Welcome to Thomas Insights — every day, we publish the latest news and analysis to keep our readers up to date on what’s happening in industry. Sign up here to get the day’s top stories delivered straight to your inbox.
Whether we’re munching on grapes from Chile, peppers from Peru, tomatoes from Jordan, or dates from Iraq, most of us have come to expect and enjoy a highly efficient global food supply chain.
Today, around 23% of all the food produced globally is traded internationally and the global food system accounts for 10% of the world’s GDP. In the U.S. alone, 32% of vegetables, 55% of fresh fruits, and 94% of all seafood consumed each year are imported. The system works well — until it doesn’t.
What’s Changed in Global Food Supply Chains?
In recent years, the global food network has operated fairly seamlessly. Consumer demand has been consistent and supply chain disruption minimal, which means the flow of goods from farm to fork has been relatively easy for suppliers and retailers to predict and accommodate. But the current system relies much too heavily on this consistency and has ultimately prioritized efficiency and cost reduction over long-term supply chain resilience.
The outbreak of COVID-19 presented global food supply chains with a series of major challenges. But it also served as a stark warning of what the future might hold if major changes in the system don’t occur.
How Did COVID-19 Impact Global Food Supply Chains?
In the months following the coronavirus outbreak, the stability of global food supply chains took a major hit.
For starters, a dip in shipping frequency saw containers piling up in some corners of the world while in others, exporters were finding them almost impossible to come by.
As global trade subsequently slowed and the food services industry all but ground to a halt, crops were left to rot and farmers were forced to dump large quantities of unwanted produce. Others quickly pivoted to reduce their operations to cut back on unnecessary costs but still struggled due to a reliance on single-source buyers.
The sudden and drastic shift in consumer spending, which comprised stockpiling and panic-buying, put a further strain on retailers and supply chains around the globe. For many consumers, this marked the first time they had been unable to purchase the produce they wanted on-demand.
While these factors certainly put global food supply chains to the test, the industry has been relatively quick to bounce back. Farmers and wholesalers found new buyers or repurposed their products into smaller sizes for retail sale, while the food services industry has gradually sprung back to life. More concerning are the warnings of future disruptions — ones that the global food supply chain may not be so quick to recover from.
How can we learn from the devastation caused by COVID-19 and prepare for a brighter, and much more resilient, future?
How Can We Build Resilience in Global Food Supply Chains?
In today’s world, restaurants have re-opened, grocery store shelves are bursting at the seams, and we are enjoying a new kind of normal. But challenges remain for global food supply chains.
In October of last year, BRINK News reported on the spikes in shipping container prices, driven in part by the renewed demand for produce in the food services sector. Container costs between China and North America, for example, were up a whopping 1,250%.
Furthermore, more frequent instances of extreme weather events, including droughts, floods, and windstorms, will further disrupt supply chains, ruin crops, impact livestock, and affect water supplies.
It’s believed that a large-scale disaster, whether it be a severe weather event or a crop disease outbreak, could decrease food production by 10-15%, with one report estimating that staple food crops will decline by a third by 2050. This would ultimately lead to issues at a scale far greater than we experienced during the COVID-19 pandemic.
To mitigate these risks and keep food products moving effectively around the world, global food supply chains must prioritize resilience and long-term sustainability. Here’s how:
1. A Change To Farming Practices
To mitigate the risks of extreme weather events, farmers could consider alternative farming methods. This might include prioritizing less water-intensive crops.
2. Reduce Reliance On International Trade
It’s hard to imagine a world in which American grocery stores no longer stocked all produce, all year round. But reshoring farming and promoting a shift to eating locally produced, seasonal food would reduce the strain on global food supply chains and establish a far more resilient, green, and cost-effective system. While outsourcing production overseas has historically kept prices low and supply steady, it may be time to change the system.
3. Investment In Infrastructure
In some nations, crumbling infrastructure could explain some of the ongoing supply chain disruptions. If policy-makers were to invest in repairing and improving roads, bridges, railway tracks, and ports shipping delays might be significantly reduced.
4. Pesticides And Fertilizers
More effective and targeted use of pesticides and fertilizers could enable farmers to achieve good yields with fewer chemicals.
5. Reduced Meat Consumption
Livestock takes up nearly 80% of global agricultural land, but produces under 20% of the world’s supply of calories. If people were to consume less meat and animal products, a huge amount of land would be freed up to grow crops for human consumption.
6. Genetic Modification
Genetic modification could help crops and animals adapt to changing conditions caused by global warming.
7. Touchless Agriculture
Technologies known as “touchless” agriculture could one day address labor shortages by having crops planted, monitored, picked, and dried and animals fed and watered by AI machines. 3D-printed foodstuffs may also become more prevalent in a bid to reduce dependence on global supply chains.
What Does The Future Hold?
There is no easy solution to the current challenges facing the global food supply chain. While the establishment of more localized supply chains promises some benefits, this is not without its risks. Smaller supply networks are perhaps especially vulnerable to extreme weather events and regional droughts.
Furthermore, while reshoring operations promise some sustainability benefits, doing so on a large scale would likely devastate farming economies across the globe. Ultimately, it will be important for governments across the globe to invest in resilience at every stage of the global food supply chain.
Image Credit: JC_STOCKPHOTO / Shutterstock.com
More from Supply Chain
