The world has become more volatile, uncertain, complex, and ambiguous (or VUCA for short), with frequent disruptions affecting the global food supply chain. Climate change, natural disasters, political instability, trade restrictions and pandemics are among the challenges that threaten the stability of the food supply chain. Recent events such as Covid, conflict, and forest fires and earthquakes have brought to the need for a resilient and flexible food supply chain to the fore.
The impacts of a volatile and unstable world on food supply
Food inflation becomes worse
The majority of the upper-middle and high-income countries (87.0%) are experiencing double-digit food inflation. In the UK, food price inflation rose to a record 15.0% for fresh food and frequent incident of food shortages. Similarly, The AMIS Market Monitor highlights uncertainty in agricultural markets due to reduced Ukrainian production amid ongoing war. Tight supplies lead to greater price volatility and uncertainty around the renewal of the Black Sea Grain Initiative adds to market turmoil. Other countries may need to increase planting to rebuild global stocks and ease prices as a result.
Logistics and operations become difficult
The transportation of food is becoming an increasingly complex logistical challenge. Even when crops are harvested, the implementation of border controls and restrictions are creating significant hurdles for the international transportation of fresh produce, resulting in higher costs.
Furthermore, food processing facilities are struggling with their operations due to shortage of staff. The Food and Drink Federation (FDF) indicated that the food and drink sector encountered a 9% deficit in labour in Q3 2022. While the Office for National Statistics found that 60% of food companies had experienced a negative impact on their production and/or supply due to rising energy costs, compared to the 38% of all businesses in the UK.
Building a robust supply chain in an unpredictable world
1. Diversification and localisation
By diversifying and localising the food supply chain, we can help reduce the risk of disruptions caused by natural disasters, climate change and political instability.
The food supply chain should source food from multiple regions and countries to reduce dependence on a few sole areas. The cultivation of a variety of crops that are resistant to extreme weather conditions can also help build a robust food supply chain. Aquaponics, hydroponics, urban farming are some of the new agricultural system needs to be promoted.
2. Technology and analytics
Tech and data can play a vital role in building a robust food supply chain. Precision agriculture, robotics and data analytics can help farmers improve crop yields and reduce waste, for example. While technologies such as blockchain can offer the industry a secure way of tracing products from farm to fork, ensuring that the food is safe and of high quality.
These approaches can help build trust in the food supply chain, reduce waste and improve the efficiency of the food supply chain.
3. Collaboration and transparency
We should be promoting knowledge sharing and collaboration among the chain to help enhance resilience and flexibility.
Collaboration can be achieved by being transparent – i.e., sharing information, resources and best practices. This can also help ensure that food reaches the consumers in a timely and efficient manner.
4. Sustainability and traceability
These are critical to creating a robust food supply chain in a VUCA world. The food supply chain must reduce its carbon footprint, promote ethical farming practices and reduce food waste. Being mindful of these factors and building them into your operations can help develop resilience against disruptions and ensure that your chain remains sustainable in the long term.
A robust food supply chain can be achieved by having a contingency plan that outlines the actions to be taken in the event of a disruption. This kind of plan must be regularly updated to reflect the changing environment. The contingency plan must also have a clear communication strategy that outlines the channels to be used to inform stakeholders of the disruption and the actions to be taken.
Stakeholders must be educated on the latest practices that promote sustainability and resilience, but consumers must also be aware of the importance of sustainability and the need to reduce food waste.
There is a clear need for a circular economy model within the food supply chain. This involves creating a closed loop system where waste is minimised, and materials reused, recycled and redistributed.
Building a robust food supply chain in a VUCA world is critical to ensuring food security and preventing hunger. The food supply chain must be diversified, technology-driven, collaborative, sustainable, resilient and educated. A robust food supply chain can also help promote a healthier planet and contribute to the fight against climate change.