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Report identifies potential impacts of COVID-19 on Oklahoma’s food industry

Tuesday, May 5, 2020

bottles of syrup on a food manufacturing line

The food processing sector plays an important role in Oklahoma’s economy, and there is no doubt the novel coronavirus pandemic has had a significant economic impact on the state’s food industry.

Experts from the Oklahoma State University Robert M. Kerr Food and Agricultural Products Center evaluated the potential impact of COVID-19 on the state’s food industry from March to mid-April and compiled a report of current impacts as a starting point for future assessments and recovery planning.

“Due to the limited amount of data available and the ever-changing landscape during this unprecedented event, situational analysis discussion is speculative at best,” said Chuck Willoughby, FAPC manager of business and marketing relations. “However, given the essential nature of the food industry, it is important to recognize how even short-term shifts in business models for food manufacturers, retailers and foodservice firms have impacted the economy.”

According to the Oklahoma Restaurant Association, 8 million restaurant employees have been laid off or furloughed, representing two out of every three restaurant jobs nationwide.

Jim Hopper, president of the Oklahoma Restaurant Association, said job losses and lost sales in the restaurant industry far exceed the losses in any other industry affected by COVID-19.

Regarding impacts on food manufacturing, the news has been mixed, Willoughby said.

“Many processors are working to meet consumers’ increased demand for food products in the food retail sector and through online sales and home delivery, as well as to maintain orders for the foodservice establishments still in operation,” he said. “However, situations of facilities becoming impacted by loss of labor due to workers becoming infected by COVID-19 have been reported.”

Willoughby said these manufacturers have the challenge of finding available labor to fill the spots of those workers impacted, and others have had to close.

Emily Shuping, market development coordinator at the Oklahoma Department of Agriculture, Food and Forestry, said by the end of the first week in April, many of the larger established companies have reported operating at maximum capacity. But, at the same time, the smaller companies that primarily market to specialty stores and companies that primarily service restaurants and institutions are struggling.

To measure economy wide impacts of food businesses during the first several weeks of the pandemic, FAPC experts used 2019 data provided by the Oklahoma Employment Security Commission and a computer-based system called Impact Analysis for Planning, or IMPLAN. This allowed FAPC to predict the worst-case scenario, resulting from COVID-19.

The total negative impact could be a potential loss of 3,650 jobs and $115.5 million income in food processing, 21,826 jobs and $529,753,947 income in foodservice and 2,585 jobs and $67,517,675 income in food retail.

Willoughby said while FAPC examined the negative impacts COVID-19 might have on Oklahoma’s food industry and the state’s economy as a whole, the assumptions are speculative at best.

“It is difficult to estimate how telecommuting in many industry sectors will offset potential employment and income losses,” he said. “Stimulus packages will offset income losses to some degree for many American workers and provide opportunities for small businesses in all sectors of the economy, not just small food industry companies, to re-enter the economy.”

For more information, view the full report, The Potential Impact of COVID-19 on Oklahoma’s Food Industry, written by Willoughby; Rodney Holcomb, FAPC agribusiness economist; Andrea Graves, FAPC business planning and marketing specialist; and Erin Johnson, FAPC business and marketing client coordinator.

FAPC, a part of the OSU Division of Agricultural Sciences and Natural Resources, helps to discover, develop and deliver technical and business information that stimulates and supports the growth of value-added food and agricultural products and processing in Oklahoma.

MEDIA CONTACT: Mandy Gross | FAPC Communications Services | 405-744-0442 | mandy.gross@okstate.edu

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