Podcast: America’s Meat Supply Crisis with Tom Vilsack

Transcript

Listen: With just a few companies controlling the vast majority of beef, pork and poultry processing in the US, the nation's meat supply chain was already vulnerable. The COVID-19 pandemic has exposed the shortcomings of the system and threatens to disrupt the entire industry, from farmers to processing plants to grocery store shelves.

This week, GZERO World with Ian Bremmer explores two sides of America's current food crisis: Infections and supply chain disruption that have shuttered plants, and growing food insecurity caused by soaring unemployment. Food banks are reporting a 70% increase in demand from communities while farmers are forced to dump milk or let animal products go to waste.

Our guest, Tom Vilsack, knows both sides of the story from experience. As former Governor of Iowa, farming and agriculture were key areas of policy and politics. Later, as President Obama's Sec. of Agriculture, he was tasked with managing the national issues of food supply and demand. Now, as a board member of Feeding America, he sees firsthand the need for more aid to working families who can't make ends meet in this pandemic.

TRANSCRIPT: America’s Meat Supply Crisis with Tom Vilsack

Tom Vilsack:

I think it would be a serious mistake on the part of any business leader in the food and agriculture industry to assume that this is a one-off situation, that we get through it and we're done with it.

Ian Bremmer:

Hello and welcome to the GZERO World Podcast. Here you'll find extended versions of the interviews from my show on public television. I'm Ian Bremmer, and today I'm talking about food; meat shortages, supply chain disruptions, and increasing food insecurity. Both will leave millions hungry. I'll explain what effect the pandemic is having and then take a closer look with a man who has some key perspectives. Tom Vilsack. He's a former governor, former secretary of agriculture, and also serves on the board of directors of Feeding America. Let's begin.

Announcer:

This episode of the GZERO World Podcast was made possible by Lennar, America's largest and most innovative home builder, and the number one destination for foreign residential real estate investment in the US. Learn more at www.lennargzero.com. That's L-E-N-N-A-R-G-Z-E-R-O.com.

Ian Bremmer:

Former governor of Iowa and former secretary of agriculture, Tom Vilsack. Very good to be with you, sir.

Tom Vilsack:

Good to be with you.

Ian Bremmer:

So of course the big topic I want to get into is the disruptions around our nation's food supply. I remember at the beginning of this crisis, panic buying in grocery stores, even toilet paper, God forbid. But then it left the headlines. Now it's back. And we're hearing all sorts of problems with getting the food to where it needs to go. Why are we talking about this right now?

Tom Vilsack:

Well, we're talking about it because the virus has a cascading effect on the supply chain. Initially, there was panic in the grocery stores as you alluded to, and essentially everything was taken off the shelves and people believed that we had a food shortage. We didn't. And then about the time that got figured out, we were hit with unemployment, massive unemployment, unexpected unemployment, sudden unemployment, which places a great strain on food banks. This was happening because we were shutting down schools. We were shutting down food service. We were shutting down restaurants, bars, and taverns. And so 50% of the food that we normally would consume in those bars, tavern schools, et cetera, had to go someplace. Well, there was no place for it to go because the food banks were not prepared to accept it. And the supply chain that exists today wasn't designed to get it to the food bank. It was designed to get it to McDonald's, to get it to the tavern, to get it to the school.

Tom Vilsack:

So we're in the process now of having to sort of realign the supply chain so it becomes more resilient so that we can over time shift and redirect food that would otherwise be used in food service to be used in food banks. About the time we had this figured out, we then began to have the problem with the processing facilities where workers were getting sick, facilities were shut down. That's a further disruption in terms of beef and pork and poultry being processed. So it's a cascading effect of the virus, and I think it suggests the need for us to really think long and hard about the resiliency of our system

Ian Bremmer:

Now talking about resilience, but we've had a lot of discussion about our global supply chain and for decades now, we've of course moved a lot of production to where labor is cheaper, manufacturing, made in China, all of that. And of course that's created disruptions. What I hear you saying is that the same thing that's happened on a global basis with our manufacturing is actually happened domestically with our food chain, that it's too efficient and that's why we're facing problems right now. It's too consolidated.

Tom Vilsack:

Well, that's true across the world. I mean, basically we're seeing the same level of disruption in other countries. Not so much because of globalization, but because the supply chains were designed to be the most efficient, most effective, and most profitable. And the reality is we didn't build into those systems resiliency, the ability to move away from one processing facility or one location to another location to take the pressure off.

