How to respond to COVID-19 in the spices and herbs sector

At the time of writing, the first waves of COVID-19 are still spreading around the world. In some countries, the situation is slightly improving. Some of the strictest lockdown measures are being relaxed or lifted. Still, as long as no vaccine is available, future waves may occur. COVID-19 is changing production circumstances, logistics, buying practices and consumer preferences. This study presents a step-by-step plan to help you reduce the negative effect on your spices and herbs business and take advantage of new opportunities.

The first 5 steps focus on immediate actions that you can take to ensure the survival of your company.

1. Take care of your staff

Your first concern is keeping your business operational. Fortunately, according to the Food and Agriculture Organisation of the United Nations (FAO), there is currently no evidence that the new coronavirus causing COVID-19 can be transmitted by food. “The virus is transmitted primarily by people who are infected through coughing and sneezing droplets which are then picked up by another person.”

Firstly, you need to keep your staff safe and healthy by implementing good hygiene practices. This means social distancing, working in shifts and enabling health professionals to take employees’ temperatures if this is allowed in your country. If necessary, you should make sure your staff wears masks, gloves and other protective gear.

You may need to do more to help your staff keep your operations running. For example, in some cases, you may have to arrange affordable and safe transport to make sure that workers can come to your company. Or you may have to arrange methods and give instructions for online video calls.

Also, be aware that some of your staff may not be able to come to work because they have to take care of their relatives, or because they need to stay in isolation. Grandparents, who are the most vulnerable to COVID-19, may no longer be in a position to babysit your workers’ children. You could consider implementing measures in your workers’ communities, such as facilities and instructions for washing hands. You may also want to make COVID-19 testing possible for your staff and possibly their communities.

2. Assess supply chain risks

Some companies have developed and introduced supply chain risk management as part of their overall Strategic Risk Management. These companies are better prepared to minimise the business impact of COVID-19. As part of your risk management, you should monitor to what extent farmers and suppliers of packaging materials will be able to continue their supplies.

Farmers might be having difficulties harvesting their produce because their employees are sick, or local and migrant labourers are unable to travel due to lockdown measures. Or maybe suppliers cannot bring their produce to the market as a result of travel restrictions. This is especially a problem for fresh products such as herbs. You may have to help them overcome bottlenecks, for example, by setting up sale points at borders of lockdown areas.

You should also include other actors in your risk assessment, such as logistics providers. Treat them as partners to secure capacity and work out different routes to get the products to the destination efficiently. Control bodies may also be important in the supply process. For example, in Indonesia, Vietnam and India, spices must be certified before they can be exported. During this crisis, however, inspectors may not be able to travel to your company, or they may be working with limited capacity. This may lead to longer waiting periods.

Do not forget banks, investors and buyers in your risk assessment. It is crucial to maintain enough cash flow to keep your business running and pay farmers. If you currently cannot ship your spices and herbs to Europe, you cannot invoice, so you do not get paid.

Finally, look at the role of authorities. Local and national policymakers’ main concerns are to limit the number of people infected, make sure that the health care system does not collapse, and safeguard food security. They have to make quick decisions and may overlook business interests in this process.

In the current situation, there are many common issues. These include travel restrictions, lockdown areas, visa procedures for migrant workers and trade/tax policies. They also include decisions about which crucial economic sectors are exempt; for example, this should also include food packaging. Engaging with policymakers will help to build a more enabling business climate. It will also help with applying health and safety guidelines, ensuring their effectiveness.

3. Take care of farmers and their workers

A well-functioning spices and herbs supply chain starts with the farmers. It is in everybody’s interest to make sure the farmers can continue producing.

Spices and herbs farmers may be seriously affected by lockdown, regulatory measures and travel restrictions. These issues can cause rising transport and production costs and severe logistical bottlenecks, sometimes leading to the waste of fresh produce. They can also result in input ruptures, seed, fertiliser and crop protection agents and occasional drops in demand, for example, due to cancelled orders. It could also mean an uncertain cash flow and access to finance. In the initial period of the crisis, the price of Indian cardamom dropped by 50% and the price of Vietnamese pepper by about 10%.

COVID-19 is also a relatively big threat to the farmers’ health and food security. Staying at home is not an option for farmers. Also, they often have less access to protective equipment, testing facilities, health care, and so on. Many spices and herbs farmers are older than 60 and are thus relatively vulnerable to the virus.

Another issue is that crops such as chilli pepper and cumin are labour-intensive, especially in harvesting periods. They thus depend on seasonal workers, often migrants. COVID-19 may have an impact on these workers. They could run major health risks, for example, because their temporary living conditions do not meet strict hygienic standards and social distancing.

Travel restrictions may make it difficult for them to go to the fields as well. In some cases, transport to the fields has become very expensive. This is due to extra hygienic operations and fewer passenger per vehicle. For example, this is now the case for Syrian migrants working on Turkish cumin farms. This may put the upcoming cumin harvest at risk.

4. Deepen relationships with customers

Now, more than ever, it is important to appreciate your existing customers and deepen your relationship with them. Maintaining flexibility in customer support and services in these difficult times is crucial. How effectively you respond to current issues will be remembered by your customers when the world goes back to normal again. Think about how the coronavirus crisis could affect their business. Make it your task to figure out how to re-position your products and services to be helpful and address the specific pain points that your customers may currently face.

If you have a good relationship with customers, they will be more understanding if you have supply chain disruptions. Some clients may then also be more likely to support your cash flow, for example, through advance payments or shorter payment periods.

