Rising demand for product. Rising equipment and building costs. Supply chain issues. Labor shortages. Like many other types of organizations, the pet food industry has been experiencing a number of challenges, many of which began early last year at the start of the pandemic and have continued through today.
Read on to learn more.
In 2020, the pet food industry generated $42 billion in sales in the United States alone. That was a 9.7% increase over 2019. This exceptional growth was due in large part to the pandemic–as people spent much of 2020 at home, many more families than normal added a pet to their household. Shelters, rescues, private breeders and pet stores all reported more demand than there were animals to fill it in the year.
While this sounds like a good “problem” to have, it has produced some significant challenges for the industry. For one, many weren’t ready for the sharp increase in product demand. And unlike human food processors, pet food processors weren’t in as good of a position to easily increase production.
Supply Chain Snags
As demand rose significantly, so did the need for ingredients. But, as numbers of other industries experienced over the past two years, supply chain issues have hindered the ability for vendors to get ingredients and supplies to processors.
Which in turn, makes it hard to keep up with demand, resulting in higher prices and scarce product.
More demand means more production. But that’s an issue in the current labor market. Again, like other industries, pet food processors have been hit hard by the inability to attract quality workers. This has been exceptionally taxing for smaller or more premium processors who don’t have as many automated processes.
In some areas, the issue is exacerbated by larger corporations that can pay higher wages for warehouse workers, which unfortunately draws more workers away from manufacturing companies.
When demand went up, many pet food processors turned their sights on growth projects, new facilities and/or facility expansions.
But, construction and equipment materials, such as stainless steel, have absolutely skyrocketed in price over the past two years. At EnSight Solutions, we have seen 304 steel costs rise from $1.28 per pound in February 2020 to $3.59 per pound in September 2021. That’s a 180% increase!
Not only have prices gone up, but so have lead times on materials and equipment. All that combined has made it extremely hard for processors to meet and stay on budget and schedule. And it also has the effect of making it hard for processors to keep up with the already high demand for their product.
At EnSight Solutions, we may not be able to solve all the challenges pet food processors are experiencing right now, but our team can help you plan ahead to achieve your goals. When you talk to one of our sales representatives, they’ll be able to walk you through the costs and timing of a project. In addition, depending on the project’s size, we might be able to pre-purchase steel for equipment and hold it to help avoid higher material costs down the road.
In addition, for companies with labor shortages (which might be pretty much everyone at the moment), we can analyze your current line and processes and advise you on ways you can automate your processes. Then, we can work to design your new line and integrate it to help you increase efficiencies and production, even when workers are hard to come by.
If you’re interested in learning more about how EnSight Solutions can help pet food processors overcome challenges, click here to locate and contact your sales specialist.