By Laura Reiley • The Washington Post
TAMPA, Fla. — For months, supply chain issues and labor shortages have been putting the squeeze on Mike’s Pies, a popular commercial bakery here that’s been selling pies based off owner Mike Martin’s mother’s recipes for three decades.
But another powerful factor — climate change — is heightening those challenges. Its impact is less visible but more enduring, and its consequences are playing out right as the food industry is struggling to avoid holiday season shortages.
Many of the ingredients in Mike’s Pies’ pies — wheat, berries, honey, soybean oil, among numerous others — have been hit hard by climate and weather effects, including droughts, wildfires and power shutdowns around the world. That’s sending prices soaring and, combined with a scarcity of workers and other hurdles, is causing mayhem throughout the global food supply chain.
“We are cutting every order that we ship; we can’t fulfill the obligations,” Martin said.
For consumers, the impact on the food business means that stocks of seasonal items, from entrees to desserts, are significantly below pre-pandemic times, with meat and pies at the highest risk of being out of stock entirely, according to IRI, a global data provider for retail companies. Food prices are also way up, rising 5.1% in October over last year, the fastest rate in years, according to inflation data released last week by the U.S. Bureau of Labor Statistics.
Economists broadly expect that the labor and supply chain disruptions should work themselves out as the pandemic fades, but they say climate and weather impacts will remain major threats to food and a growing number of other industries.
”There is no place to run and hide from extreme weather events,” said Michael Swanson, Wells Fargo’s chief agricultural economist.
Near the end of the supply chain, Martin is more focused on tackling whatever crisis is front of him — regardless of the cause.
“I don’t know what tomorrow is going to bring. I could walk in and they say we can’t get boxes or we can’t get sugar,” he said. “Orders are going through the roof, prices are skyrocketing and we’re having to order way out and to order more than we’ve ever ordered.”
Finding graham cracker crumbs
Mary Provatas, general manager of Mike’s Pies and Martin’s right-hand woman, got ghosted. It started on July 30, when the company’s graham cracker crumbs vendor, with whom they’d done business for 20 years, emailed to say labor shortages and equipment breakdowns meant their Aug. 5 order wouldn’t be available for pickup for five more weeks. The vendor scrounged up only a quarter of their order in September, then things fell silent again, no crumbs in October.
“I sent them an email, ‘Are we done doing business, or aren’t we? Just be frank with me,’” Provatas recounted. It went back and forth, with Provatas sending nudgy emails nearly daily. Still, no crumbs. “They finally came back and said, ‘Do you want to cancel the rest of your orders, what do you want to do?’ At some point, you gotta be done, right?”
For Mike’s Pies, this was a crisis. The company was facing record demand from customers, such as Red Lobster and Winn-Dixie, and it was down about a dozen workers. The price of most ingredients had climbed 10 to 15%. The company couldn’t get Dole crushed pineapple in the big cans, flaked coconut or Hershey’s fudge and caramel.
But the graham cracker crumbs — those were the foundation for so much of what the company sells. They came from Richmond Baking, which has been in business since 1902 and manufactures the crumbs in Indiana and Georgia. Bill Quigg, the company’s president, says Richmond was having its own severe shortages.
“The labor supply is a challenge. The number of pounds we can produce is directly related to how many people we can employ and how many show up on a given day,” he said.
At the same time, he was facing massive price increases for the core ingredients in the crumbles, such as soybean oil as well as honey and spring red wheat.
Like Martin, Quigg isn’t certain how much the climate and weather are to blame. “I’m not the commodity expert to answer that question,” he said.
But the commodity experts say they definitely are.
Wheat prices on the commodities market are at historic highs, hard red spring wheat in particular, said Janis Abbingsole, vice president of operations for King Arthur, one of the country’s largest flour companies.
“Every consumer package goods company is feeling it — no matter what their business is,” she said. “The pressure on the hard red spring wheat is a result of weather and drought conditions. Mother Nature bats last.”
Historic drought conditions destroyed or damaged spring wheat crops in the West, Northern Plains and Southwest, key growing regions for wheat, says Kyle Holland, an analyst covering oils and grains for Mintec, which provides global commodity pricing data. Total U.S. bushel numbers are at the lowest they’ve been since 2002, he said.
And graham crackers are made with graham flour, a specially milled whole-wheat product with all of the bran added back in.
Glenn Roberts, founder of Anson Mills, said a miller has to re-gear his entire system to mill graham flour, and “right now, no one is stopping their whole system to do that.”
