeping People Fed During a Pandemic
,
which provides guidance on six key factors that have impacted the
FBA sector.

1. CHANGES IN CONSUMER DEMAND

Across Canada, dairy farmers are experiencing dramatically
reduced sales. This excess product can be largely attributed to
substantial purchasers of dairy products such as restaurants,
coffee shops, schools, and hotels no longer operating due to the
COVID-19 outbreak, as well as limits on essential items at the
retail level. The FBA sector is proactively looking for solutions
to avoid food waste where possible, such as rerouting excess
product to food banks. However, drastic discrepancies in supply and
demand have resulted in farmers being forced to dump excess
milk.

Increased time at home continues to shift consumer preferences.
Consumers are heeding advice to stay home, minimizing grocery trips
and stocking up when they do go shopping. Restaurants are reacting
to this demand shift by offering grocery staples as well as
ready-made meals. With more food being prepared at home, there is a
demand shift towards basics, which can jeopardize sellers and
producers that specialize in more luxury food items. For example,
fishermen looking to sell Canadian seafood, a premium product that
is typically marketed to restaurants and shipped overseas, are
anticipating challenges moving their products. Some seafood
suppliers that previously served restaurants are trying to shift to
a direct-to-consumer model. The shift towards direct-to-consumer
business models will be discussed further under Supply
Chain.

2. GOVERNMENT RESPONSE TO COVID-19 CHALLENGES

The Ontario government is launching a web portal to connect
workers with employers to fill positions in the agri-food sector.
The aim of the new tool is to fill important jobs across the food
supply chain to ensure food continues to be provided to Ontarians
throughout the COVID-19 crisis. The portal provides access to job
recruitment websites, retailers hiring in the food industry, and
training resources. The web portal can be accessed at www.Ontario.ca/AgFoodJobs.

Measures seeking to improve access to food for vulnerable
Canadians may also impact FBA sector businesses. The federal
government is investing C$100-million into organizations that
address food insecurity, such as food banks, to help such
organizations purchase food and other necessities. In Alberta, new
funding is being provided to organizations to help provide food
assistance for vulnerable students and families while students are
no longer able to attend in-person classes. These investments may
provide opportunities for FBA sector businesses looking to redirect
food supply previously destined for restaurants, schools, and other
non-operational businesses.

3. LABOUR SUPPLY ISSUES

The anticipated challenges relating to bringing temporary
foreign workers to Canada continue to be top-of-mind for food
producers. The government previously confirmed that temporary
foreign workers would be allowed to enter the country, and that all
arriving workers would be required to self-isolate for 14 days. The
federal government also published guidelines for employers hiring
temporary foreign workers, including requirements to provide
regular pay and benefits for the self-isolation period, monitoring
and reporting requirements relating to employee health, and several
rules relating to employer-provided accommodations. Farmers and
food processors have been understandably concerned about whether
these workers will arrive, and their safety once they do arrive. On
April 13, 2020, the federal government announced a C$50-million
investment to assist farmers and food processors manage the costs
associated with mandatory quarantine rules for temporary foreign
workers. This relief is intended to provide employers with C$1,500
per worker and will hopefully ease some of the costs borne by
employers in maintaining the workforce required to protect the food
supply.

4. SUPPLY CHAIN

All levels of the FBA sector are collaborating to address
persistent challenges arising as a result of COVID-19. Food
distribution companies traditionally set up to supply businesses
that are currently experiencing decreased demand are shifting to
provide transportation and warehousing assistance to grocers that
are under pressure to move product into stores. Accordingly, food
service distributors are shifting some of their excess food product
and labour supply to retail distribution channels.

In our
April 2020 bulletin
we anticipated that companies operating in
the FBA sector may implement supply chain changes as a result of
COVID-19. Some FBA sector businesses have already reported that
they are taking steps to shorten their supply chain, such as
employing more direct-to-store shipments or moving to a
direct-to-consumer model. The Ontario Federation of Agriculture has
published guidance for those selling agricultural products to
market their products through direct sales during COVID-19,
suggesting use of direct farm gate sales, online sales, and
partnerships with other local businesses or restaurants. Farmers
markets, a traditional direct-to-consumer option, are generally
able to remain open as an essential service, however several
markets are still implementing virtual offerings in addition to
brick and mortar operations in light of COVID-19. Other existing
forms of direct-to-consumer food sales such as meal kits and
produce baskets may also experience new entrants and increased
consumer interest.

5. INTERNATIONAL TRADE

In our last update, we outlined the status of trade restrictions
on food products resulting from COVID-19 concerns. Since then,
Vietnam has announced plans to walk back their previous ban on new
rice export contracts and instead implement a limit on the volume
of exports for April and May. Several other recent developments
will restrict the international flow of food products, with Russia
limiting its grain exports through June, Ukraine banning buckwheat
exports, Cambodia banning rice exports, and rice traders in India
restricting the signing of new export contracts due to COVID-19
related labour shortages and other disruptions.

Restrictive export polices may impact the global prices of these
staples, which can particularly disturb food security for lower
income food importing countries. Canada is one of several countries
that has committed to keep the flow of its food exports open. FBA
sector businesses should consequently anticipate continued demand
for staple products both inside and outside Canada’s
borders.

6. SAFETY MEASURES

Health authorities state that COVID-19 is not being transmitted
through food. We previously reported that the Canadian Food
Inspection Agency (CFIA) was suspending low-risk activities in
light of COVID-19, and recent announcements provide further
guidance on the CFIA priorities during the outbreak. The CFIA has
indicated that manufactured food importers will generally not
experience delays or disruptions by reason of not having a Safe
Food for Canadians Regulations licence, and domestic manufacturers
will be able to operate while they apply for a licence. The CFIA is
also suspending labelling requirements that have no impact on food
safety, for food that was packaged prior to April 6, 2020 and for
90 days thereafter. Guidance outlining the CFIA’s position on
specific requirements is available here.

As the COVID-19 outbreak progresses, FBA sector businesses are
becoming increasingly concerned with food and employee safety. The
CFIA is encouraging food processors to enhance regular cleaning and
sanitation efforts within their facilities and to follow public
health measures if an employee develops COVID-19 symptoms. In April
2020, one of the largest American pork processing plants announced
its closure until further notice after confirmation that over 200
employees tested positive for COVID-19.

A large Ontario-based poultry processing plant has also recently
suspended operations in response to three employee COVID-19 cases.
The plant is investigating the incident and deep cleaning the
facility during the shutdown as well as implementing social
distance measures and staggered breaks. This swift closure and
immediate action to resume operations demonstrates the importance
of being prepared for an outbreak in order to prioritize employee
safety and minimize operational impacts.

TAKEAWAYS

We have seen the challenges and trends stemming from COVID-19
evolve and at every step, the FBA sector has adapted to the
changing reality. We will continue to monitor the situation to
provide you with up-to-date information for your business
needs.

For permission to reprint articles, please contact the
Blakes
Marketing Department.

(C) 2020 Blake, Cassels & Graydon LLP.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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