Tom Vilsack:

So I think we have to really think long and hard about this. And as we're trying to figure our way out of this crisis, as we're trying to figure out ways in which food banks can receive the food that they need, now that they have a 70% increase in demand and they have no refrigeration, no storage capacity, how do we meet that crisis? But at the same time, how do we create a system that in the future, because this isn't the last time we're going to be dealing with something like this, how do we make sure that we can pivot more quickly?

Tom Vilsack:

And I think one of the answers is that we're going to have to have shorter supply chains and more storage capacity. Which means that we have a more resilient system, but maybe not as efficient or as profitable system as we had before.

Ian Bremmer:

Yeah, it sounds expensive. I mean, when I hear more resilience and shorter supply chains and more capacity in case of a pandemic or something, another disruption in the future, I hear costs for the average consumer are going to go up. How dramatic do you think this is possibly going to be?

Tom Vilsack:

Well, I think we really don't know the answer to the question of how dramatic it's going to be because we don't know at what pain point the consumers are going to say, "That's enough." I think it's fair to say that if you're looking at more processing facilities, maybe smaller and more as opposed to larger and fewer, that's obviously going to be an expense that's going to have to be factored into the cost of hamburger and the cost of chicken, chicken breasts, et cetera. The question is, at what point will the consumer say, "We're okay with a slight increase for more resilience because we don't like the disruption that we see today. We don't like to see the unemployment that we see today, that the price we're willing to pay to avoid that in the future is a little bit higher on the food side."

Tom Vilsack:

It may very well be that consumers make a different choice, and I think that's what we have to learn from the response to this pandemic. Are people going to be willing to factor into their decision making resiliency? Are companies and businesses willing to become more resilient and maybe slightly less profitable? Maybe not just in time inventory, but some stored inventory, so the disruption's not as severe in the future.

Ian Bremmer:

Do the people that are running these big companies that have experienced such extraordinary consolidation, do they recognize in your view that this is a game changer for the way they need to run their companies? Or do you think most of them still see it as, "I get through the next six, 12 months, we can probably go back to the way it was."

Tom Vilsack:

I think it would be a serious mistake on the part of any business leader in the food and agriculture industry to assume that this is a one-off situation, that we get through it and we're done with it. Mother nature is going to constantly create new viruses. And given the fact that we're going to continue to travel, we're going to continue to have interactions with folks, the chances are very good that we're going to see pandemics of sorts in the future. How do we guard against it? How do we minimize the impact of it? That's the question.

Tom Vilsack:

And I think every business leader is going to cope with it and have to cope with this to make a decision about, "Do I need more processing facilities? Do I need a shorter supply chain? Do I need storage? How am I going to deal with this when it comes again, so I don't have to lay off lots of folks? Or I don't have to tell my customers I can't supply the goods because the workforce is ill?"

Tom Vilsack:

I think these are just questions that business leaders are going to have to deal with. I think government's got a responsibility and a role they have to provide leadership and direction. For example, our food banks don't have the resources today, the financial resources today to build a lot of storage capacity or a lot of refrigeration capacity. Maybe in a community there needs to be some conversation about that. Maybe government has a program or could create a program that creates the resources that encourages food banks to think longer term to create that storage capacity, that refrigeration capacity. Maybe that creates a system where the supply chain can be diverted more easily from food service that shut down periodically to a food bank that's in need immediately.

Tom Vilsack:

But I think it behooves all of us to have that conversation and to have that thinking going on. And I would hope that political leaders and business leaders are having those conversations right now.

Ian Bremmer:

At the same time that we have supply chains that are too efficient and not resilient enough, we also have an awful lot of workers that are getting sick. Conditions that clearly for the line workers at these plants, these massive processing plants that were not built to handle a pandemic. I know the Trump administration has been working to try to get these people back up and in the plant as fast as possible. Given that we don't even know what a safe workplace really looks like right now, what do you think these plants need to do to be able to open?

Tom Vilsack:

Well, I think it's certainly important to get them open. But the question is getting them open safely to the extent possible and minimizing the risk of a spread of the virus.

Tom Vilsack:

Now, how do you do that? Well, it seems to me that you have frequent testing of the workers, that you create no incentive to encourage people to come to work, that you actually encourage folks if they're not feeling well to stay at home. I think you look at your line speeds to determine whether or not you can continue that line speed safely. My suspicion is that you're going to have to slow the process down a bit. Maybe you won't be able to produce quite as much or process quite as much product as you did before. Maybe you need to install separation equipment between workers, plexiglass, things of that nature. You clearly have to have your workers have protective equipment that is top of the line and important for them, and to send a message that you're concerned about their safety. You need to make sure that you are constantly encouraging folks to take their temperature and things of that sort.

