In 2022 things keep uncertain, as we still see Supply Chain (SC) deficiencies. Although some of them are starting to recover, other inconveniences keep surging worldwide. Costs and the disruption of Food SC are skyrocketing due to the ongoing war in Ukraine.
What factors are contributing to this disruption?
Food prices are mounting – In May 2022, the FAO Food Price Index reached 157.4%, close to the record of 159.7% in March. This amount is an estimate of the international food commodities price monthly changing, particularly affecting sunflower oil.
Food security is at risk – Wheat is a crucial food component; over 80% of it is used for flour. Since the wheat price has experienced increases of over 100%, directly impacting global food security, bread is a crucial product of several emerging markets with small value chains. If food scarcities reach a critical level, starvation and political conflict would likely arise in developing countries.
The Food and Agricultural Organization of the United Nations states that Ukraine’s hostility could drive an additional 11 to 19 million to unrelenting hunger.
A food security crisis is expected to modify consumer patterns. Inadequate communication and unsatisfactory information caused consumers to increase in ‘panic-buying’ habits in recent years, causing unnecessary empty spaces on supermarket shelves.
The pandemic – Covid-19 has caused a Food Supply Chain commotion, and goods transportation often standstill, with packed ports and cargo ships waiting to disembark and, at times, transporting perishable food that quickly becomes waste. A production deficiency due to lockdowns, unavailable workers, or poor health also hit food hard. Lockdowns are currently present in China, and pandemic waves are replicating worldwide.
Workers and goods shortages – The lack of chemicals and fertilisers crucial for the production of crops has worsened since important industries shut down. Certain countries caused the deficiencies to be more severe as they decided to store food products for their domestic market, enforcing export bans to diminish the risk of other shortcomings.
The ongoing Russian invasion of Ukraine – Is the most influential factor. The world and especially Europe, Africa, and the Middle East rely intensely on these two nations’ numerous food trades; both are crucial producers of large volumes of rye, barley and mainly wheat, considering wheat around a quarter of the world’s exportation.
Along with it, Ukraine is responsible for a significant percentage of all sunflower oil exportation, whilst Russia’s global nitrogenous fertiliser exports are nearly 15%. Due to fertilisers, natural gas in Europe and oil prices skyrocketed when the war burst, slowing down food production in the EU and China.
Some grains are redirected across Europe by ship, road, river and rail, but the transportation is sluggish. The penalties and controls enforced on Russia resulted in trade restrictions and declining exportation.
Extreme weather conditions – These encompass floods, droughts, and high temperatures. Due to weather conditions, poor production and food shortages aggravate the food categories, showing the way to empty supermarket shelves. Moreover, the restriction for farmers on how much they can exploit during a year and the drop in land available to harvest bring down the total amount of food to produce.
What to do?
Effectively managing food stockpiles – Food overstock and decay are enormous problems in many prosperous and technologically-advanced food industries cross-wide. We can talk of billions per year of waste lost in value in the food retail sector; companies need to look at their SC and optimise their stock list where possible to prevent generating more waste.
Transportation of supplies – Shipping companies could work with authorities and the United Nations to support transport deliveries of wheat and other merchandise from Ukraine, confronting shortages. Agreements to free up Russian exports of grain and fertiliser and concede Ukraine to transport commodities from the port of Odesa are moving slowly. The lack of accessible routes from Ukraine is causing food shortages.
Long-standing climate change actions – In the long term, climate change demands to be tackled, as the generation of carbon emissions and pollution are required to decrease and shield crops. Green Energy, such as solar, geothermal, and nuclear power, is an environmental challenge priority.
Collaboration is also necessary among nations; therefore, developing countries can use renewable energy to benefit food production. Governments should also encourage the objective of eating less meat to alleviate the environment; as an alternative, the land could be exploited by plant-based options.
Final thoughts: the current challenging time threats to the global Food Supply Chain. To create more well-organised SCs, companies and governments must collaborate with developing countries to manage the Food Supply Chain in these harsh times. Collaboration is crucial to cope with the challenges of food shortages and security.
Is your Food Supply Chain strong enough to cope with these challenges?
Dave Food