Industry “resiliency” is a never-given

Source: www.producer.com

Everybody hates getting their vehicle stuck and having to call for help.

I’m sure the captain of the Ever Given, the gigantic container ship that completely blocked the Suez Canal for a week, was mightily embarrassed having to put out an emergency call to canal officials, tug boat operators and his bosses at the shipping company after the Ever Given became lodged across the canal – whoever’s fault that was.

As dozens and dozens of giant ships piled up on each side of the lodged ship, the “resiliency” of the global shipping industry seemed pretty thin. I mean, if one ship getting jammed can block 12 percent of global shipping, and there are other chokepoints like the Suez Canal around the world, how bad could things get with worse luck? Imagine if a ship like the Ever Given sank. Nightmare.

Those sorts of chokepoints and constrictions have also been appearing during the pandemic. Right now a number of industries, including the North American auto industry, are going into slowdowns because they’ve run short of the microchips that are necessary for the many in-car electronics systems built into each vehicle these days. No chips, no finished cars. That chip shortage mostly arises out of the pandemic, with auto and other manufacturers cancelling and scaling-back orders at the beginning of the pandemic, anticipating a prolonged economic slump, then being surprised by the strength of the economic recovery in recent months. Those semiconductor plants, most overseas, can’t just fire up a few more blast furnaces and pour out a bunch of extra chips when they get rush orders. They are the product of incredibly complex supply chains, relying upon scarce “rare earth” minerals and high tech components from a handful of sources that also can’t just crank up production or deliveries. A demand disjuncture, like the early pandemic cancellations and delays of orders, has led to a supply disjuncture that won’t be too easy to clear up.

Like the logjam of ships trying to move through the Suez now that the Ever Given is freed, delivery delays could last months as ports in Europe, Asia and elsewhere soon deal with fleets of ships arriving around the same time, far exceeding unloading capacity.

This all shows the challenge of finding “resiliency” in complex systems, which has been a favourite discussion of the pandemic The term “resiliency” has been used so many times it has become a cliche in commentary, speeches, headlines and discussions on thousands of Zoom-broadcast conferences. It’s something I’ve mocked before, because it is sometimes used in such a loose manner that it could mean almost anything, and the simple notion of adding resiliency to a system isn’t so simple to do if it comes with a big price tag.

But it’s a useful term when used precisely, and that’s what I think researchers Ken McEwan, Lynn Marchand and Max Zongyuan Shang of the University of Guelph achieved in their article The Canadian Pork Industry and COVID-19: a Year of Resilience, published in the Canadian Journal of Agricultural Economics in March 25. When I saw “Resilience” in the title, I groaned at yet another iteration of the term, but the article does an excellent job at looking at why the Canadian pork industry didn’t collapse in 2020-21 as the pandemic’s multiple shocks hit, including plant shutdowns, border interruptions, world trade disruptions and unexpected surges and slumps in demand.

“We view resilience as how robust and flexible the economic system is when facing unexpected external shocks such as an international trade dispute, natural disaster or a pandemic,” they write. That’s a useful framing for a study of how the industry managed to make it through the unique challenges of the past year. They find a number of factors led to this strength, including keeping the Canada-U.S. border open, flexibility of processors and regulators, and fluid ports and international markets that could serve areas of demand when they arose.

Lots of farmers had grave troubles in the past year, as plants temporarily shut and forced some awful decisions to be made at times, and crashing prices occasionally. Hog pricing in Western Canada was a particular problem, and I’d say the least resilient part of the pork industry presently, not providing a viable long-term basis for continued production at today’s levels. However, for the industry in general, 2020 was pretty good. Slaughter increased four percent, overseas exports (mostly to China) were magnificent, and packing plants learned to operate under extremely trying conditions, developing new capabilities along the way.

That’s why the story of Canada’s hog industry in the first year of the pandemic is mostly a non-story, as good news often is. You won’t hear too much about it. Despite initial shutdowns and early chaos, the industry got back into gear and continues to function mostly as it should. That, if anything, is resiliency.

When the pandemic is done and gone, you probably won’t hear too much about resiliency. Once we can take our supply chains for granted again, we probably will. Having the ability to withstand a shock will be forgotten about until the next crisis. But for now, let’s be grateful about the perhaps unexpected resiliency our hog industry (and other ag industries) have shown.

All we have to do is look at the auto and other manufacturers relying upon scarce microchips to realize how much better agriculture and food have been able to adapt than some other industrial sectors. And from looking at the Ever Given, we can perhaps feel some sympathy not just for the hapless ship’s crew and canal pilots who got stuck, but also empathize with the thousands of other ships’ crews, port workers, factory workers and truck drivers who have suddenly realized that the supply chain they’re a part of isn’t as resilient as they thought. It’s not something you think about much, until you have to.

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