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Global food supply chains

1,300 words

Strawberries at Christmas: an image that epitomises consumer fantasies of the global food supply chain, how there can always be plenty and choice at a low price, whatever the season. 

Hidden behind the haze of food supply ‘magic’ is a reality of pressured resources relying on global flows of container shipping and air freight. A fraught and sometimes fragile system that brings us Chilean blueberries, Mexican avocados, Argentinian blackberries, sugar snap peas from Zambia, and roses from Kenya.

Relatively speaking, food retailers and consumers have become used to a settled landscape, a global network that has kept moving, based on predictable demand and familiarity when it comes to the direction of flows of goods. We’ve known who wanted what and where it was going to come from. We could be confident that we’d always find what we were looking for on the store shelves.

Climate change and the more regular occurrence of extreme weather events are going to disrupt this kind of stability, as a matter of course, in terms of ruined crops, water supplies and impact on livestock. A Chatham House report [https://www.chathamhouse.org/2021/09/climate-change-risk-assessment-2021] suggests yields of staple food crops will decline by almost a third by 2050. This year, for example, there have been lower yields of coffee beans, meaning higher prices and lower-quality products are coming [https://www.reuters.com/business/environment/threat-posed-by-frost-coffee-crops-brazil-2021-08-06/]. The world’s largest producers of durum wheat, Canadian farmers saw their usual yields reduced by half this year and pasta prices are expected to rise steeply. More farmers and other producers will be looking to focus their business around where they can find the greatest financial security, shifting to more resilient foodstuffs, meaning some types of produce will become scarce, and some regions will potentially move away from agriculture entirely.

The biggest shock and the biggest lessons for food supply chains have obviously come from the Covid-19 pandemic. The global crisis resulted in a huge dislocation of the system, and an ongoing legacy of disruption, displacement, and uncertainty. The foundations of that settled picture of supply chains have been moved around or fallen apart.

The situation we’re in resembles what happens with a tsunami, when there’s a dropping away in sea levels before the serious flood comes. In terms of Covid-19, societies around the world were limited by lockdowns in their spending on foods, in restaurants and other food outlets. There was lower demand for foods combined with a decline in availability because of affected logistics and lack of staff. In turn, farms and producers were limiting their operations, cutting back on unnecessary costs. There were campaigns to encourage people to eat crops that would otherwise go to waste — Belgians were encouraged to eat more fries to tackle the potato mountain. The sudden lack of work for lorry drivers, as well as staff in restaurants, meant people looking for work elsewhere — and perhaps sometimes finding jobs they preferred with better working conditions.

Now we’re experiencing the other end of the tsunami as the ocean of renewed demand rolls in, overwhelming the food supply system. Latest figures for European imports of food suggest increases of more than 130% compared with December 2020. Restaurants have opened up; events are taking place. Freed from distancing restrictions and curfews, people want to be out and spending money to make up for lost time.

Container shipping is out of sync and struggling to cope with renewed demands. Pre-pandemic the costs to send goods to China were almost nothing because otherwise firms were sending back empty containers. There would be bizarre anomalies, such as how it would be cheaper for French mineral water to be sent to China rather than the short hop across the channel to the U.K.. The extraordinary breaks in demand have meant containers not following conventional flow patterns, not always returned to the locations where most goods have typically been produced. Like supermarket trolleys scattered around the extremities of the car park… We’re now seeing spikes in container shipping prices due to renewed demand and messy distribution, particularly for the food sector and its need for specialist temperature-controlled containers. Container costs between China and North America now average $17,970, up 1250%. Prices are also up 850% from China to Northern Europe. Similarly, costs of air freight were kept to a reasonable level because goods were transported along with passengers — people up top, goods below. Costs rocketed while flights were limited and continue to be affected by the slow return to more ‘normal’ levels of travel.

We’re heading from a ‘pre-new normal’ stage into a ‘new normal’, or what should most constructively be seen as a ‘new better’. There are obvious lessons from the demand tsunami that can help members of the food supply chain internationally to focus on resilience and adaptability. The challenge is making the transition, and the ways in which the necessary changes to the system will impact on everyone, meaning new attitudes and approaches in producers, manufacturers, distributors, and consumers. 

There will always be a level of reliance on those global flows of food products — just in terms of reflecting the reality of where different types of produce can be grown. But there will also need to be more near-shoring, on-shoring and multi-shoring to reduce exposure to risks. Lower transport costs, smaller carbon footprint, fewer ‘touch’ points – more control. Just because a country wants to on-shore, of course, doesn’t mean you can. There will be difficult issues around infrastructure, skills, labour, know-how, as well as climate and soils. Where there is strong market demand and investment for localised food production, ingenuity and innovation will follow.

The sector will need to think cleverly to find ways to minimise waste in logistics, to get more from every food mile. As we’ve seen from Australia, that might mean a product like wine transported in large boxes for local bottling. More distributed manufacturing rather than large factories; more 3D printed food. Smarter collaborations between businesses and across sectors to share best use of logistics operations. New technologies being trialled mean a ‘touchless’ agriculture from farm to fork, foods planted, monitored and picked via AI and robotics, is on the horizon.

Any radical new model of food supplies has to be based on holistic decision-making. As societies we can’t keep insisting on, and benefiting from, supply chains structured solely around issues of efficiency and cost. There needs to be attention to the trade-offs between planet and people. We can easily stop buying roses from Kenya, but that will mean lost jobs and livelihoods. Sustainability in the system doesn’t only mean net zero CO2, but what is workable in terms of the bigger social context. We can live with fewer food choices but not without jobs. The poverty created by the collapse of food-related economies is only ever likely to lead to more production and supply disruption as a result of extremism and civil unrest.

We also need more resilience as consumers, for consumers to want to contribute towards sustainability and security. That means learning to be more realistic about seasonal availability. Do we really need strawberries and asparagus at Christmas? If we do, then we should expect them to come with a heavy price tag to reflect supply chain truths. And we need to become used to having fewer choices, just six types of pasta rather than the usual 20. Fewer exotic, specialised food treats. 

The greatest risk to this post-pandemic, climate-conscious world would be for consumers to expect a return to ‘normal’, to fall back into old habits. Perhaps some shortages and price increases here and there have been good for Western societies in particular. Businesses look to fulfil what are seen as unmet needs, providing more food choices like there used to be, and so competitors feel they have to match them. And the spiral towards more supply chain fragility and supply shocks only intensifies again.

Richard Wilding OBE, Professor of Supply Chain Strategy and Emel Aktas, Professor of Supply Chain Analytics, Cranfield University, www.cranfield.ac.uk/som

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