How Hurricane Florence’s Devastation May Affect Your Supply Chain and How to Prepare for the Future

GettyImages 1042677386By Carol Lumpkin and Shawn Hogue 

Hurricane Florence left in its wake a path of devastation through the Carolinas. According to Moody’s, Hurricane Florence caused damage in excess of $17 billion. A considerable portion of the nation’s poultry industry was affected by this storm.  

3.4 million chickens drowned from the flooding of the storm. According to a statement by Sanderson Farms, they claimed the loss of 1.7 million broiler chickens out of its 20 million in the state. Sanderson alone said that 60 broiler houses and four feeder houses were flooded. These losses will have a long term economic impact on the industry.

By far, Americans eat more chicken than any other meat in the supply chain, and total sales in 2017 for chicken alone amounted to $30.229 billion. If you add turkey and eggs to the equation, the numbers approach upwards of $42.7 billion. This may also impact the pork industry as 5,500 hogs were also killed in the flooding. Americans will need to brace themselves for the potential of a poultry food shortage, or at least higher prices in the short term.

What Those Affected By the Storm Should Be Aware Of and Should Do:

  • Engage with your counsel to discuss options relating to alleviating the financial impact of a natural disaster. Such a consultation will not only assuage the negative impact on your business, but it will almost certainly offset skyrocketing prices associated with a food shortage, which will be important to your consumers.
  • Contact your insurance providers to address any business disruption that may have come about from Florence, or any other natural disaster.
  • Engage counsel to undertake a contract review to ensure that purchasers know and understand their contractual rights in light of supply chain disruptions and higher prices.
  • Retailers may also consider broadening their supply chains by importing poultry from other sources. While engaging outside sources may result in higher costs in the short term, it may hedge against a more serious food shortage.

While we cannot control the weather, it is always smart to plan ahead before the storm. 

image1Carol Lumpkin (top left) is a partner and Shawn Hogue (bottom left) is an associate in the Miami office of K&L Gates.

 

 

 

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