COVID-19 Impact on Food Equipment in Food and Beverage Industry | DBMR

Posted by swarajya on April 21st, 2021

COVID-19 Impact on Food Equipment in Food and Beverage Industry

OVERVIEW

Food equipment industry includes processing machines, components and systems used to prepare, handle, store, cook and package food and food products. Even though these food equipment are mainly aimed towards the transformation such as increasing the consumption, palatability and digestibility or preservation which means enhancing the shelf life of food. Some other types of equipment are also employed to perform auxiliary or preliminary functions, such as preparation, handling and packaging. Food equipment are used in various applications ranging from beverages industry to bakery products and dairy to produce wide variety of food processing equipment available to perform the various unit operations required during a complete production cycle, such as separating, washing, baking, mixing, sealing and freezing. One of the hardest-hit industries due to the COVID-19 is the food equipment manufacturing industry. The COVID-19 originated in China, which is a major country for the supply of raw materials to the factories across the world. The measures such as lockdown and ban on transportation are being taken to restrict the spread of the coronavirus which has led to the shutdown of the manufacturing facilities and derailing the entire global supply chain. This has affected the chain of events which includes a downturn in economies across the world and decline in global FDI inflows. According to the United Nations Conference on Trade and Development (UNCTAD), COVID-19 is expected to cause decrease in the global FDI by 5 to 15% owing to the downfall in the manufacturing sector coupled with factory shutdown.

ANALYSIS ON FOOD EQUIPMENT INDUSTRY

In this scenario of COVID-19 pandemic, food equipment manufacturing companies are facing significant reduction in the consumption and also the supply chain issues which is affecting the demand for food equipment. Food and beverage industry is the largest user of food equipment. According to the estimate of French trade group ANIA, the food & beverage manufacturers have suffered a 22% loss in turnover across the world. This shows that the demand for food equipment has also reduced. The supply of raw materials to the site is affected which has hampered the production of equipment which is forcing manufacturers to shut down the operations, also the companies are facing manpower issues in the time of social distancing.

Food equipment is used in various food related industries such as dairy, meat, fisheries and oil among others. These industries are affected owing to the COVID-19 pandemic which in turn is expected to reduce the demand for food equipment in these industries. According to the Food and Agriculture Organization (FAO), the global meat production is expected to reduce by 1.7% in 2020 owing to COVID-19 related market disruption. The prices of meat in the International market have fallen by 8.6 percent from January 2020 owing to the COVID-19 related measures. The COVID-19 pandemic has heavily affected the fish industry. The global demand for the fish is expected to fall by at least by 15 percent in 2020. The global sugar production is also expected to reduce. The global dairy exports are expected to fall by 4 percent amid faltering import demand. This shows that the negative impacts of COVID-19 on these industries is also expected to reduce the demand for food equipment needed in these industries.

DISRUPTIONS TO SUPPLY CHAINS

The measures which are being taken to restrict or prevent the spread of COVID-19 are also affecting the functioning of food equipment supply chains. The impact on labour availability is of major concern. The food equipment industry is expected to be vulnerable to the adverse impacts on the workforce from the spread of COVID-19 (workers being in isolation or sick) and may face additional distribution and production costs, a result of safety and health measures introduced to decrease the exposure of their workforce. Two clear mechanisms of virus transmission are people in contact with contaminated surfaces and people who are in close proximity. Managing these risks require immediate changes to the way food equipment is distributed and processed, but could be difficult to implement in the short term owing to challenges with regard to sourcing protective equipment and masks for workers. Because of increasing infection rates and absenteeism, the available workforce has already been reduced. In addition to disruption to supply, infection rates in processing facilities have in turn led to reductions in demand. Restrictions on the mobility of the people and lockdowns is also affecting the provision of equipment safety, certification checks and quality, including those which are required to facilitate trade such as physical inspections of equipment to certify compliance sanitary and phytosanitary requirements (SPS). Read more…