As concerns regarding potential supply chain disruptions during the pandemic intensify, some customers are reevaluating their sourcing strategies and opting for domestic ingredients. In the U.S., most garlic is imported from China, the country where the novel coronavirus first emerged. However, as COVID-19 spreads globally, Olam Spices CEO Greg Estep informed Food Dive that there was a 20% increase in orders for U.S.-grown onions, garlic, and chilies in March compared to the previous year. “The primary shift from Chinese to U.S. garlic is driven by customers addressing supply chain concerns. Many businesses that previously sourced garlic from China are now looking to diversify their purchases to include U.S. sources as a contingency,” he stated in an email. “We anticipate that a significant number of customers will continue to prefer U.S. garlic in the long run, rather than depending solely on China.”
The longer the pandemic continues, the greater the likelihood that vulnerabilities will be revealed in supply chains across various sectors. In light of this uncertainty, some consumers are choosing to procure their ingredients closer to home. Estep noted that many retailers favor domestic garlic over the Chinese alternative due to differences in supply chain transparency. While dried garlic from China often comes from the fresh garlic industry and lacks traceability, Olam Spices’ U.S.-grown garlic is dried at their facility in Gilroy, California, with complete traceability from seed to shelf.
In response to the growing demand for transparency in purchasing decisions, Olam has enhanced its traceability initiatives in recent years. The company launched AtSource in 2018, a program designed to improve the traceability of its spices by detailing the entire supply chain from seed to customer, which could serve as a valuable resource during this period. With more consumers cooking at home and stocking their pantries, Olam has experienced a “significant increase in demand,” according to Estep. The largest surge is coming from retailers and food manufacturers striving to keep up with the skyrocketing sales of staple food products across grocery stores. Estep explained that Olam has been able to adapt due to its historical practice of maintaining a buffer stock for unforeseen demand and substantial inventories. This approach provides the flexibility to mill or create products to fulfill urgent customer requests.
The company operates three onion processing facilities in the U.S. and two in Egypt. For dried garlic, it has operations in both the U.S. and China, which are significant sources of garlic. In black pepper, Olam has farm-level sourcing in four major growing regions, as well as its own pepper estates in Vietnam and Brazil. “Our global footprint in key spice-producing regions allows us to quickly adapt and meet our customers’ increasing needs,” he remarked.
While the coronavirus has led to increased garlic prices in some regions, Estep stated that Olam has not experienced any price fluctuations. Thanks to its fully integrated supply chains, the company understands production costs and is maintaining stable prices while meeting customer demands. Overall, the impact of the coronavirus on ingredient output across various suppliers and manufacturers has reportedly been minimal. So far, Olam has not faced any challenges in importing spices into the U.S., but Estep noted that the situation is evolving daily. Although operations in China have resumed, there is a 21-day shutdown in India that may affect supplies of red pepper and turmeric. He emphasized that the company is currently in a “good position” but that further delays could adversely affect the situation. As a leading supplier of black pepper and cassia from Vietnam, Olam is closely monitoring changing conditions there, although operations have not yet been disrupted.
Some countries have already begun to restrict certain exports due to food security concerns. Reports indicate that Russia, Ukraine, and Kazakhstan have announced plans to limit wheat exports, and worries about supply in Asia may threaten rice exports, according to Bloomberg.
At present, Olam has not encountered difficulties exporting its spice ingredients internationally. Similar to its experience in the U.S., the company is seeing increased orders from food manufacturers worldwide who are attempting to mitigate their risks. Over the past few weeks, Estep mentioned that Olam has been in constant communication with its customers. “We prioritize transparency with our customers, which is why we have chosen to maintain an open dialogue with them during this uncertain period. As disruptions have arisen, our team has collaborated closely with customers to ensure a steady supply of high-quality spice ingredients for them and their consumers,” he remarked.
Olam is not alone in sourcing products internationally and is anxiously hoping that the pandemic will not disrupt supply chains. Victoria Doggett, co-founder of Italian Harvest, a U.S.-based company importing artisanal foods and ingredients from Italy, told Food Dive that her company has not yet faced significant issues in bringing products to the U.S., despite Italy being heavily impacted by the virus. She noted that while some suppliers are closed, such as a printing press that was supposed to produce labels for one product, most are still operational since food is deemed an essential business. Although a customer inquired whether the virus could be transmitted through products, Doggett stated that demand has risen, and they hope to avoid any supply chain disruptions. “We may still face some unforeseen challenges regarding product availability. However, we had placed substantial orders a couple of months ago, which are now arriving,” she explained. “There’s still a considerable unknown, and this situation is new for all of us, so we don’t really know what to expect.”
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