Honey, another critical ingredient in graham cracker crumbs, is among those products facing the most weather- and smoke-related impacts, many of which are tied directly to climate change, says Dave Gustafson, professor of biological systems engineering at Washington State University.
Honey has been decimated by drought and fire because it leaves bees with nothing to eat. Beekeepers across the United States, largely those located in North Dakota, South Dakota, Montana and Minnesota, lost 45.5% of their honeybee colonies from April 2020 to April 2021.
Even plastic bags in short supply
Martin of Mike’s Pies sells about 1.7 million Key lime pies a year, but he has 20 other cakes and pies — Mississippi mud and Southern pecan pies, carrot and red velvet cakes. And his problems go well beyond graham cracker crumbs.
Tim Galloway, the chief executive of Wisconsin’s Galloway Co., which supplies Mike’s Pies with sweetened condensed milk, is having his own headaches; he says climate change is in part to blame. Dairy prices spike when animal feed prices soar, so that poor wheat harvest also affects what he pays.
”We’re seeing more dramatic weather shifts, [and] these factors influence dairymen in these parts of the country,” said Galloway, who buys most of his milk from Wisconsin. As input costs such as alfalfa for animal feed — this year 45% of alfalfa hay acreage in the United States experienced severe drought conditions — get more expensive, small, family-run Wisconsin dairies are closing. In 2019 alone, 10% of the state’s dairies shuttered, ceding ground to California, the nation’s top dairy state.
California dairy, mostly large-scale operations in the San Joaquin Valley, is also getting squeezed by the climate-related combination of drought, heat and the specter of increasing restrictions on irrigation. As droughts become more frequent and more severe, cows produce less milk and are more susceptible to diseases and infertility.
Extreme weather has affected Galloway of Wisconsin in additional ways. One of the contract packagers the company works with was shut down for six weeks because it couldn’t get plastic bags, fallout from last winter’s polar vortex in Texas, which triggered a global plastics shortage.
And then there are imports like vanilla.
The spice is grown primarily in Madagascar, according to Marcel Goldenberg, head of proprietary pricing at Mintec, which is at risk of a climate change-induced famine.
Goldenberg said the southern part of the island is completely dry and people can’t live there anymore. The people and the vanilla crop have moved north, but he says farmers don’t have the tools or the skills to grow it there, and a lot of the crop is dying because of weather that vacillates between too wet and too dry.
Smaller customers lose
The food industry is sharply aware both of its impact on climate and its vulnerability to weather events. Agricultural companies such as ADM, Cargill and Bayer AG have pledged to work with farmers to adopt practices that will reduce atmospheric carbon and methane, and most major food conglomerates have committed to cutting their carbon footprint measurably.
But as extreme weather buffets supply chains and causes ingredient shortages, often these multinational conglomerates’ own production lines are safer. Shortages and labor-related limits on production capacity force suppliers to cut off smaller customers, according to Bill Lapp, president of Advanced Economic Solutions, a consulting firm that specializes in assisting food companies with supply chain risk management.
Martin is a big man, and his company is well known in pie circles. But he’s no Sara Lee. In the grand scheme of things, he’s small.
On a recent day, he zips past the rows of double ovens, each of which can fit 92 pies but are currently spinning with sheet trays of chocolate cakes. There’s a 500-pound vat of pumpkin cheesecake filling, waiting for its graham cracker crusts, and behind it is a whiteboard scrawled with the day’s orders. There are 2,016 Key lime pies to Winn-Dixie, 776 Reese’s peanut pies.
He stoops to pick up a long tail of shrink-wrap off the factory floor, glowers a bit. He keeps the place meticulously clean. In the coffee room is a sign that says, “You don’t have to be crazy to work here. We’ll train you.”
Martin wanted to retire by now, play more golf, pass the company along to his two sons and a son-in-law. The pandemic postponed that.
Instead, he’s been hustling to get graham cracker crumbs. Provatas, his right hand, worked the phones looking for graham cracker crumbs until she found a new supplier, a Canadian company called Kinnikinnick that specializes in allergen-free baked goods. They’re three times the price of Richmond’s crumbs, and Martin doesn’t have strong feelings about gluten one way or the other, but any port in a storm.
“Do I say they are gluten free?” he wonders. “That helps sell pie in Colorado, but in Florida, not so much.”
His company moved into its new, much bigger factory near the start of the pandemic, but already he feels crowded with some of the “just in case” stockpiling he’s had to do lately.
“We’re trying to stay in front of it, but what should we load up on?” he said. “Some of the issue is, we don’t know what’s around the corner.”