Tom Vilsack:

We know from other countries that are doing a pretty good job of integrating back workforces in large office buildings and so forth. We know that there are ways to do this. There's additional expense, there's no question about that. And it may again, may result in a slightly less product being processed in the same timeframe. But at the end of the day, it will be less disruptive than shutting the plant down completely or having shut downs periodically because you have a recurrence of the virus.

Ian Bremmer:

One thing you didn't mention, and I'm a little surprised, is automation. And is it because this industry, it doesn't have the ability to automate more dramatically despite this really unprecedented crisis?

Tom Vilsack:

Well, I suspect that there'll be some thought to that. That is not an easy process to automate. This is an incredibly difficult task. It's very physically demanding. And it takes an awful lot of effort. And maybe there's a way in which you can create automation. But obviously at this point, up to this point, the decision's been made that it is probably more profitable to do it the way it's been done. But I wouldn't be surprised that there aren't some people thinking right now, "Is there a way for us to automate, to be more automated in this process?" That's going to take time. In the meantime, you're still going to have workers in that plant. You still have responsibility of those workers to make sure it's a safe workplace.

Ian Bremmer:

As we enter into the teeth of this crisis and peak levels of disruption and cases in many of these states and in many of these plants, do you think it is possible, should the American public be ready for actual shortages of meat and related animal products here in the supermarkets at the stores?

Tom Vilsack:

I don't think there's going to be a shortage nationally. In other words, I think there's going to be enough supply to feed the American public. About 30% of everything that's produced in this country gets exported. So we're obviously in a position where we can fulfill the needs of people in this country. But there may be local or regional disruptions because of plant closes, because of the nature of the supply chain today. There may be a shortage here or there, but overall, I don't think anybody needs to be worried about whether or not there's going to be enough food.

Tom Vilsack:

The big challenge though, is to get food to the people that need it. When you've got 30 million unemployed folks, suddenly unemployed folks, there's tremendous demand on food banks and pantries. And again, most of what they would get from a donated standpoint historically has come from retail. Well, retail doesn't have food to donate because we're buying it off the shelves. So the question is, how do we create a supply chain that will allow us to gradually redirect the food that would otherwise go to food service, to food banks, to take some of the pressure off of them? And as food service comes back online, how do we make sure that we keep that supply chain stable and healthy? So that's going to be a challenge. No question.

Ian Bremmer:

What's the call to action to consumers? Is there something the average American could do given what we know about the food supply chain right now, that en masse would actually make a difference? Would take some of the pressure off?

Tom Vilsack:

Well, I think obviously avoiding any kind of panic buying. I don't think it's necessary to go out and buy two months worth of this or that for fear that there's going to be a shortage because that basically creates a bit of a disruption in the supply chain.

Ian Bremmer:

If you were still secretary of agriculture, any immediate steps that haven't been taken that you would take to try to further stabilize our food supply chain?

Tom Vilsack:

Well, first of all, I think Secretary Perdue's got a really, really tough job, and I know he and his team are working through it. But I think one thing that could be done that I think should be done is to consider the ability of raising the SNAP, the Supplemental Nutrition Assistance Program resource and benefit.

Tom Vilsack:

The reality is you can send stimulus checks in the mail and some folks get them, and some folks don't get them, and it takes a while for them to get them, and some people use them to pay down their Visa bill, and does that necessarily stimulate the economy? Uncertain.

Tom Vilsack:

But what we do know from data and what we do know from history is that that SNAP benefit does get spent. It gets spent within 30 days, 95% of it gets spent. So to the extent that you provide those unemployed workers and their families the capacity to buy just a little bit more at the grocery store, the chances are that they will in fact do that. And that will create opportunity for the supply to stabilize, for prices to stabilize. That in turn helps farmers be a bit more comfortable and confident that the future's going to be okay.

Ian Bremmer:

I'm wondering, do you think that the role that the governors have been playing in deciding to reopen the economy, the country, their states, has it been adequate? Is it appropriate? Are they doing a good job?

Tom Vilsack:

Look, I was governor during 9/11, also governor during Katrina. And what I noticed during both of those crises was that there was a concerted effort on the part of the federal government and the state government to work collaboratively and cooperatively. And I think in a moment of crisis, especially a national crisis of this magnitude, that collaboration, that partnership is incredibly important. I don't sense that that's necessarily the case here. There's obviously a difference of opinion about when and how to open and reopen states. And so you don't have quite that alignment. So it's going to be hit and miss here, I think. And it makes the governor's job much more difficult.