5. Stay informed and be prepared

Up-to-date, accurate information about the pandemic, both international, national and regional, is crucial for creating action plans and delivering solutions. Firstly, this concerns COVID-19 policies, regulations and related implications for your business. You should get this information from the authorities in your country as well as your export destinations. Secondly, this applies to initiatives of other companies in your region and NGOs, for example, to jointly solve logistical challenges or support farmers.

This is also the time to develop future strategies. Be prepared for potential next waves of COVID-19 contaminations, as well as for the post-coronavirus period. You may now want to re-evaluate your operations, platforms and processes and do some long-term planning. See steps 6-10.

After these immediate actions, we now turn to the more strategic longer-term steps for the post-COVID-19 period.

6. Improve your sustainability

The COVID-19 crisis will reinforce the current trend sustainable supply chain trend for spices and herbs. To many, the situation makes it clear that we are all global citizens, connected and dependant on each other. Many European consumers, policymakers and business leaders were already questioning global food systems before COVID-19. The pandemic has sped up this shift, as the world slows down and has time to reflect.

Consumers care more and more about social and environmental challenges related to local and international food production. They value the people who produce their food and want to hear what they have to say. Vegan and vegetarian cooking, in which many spices are used, is on the rise especially. This consumer segment is relatively critical about food-related sustainability issues. Sustainability will become more import in the coming decade.

The crisis also emphasised the vulnerability of agricultural supply chains, and our dependence on farmers and their workers. It is in the best interest of all spices and herbs supply chain actors that farmers continue farming. They must be able to make an income they can live off and have decent and safe working conditions. Their human rights must be respected, and their physical environment preserved.

In Europe, several forces are moving towards more sustainable agricultural supply chains. For example, in the Netherlands, the Royal Dutch Spice Association entered into an Agreement on International Responsible Business Conduct. The Dutch government, Dutch retailers, Dutch food processing industries, NGOs and Trade Unions were parties in the agreement. They aim to address negative social and environmental impacts in agricultural supply chains.

Companies are expected to map such issues in their supply chains up to farmer level and act on them if necessary. There are specific projects in the areas of banning child labour, adequate living wage and climate adaptation as well. Besides these voluntary initiatives, European policymakers are implementing legislation to make international supply chains more sustainable. The legislation looks at, for example, child and forced labour.

7. Diversify supply and intensify farmer relationships

The COVID-19 crisis has taught us that we should not be too dependent on a limited number of suppliers. This applies to both your customers, see also step 9, and your operations. Right now, it is the COVID-19 outbreak causing disruptions. However, in the future, it may be crop pests and diseases, climate change or farmers converting to other crops or stopping farming. Diversifying your suppliers is an important element of your risk management strategy. It is a good idea to have a secondary source outside your primary sourcing region.

The crisis also emphasises the importance of knowing the farmers who are producing your spices or herbs and having a good relationship with them. This will make it easier to find solutions together in a crisis, and farmers may be more likely to serve you if there are shortages. If you just focus on the lowest price, their loyalty may be limited. European customers will also appreciate it if you know your farmers. This is crucial for managing food safety and sustainability. It also helps with storytelling about the products. See step 8.

8. Look for added value

It will probably not be business as usual once the pandemic has passed. Market requirements, expectations and preferences may have changed. For more buyers, it may not be good enough anymore to just supply acceptable quality spices and herbs on time and for the lowest price. The crisis has shown the vulnerability of just-in-time concepts. In these, all parties try to keep buffer stocks as low as possible. Guaranteeing sufficient quantities may become a more important reason for buyers to give you preferred supplier status.

Besides maintaining good relationships with your clients and offering excellent service, you may want to add more value to your products. Some European spice companies expect that, as a result of the health crisis, there will be a stronger focus on food safety. This (includes anti-adulteration and sustainability issues related to the products. The COVID-19 pandemic has led to surging demand for organic and sustainable foods.

9. Make marketing more effective

European buyers may start looking for new suppliers after the COVID-19 crisis. Some may be disappointed in the service levels and the communication of their existing suppliers. Some may want to increase or diversify their number of suppliers or origins as part of their new risk management. COVID-19 has shown it is risky to depend on a limited number of suppliers/origins. For you, as a supplier, this means you may want to intensify your marketing/sales activities and present yourself to possible new clients.

You may also want to diversify your commercial channels and spread your market and price risks. COVID-19 also showed the vulnerability of operating on export markets. In Europe, consumer interest in locally-produced products with a personal story is increasing fast. If such developments are also taking place in your country, for example, among the urban middle class, it may be interesting to explore possibilities to increase your sales on the domestic market.

10. Prepare for other major supply chain disruptions: climate change

Unfortunately, new disasters causing major risks to spices and herbs supply chains may also occur after the COVID-19 crisis. You should be aware of the various potential impacts of climate change. For example, in the past few years, cyclones have had a devastating impact on nutmeg plantations in Grenada and vanilla plantation in Madagascar.

It is not just exceptional events that are having huge consequences for herb and spice cultivation. Different abiotic factors directly or indirectly influence different physiological growth stages and final reproductive or vegetative yield of spice crops. Factors like temperature especially, rainfall, day length, sunshine hours and wind have an effect.

High temperatures cause spike shedding in black pepper. Prolonged dry seasons may cause reduced pollination and abortion of cardamom flowers. And drought and violent winds are harmful to vanilla plant growth. Sudden temperature falls during the early vegetative stage causes onions to bolt. High rainfall and humidity invite pests like aphids and diseases like powdery mildew to most of the seed spices. More unpredictable weather also influences post-harvest practices. For example, drying in the open air becomes riskier.

This study was carried out on behalf of CBI by Victor de Lange of CREM.

Please look at our market information disclaimer.