Butcher agility keeps meat cabinets stocked

Why some supply chains are more robust than others

Butchers, fruit and vegetable specialists and small family-run grocery stores appear to have bypassed the supply chain crisis that has stripped supermarket shelves of fresh produce.

However, they are having to come up with some nifty footwork to meet fickle consumer demands that seem to change on a daily basis.

The agility to work with a larger number of wholesalers, going directly to farmers for supply and flexibility in on-site preparation has insulated the smaller stores.

As Coles and Woolworths stick to product limits across a number of items, the smaller independent operators say some lines are tight but they can adjust quickly.

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South Australian butcher shop owner and deputy chairman of the Australian Meat Industry Council's retail arm Trevor Hill said the overflow from supermarket custom was putting pressure on independent butchers, but most had reacted quickly and were 'pivoting' daily to meet demand.

"We have the ability to use different cuts to come up with the products consumers want, where supermarkets have no flexibility," he said.

"We're making mince from rump, schnitzels and barbecue steak from different cuts we've never before used in that way, and we're working longer hours to create all the value-add meals people are wanting.

"Whole chickens are not in tight supply but that's not what customers want. Across my four stores, for example, the thousand chicken kievs we'd typically sell have doubled in the past week.

"People are also tending to shop once a week rather than daily for a single meal, so we've had to adjust supply to accommodate.

"But generally, they are not hoarding or panic buying like at the start of the pandemic.

"The average spend is probably only up $5 to $10 but it's coming all at once, rather than spread out over a week."

The increase in farmers selling direct to smaller stores plays into a larger trend of customers seeking provenance, Agriculture Minister David Littleproud said.

"We're seeing a real change where people want their food to be more local than ever," he said.

"This is the exciting thing for our agricultural sector - they don't have to just play in the big supermarket sand pit anymore.

"We've got small businesses, family businesses, that are starting to pop up because they see the importance of this - that families want to understand the provenance of their food and fiber."

Cancelled deliveries

Some farming leaders have expressed concerns about producers wearing the brunt of the current supermarket food shortages as a result of their lack of bargaining power.

However, the competition watchdog says the situation at the moment appears to be a case of all players in the supply chain experiencing extreme disruptions as a result of the spread of the virus, rather than any one player unfairly exerting market power.

The Australian Competition and Consumer Commission says it is impossible to draw broad conclusions about contracts being cancelled at short notice or supply on doorsteps not being accepted without investigating each individual case in depth.

ACCC agriculture commissioner Mick Keogh said the nature of supply arrangements varies immensely, ranging from detailed long-term contracts to verbal agreements to take product next week.

"Certainly, some contracts have conditions that allow for cancellations in extraordinary situations and those may be being utilised," he said.

"What is most evident at the moment is the disruptions are primarily a workforce issue, where some farming, processing, distribution and transport businesses are unable to operate as normal."

Asked if fresh food supply chains were simply so fragile that little could be done to mitigate shortages in a situation such as this, Mr Keogh said the answer fell 'somewhere in the middle'.

"Some supply chains have proved resilient in the face of these extraordinary circumstances, while others - generally more centralised supply chains - have proved vulnerable," he said.

Recent ACCC work in the beef cattle, horticulture, dairy and winegrape sectors had shone a spotlight on the need for clarity in terms of contractual obligations and documentation, and full price transparency, and both these have been important in negotiating the current situation, he said.

"Those two things are often lacking in contractual arrangements within ag supply chains, and can be the cause of major disputes when abnormal disruptions occur" Mr Keogh said.

This story Why some supply chains are more robust than others first appeared on Farm Online.