Supply chain hotspots need a shot in the arm

Photo taken pre-pandemic by Glenn Lowson.

The lowly pallet is in high demand. A year into the global pandemic, stockpiles of wooden shipping pallets continue to shrink while prices skyrocket by as much as 400 per cent. 

 

Unfortunately, that’s but one of the troublesome kinks currently plaguing the produce supply chain. Another is the costs and delays from housing temporary foreign workers for the 14-day quarantine, often longer when COVID-19 test results are delayed or lost. The problem will only ease once a sufficient percentage of the workforce is vaccinated – an elusive goal determined by vaccine supply, access to vaccination clinics and, of course, worker consent.  

 

One would think that getting pallets, the most utilitarian of supplies, should be a slam dunk. Not so in the COVID era with North America-wide shortages this spring connected to several disruptors.

 

“The lack of pallets is adding stress to a supply chain that is already facing significant challenges,” says Jane Proctor, vice president, policy and issue management, Canadian Produce Marketing Association (CPMA). She names a lack of available trucks and shipping containers, ongoing labour challenges, fluctuating fuel costs, pandemic-related challenges and a pending shortage of resin used to make reusable containers and pallets. 

 

“At this time, expectations are that the pallet shortage will continue for months, perhaps for the balance of 2021 – all at a time when many North American produce items are just beginning seasonal harvests and shipments.”

 

That’s a big deal since pallets are a prerequisite for shipping produce, not only to stabilize the load but to maintain food safety. 

 

The scope of pallet excess demand is driven by several factors, says Proctor. The shortage of lumber and wood products has increased the cost of raw lumber that’s needed to build new pallets to replenish supply chain attrition due to normal wear and tear. Pallet companies are forced to source product from other jurisdictions thereby adding duty and transport costs to each pallet. And then there’s the ripple effect from pallet hoarding, much like the toilet paper crisis, caused by delayed or cancelled orders from pallet suppliers. In turn, this causes longer storage and increased operational congestion.

 

Compounding a dwindling availability are wholesaler, distributor and retailer efforts to maintain inventories of non-perishables given previous pandemic-related demands, which translates to product sitting on pallets in their warehouses much longer than normal.

 

“A concerted effort across the supply chain is required to ensure pallet availability for shipment of produce, to meet buyer and ultimately, consumer demand for produce,” says Proctor. 

 

Early indicators are that Canadian stakeholders are already focussed on finding a means to mitigate impacts and ensure produce continues to flow through the supply chain – a welcome effort given that local produce is coming to market now.  CPMA and a clutch of North American associations are banding together with industry stakeholders to find a safe, dependable solution until the pallet shortage is resolved.

 

Over on the labour front, Canadian growers are facing an unwelcome and unexpected drop in federal financial support for the 14-day quarantine period. Agriculture and Agri-Food Canada has announced that current compensation of $1,500/worker will drop to $750 as of June 15. Research by the Ontario Fruit and Vegetable Growers’ Association (OFVGA) shows that estimated costs of $3,125 per worker for hotel accommodations are double the costs of on-farm quarantines. (See chart:  Costs for initial 14-day quarantine, per worker).

 

“Growers have shared that these requirements have forced them to take out loans, draw on lines of credit and dip into savings so that they can attempt to secure a workforce for the 2021 growing season,” says Bill George, chair, OFVGA. “Some have shared that they no longer know why they are doing this and may stop production because the costs are not sustainable for their operations.” 

 

To address the crumbling supports and complete withdrawal of the Mandatory Isolation Support for Temporary Foreign Workers (MISTFW) by August 31, 2021, the OFVGA is lobbying hard for government to continue supporting a minimum of $1,500 per worker for as long as the Quarantine Act is in force and the isolation protocol is followed.

 

“The industry appreciates the steps that the federal government has taken to ensure that temporary foreign workers can continue to arrive and perform their critical role in Ontario’s food production,” says George. “The federal government’s Quarantine Act has imposed substantial additional costs on the employers of TFWs and the MISPTFW has offset many of those costs, which cannot be recovered through the marketplace. We agree that pandemic- related programming will need to come to an end, but expect that the sunset of this funding support to align with the end of the quarantine requirement, and not before. That’s exactly what the federal government committed to do when they introduced this program.”

 

While these talks unfold, growers have an imperative to obtain consent from and vaccinate as many farm workers as possible as quickly as possible. At Pearson International Airport in Toronto, about 3,000 incoming workers have been vaccinated with uptake of about two-thirds of arrivals. The Ontario Food Terminal, with support from the City of Toronto, invited farmers and front-line workers to sign up for a clinic held May 10-17, 2021.  

 

“Just under 6,900 frontline Ontario Food Terminal workers, Ontario agri-business essential workers and their immediate families received their first vaccinations,” reports Gianfranco Leo, manager, administration, Ontario Food Terminal Board. 

 

These numbers reflect the national drive to vaccinate 75 per cent of citizens, a benchmark that Prime Minister Trudeau considers critical to opening the Canadian-American border to more normal traffic flows. The border has been closed to all but essential goods and workers since March 2020.

 

Can the benchmark be reached in time to open the border for the national holidays of both countries? And if so, what new e-document will be mandated to support such an opening? The only certainty to come out of COVID is that the news changes at the speed of the internet, so stay posted. 

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Publish date: 
Saturday, May 29, 2021

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