Feast-or-famine food supply chains need global solutions

Global food supply chains are complex and prone to disruption, waste and political manipulation. Skyler Chi of Exiger explores solutions to these issues

Global food security was a serious issue long before Vladimir Putin sent his troops into Ukraine. In 2021 the UN’s Food and Agriculture Organisation (FAO), sounded the alarm bells about how avoidable food loss is causing hunger for millions of people across the world. 

The FAO says hunger affects around 690 million people, and that with the world’s population expected to hit 9.7 billion by 2050 – an increase of 2.2 billion – food production needs to increase by 56 per cent if more-widespread hunger is to be avoided.

One of the biggest problems is waste. McKinsey reports that despite increasing pressures on food supply, an estimated one-third of the total food produced for human consumption is wasted. 

The biggest source of food loss (40%) occurs in the post-harvest agricultural supply chain, between producers and consumers. The problem is most severe in developing economies, including those in Africa, Asia, and Latin America. 

'Leaky' food supply chain a big issue

The problems go beyond leaky supply chains. Inflation is also an ongoing issue. Between October 2022 and February 2023 food-price data shows high inflation above 5% in 94.1% of low-income countries, 86% of lower-middle-income countries, and 87.0% of upper-middle-income countries and many experiencing double-digit inflation. Plus, around 87.3% of high-income countries are experiencing high food price inflation. 

When prices go up, those in low-income areas buy less food, meaning that for many people, food shopping becomes more like window shopping – a situation that any government whose moral compass is not on the blink needs to address.  

Then there are the severe weather events to which food supply chains have always been subject. Recently drought in Spain and North Africa, for example, has decimated tomato crops destined for Europe.

Some countries have been harder hit than others. UK supermarkets have endured serious tomatoes shortages these past five weeks – but then they only have themselves to blame for this.

This is because in the UK, the law of supply and demand does not apply to fresh produce, due to the fixed-price contracts UK supermarkets have with suppliers.

Although this keeps food prices stable it means that in times of shortage, UK stores do not increase prices. With the tomato shortage, supermarkets across Europe put their prices up, but not in the UK. The result? Tomato suppliers ignored the UK and instead supplied France, Germany and other EU nations. 

And revisting McKinsey’s shocking stats on food waste, the UK is also one of the main offenders here. Again, it is the supermarkets to blame. For decades, UK supermarkets have been engaged in fruit-and-veg eugenics, whereby misshappen and blemished produce is rejected. UK consumers have effectively been brainwashed to consume perfectly symmetrical, perfectly shiny produce. 

Too often, ‘fresh’ produce in the UK is also perfectly tasteless, having been shipped half-way round the world and ripened in the hull of ships using ethylene – the chemical that ripening bananas give off. (Which is why, when you want to ripen fruit in a bowl, you should place a banana next to them). But that is another issue.

Food security is complex 'but solutions are there'

Food security is complex, and multi-faceted, which is why Supply Chain Digital turned to an expert with insight into how stakeholders might work towards resolving some of these challenges.

Skyler Chi is Global Head of Enterprise Accounts at Exiger, whose technology helps clients maintain regulatory compliance and minimise risk.

“The global food supply chain can be compared to a recipe,” says Chi, “with each ingredient representing a different component.” 

He adds: “Just as a recipe requires careful measurement and attention to detail, the global food supply chain requires meticulous planning and execution to ensure a successful supplied global ecosystem.”

However, he says, there are aspects of the food supply chain detail that most consumers do not fully understand. Such as subsidies.

We opened by referencing Putin and Ukraine, and Chi cites Ukraine as an example of how complex food supply can be.

Ukraine, he points out, is one of the largest suppliers of grain in the world, both for human consumption and animal feed for livestock.

“Were Putin to completely block grain exports from Ukraine this would significantly impact global food supplies, meaning other countries would look to government subsidies to increase their domestic production of grain.”

Or, he says, they would seek alternative sources of supply, and import from countries such as the US, one of the world’s largest grain producers.

Chi adds: “Some of the top importers of Ukrainian grain include Egypt, Turkey, and China. Other European countries, such as Germany and the Netherlands, also import significant amounts of Ukrainian grain for animal feed production. 

“The United States is not a major importer of Ukrainian grain, so a block on Ukrainian grain exports by Russia would likely have limited direct impact on US food supplies.

“Any disruption to global food supplies can have ripple effects on food prices and availability which could impact US consumers and businesses that rely on imported food products. 

Also, he says, the US is a major exporter of agricultural products, “meaning any disruption to global food supplies could impact US agricultural exports and the US economy as a whole”.

Poor countries bearing brunt of Ukraine food problems 

Chi continues: “Poorer nations will absolutely be disproportionately impacted by a Ukraine food shortage caused by the Russian-Ukraine war. These nations rely heavily on grain imports from Ukraine to meet their food needs and may not have the resources to easily switch to other sources of supply.”

“A shortage of grain from Ukraine could lead to higher food prices and reduced availability of staple foods like bread and pasta, which would hit poorer nations the hardest. 

“In some cases, these shortages could lead to food insecurity and malnutrition, particularly for vulnerable populations like children and the elderly.”

He adds: “To counteract food shortages and price increases, governments can always look to implement policies to encourage domestic production, such as subsidies for farmers and investment in agricultural infrastructure.” 

Chi also urges consumers to reduce food waste and adjust their diets “to prioritise more affordable and locally sourced foods”. 

But he adds that prophylactic policies such as these “take more time than what the world might have in order to feed their populations”.

He also adds that such changes can also come with significant hazards, and cites the US as an example.

If the UK has been programmed to consume flawless fruit and veg, then the US is addicted to low-grade mass-produced foods that are borderline junk.

US poor are eating a diet of subsidised junk

“it is well known that the US government’s domestic subsidising of corn supply chains has led to increased health disparities, as the availability of unhealthy, highly processed foods that are made with subsidised corn has contributed to health issues as low-income individuals,” says Chi.

He adds: “Communities of colour are more likely to consume these foods and suffer from related health problems like obesity, diabetes, and heart disease.”

Chi urges the human race to seek more novel ways to reduce food shortages. 

“A significant amount of food is wasted each year due to spoilage, improper storage, and massive overproduction,” he says. “Governments can implement policies and programmes to reduce food waste, such as food recovery programs, education campaigns, and incentives for businesses to donate excess food to food banks and other organisations.”

He continues: “In many countries, companies are worried they will be held legally liable if they give away food to certain programmes, which is why many countries are looking to backstop with good Samaritan laws.

“As a last-ditch effort, it’s possible that some governments may also look to implement price controls. In times of food shortages, prices may rise due to increased demand and limited supply. 

“Governments can implement price controls to prevent price gouging and ensure that food remains affordable for all consumers.”

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