Tom Vilsack:

Then you have this substantial amount of resource being provided by the federal government. And there are a lot of unanswered questions about how and where and what these resources are to be used for. And so I think it's a difficult time. And I'm sure that I'm not the only American that would like to see better coordination and collaboration between the two levels of government, because at the end of the day, it works best when it works together.

Ian Bremmer:

Would you like to see a federally mandated plan to reopen either with guidelines like what the CDC has recently proposed or otherwise?

Tom Vilsack:

Well, I don't know that a mandate's the right way. I think you look at this as a partnership. And you understand, and you appreciate the fact that mayors and governors are on the front line, that they are dealing with their constituents on the ground level. And they need to have a very clear understanding of precisely what information they need to look at, what information they need to consider in making these decisions that affect the life and safety and health and economic wellbeing of the people they care about. So to the extent that the federal government with its amazing resources can provide clear direction and clarity, that's really important. To the extent that it can provide a cooperative partnership with resources, with equipment, with personnel, with rules and regulations that can be waived or changed. All of that makes the job of making sure that people are protected, making sure that the economy gets back on track as quickly as possible, just that much easier.

Tom Vilsack:

If you have a difference of opinion, if there's uncertainty, if there's confusion, it just makes it really, really hard. And then what you have is you have different governors making different decisions, and then people basically trying to figure out, "Well, who's got the right decision making process? Who's made the right choice?" And that's really hard. And so my heart goes out to everybody who's involved in this because it's a very difficult situation. But I think it would be better off if we had greater collaboration and cooperation. And unfortunately, in this day and age, maybe that's difficult to get.

Ian Bremmer:

I know it doesn't feel that way, but there is another issue in 2020 that I need to ask you about. The election, you are a leading surrogate for the Biden campaign. I wanted to ask you, what is the most important advice that you've given him so far?

Tom Vilsack:

Well, I don't know that I've given him the important advice. I think what I would say is that ...

Ian Bremmer:

If I had you as my surrogate, I'd be asking you for important advice. I mean, you've got some background.

Tom Vilsack:

Well, we had plenty of opportunity to spend time when he was campaigning in Iowa. And I think the thing that I was able to impress upon the vice president was the importance of having a rural agenda and being able to speak specifically to and about rural folks in rural places and the need for an opportunity to recreate, to re-energize the rural economy. And I think he sees that opportunity with his plan to essentially get American agriculture to a net-zero emission future, which will fundamentally change the dynamic in rural places. It'll create new income opportunities for farmers, it'll allow for manufacturing to return to rural places. So I think from that standpoint, his rural plan, I think is a reflection of the conversations we had.

Tom Vilsack:

But I would say in this particular time, the advice I would give him would be to continue to show the empathy that he has shown throughout this process. Leadership is about a lot of things, and one of the most important aspects of leadership, especially during a time of crisis, is the ability to empathize, the ability to connect with people and basically understand what it must feel like to be unemployed, what it must feel like, not to have enough to feed your family, and to be able to convey a sense of understanding and that your desire would be to make that situation better. I think that's very, very important. And I think he has the ability to do that and would certainly encourage him to continue displaying that part of his character, which I think is really important.

Ian Bremmer:

Are you implying that empathy is not one of Trump's leading strengths as president?

Tom Vilsack:

Well, I think the president just ... I think sometimes it's difficult for him. I don't know why. I think he sees the world in a much different way than a lot of folks do. And I think he sees it as a competition. And obviously it is a competition. But in a time of crisis, it's really ultimately about trying to figure out ways in which you can inspire people and ensure people a sense of security and confidence that things are headed in the right direction.

Tom Vilsack:

I just got finished reading a book about Winston Churchill during World War II. And it was pretty obvious that while London was being bombed repeatedly and the country was being bombed, that this was a tremendous leadership crisis and challenge. And he was up to it. And he spoke often of the uncomparable people. He essentially was able to make a connection with the people in Britain to make sure that they knew that he had total confidence in their ability to get through this. And because he conveyed that confidence, because he conveyed that sense of understanding and connection, he inspired the nation to withstand a tremendous assault and to ultimately triumph. I think that's part of leadership.

Ian Bremmer:

Tom Vilsack, thank you very much for being with us.

Tom Vilsack:

Thank you.

Ian Bremmer:

That's it for today's edition of the GZERO World Podcast. Like what you've heard? I hope so. Come check us out at gzeromedia.com and sign up for our newsletter signal.

Announcer:

This episode of the GZERO World Podcast was made possible by Lennar, America's largest and most innovative home builder, and the number one destination for foreign residential real estate investment in the US. Learn more at www.lennargzero.com. That's L-E-N-N-A-R-G-Z-E-R-O.com.