The global food supply chain is the unseen undercurrent of the world economy. This logistical marvel connects farmers, distributors, retailers, and consumers in a complex, never-ending production, processing, and distribution cycle to keep supermarkets stocked and kitchens brimming with fresh foods.
However, recent global events have cast a glaring spotlight on the vulnerabilities inherent to this system. Once considered a strength, global connectivity has become the supply chain’s biggest hurdle. Disruption in one region caused a domino effect that rippled across world markets, impacting operations for what may be years to come. Knowing this, what are the major causes of food supply chain issues?
Challenges Facing the Global Food Supply Chain
Although many major supply chain problems related to COVID-19 have eased, the repercussions linger.
In 2022, consumers had to deal with a fresh slate of issues — including labor and driver shortages, regional droughts, rising fuel costs, and the ongoing war in Ukraine — which only added to the mounting problem of food scarcity and price inflation. While eggs and baby formula made the headlines, they were just the tip of the iceberg in a year marked by domestic food price inflation. According to the World Bank:
“Food price inflation data shows high inflation in most low- and middle-income countries, with inflation higher than 5% in 63.2% of low-income countries, 79.5% of lower-middle-income countries, and 67% of upper-middle-income countries, with many experiencing double-digit inflation. In addition, 78.9% of high-income countries are experiencing high food price inflation.”
Given the economic data and current political headwinds, many supply chain executives have a concerned outlook for the immediate future, with the majority of those polled reporting that they expect disruptions to remain commonplace with no return to normalcy for at least another year.
The Russian War in Ukraine’s Impact on the Supply Chain
While countless variables go into the supply chain equation, one issue has had an outsized impact on the global supply chain: the Russian invasion of Ukraine.
The Russia-Ukraine war has been catastrophic, to say the least, shaking global economies and edging Europe close to a recession. The conflict has also severely affected our global food supply chain, threatening its availability, accessibility, and affordability.
Historically, Ukraine has been lauded as the “Breadbasket of Europe.” Thanks to incredibly fertile soil, Ukraine has long been a pivotal player in global agriculture, accounting for approximately 20% of the world’s cereal grain production and a substantial portion of the global corn output. But today, those fields, once teeming with crops, are now filled with soldiers. As a result, crop yields have plummeted, and once abundant supplies are now dwindling, causing prices to soar.
Additionally, Russia, a global powerhouse in natural gas and fertilizer production, has played an essential role in maintaining global food supply chains. With a stranglehold on these two vital inputs for agricultural production — fuel and fertilizer — repercussions are being felt across the globe: agricultural yields are down, and prices are up.
Current Trends in the Food Supply Chain
Ongoing global issues, such as labor shortages, regional droughts, and the protracted Russian-Ukrainian conflict, aren’t just isolated challenges. These disturbances echo throughout the global food supply chain, shaping three significant trends:
Price volatility is characterized by an unpredictable pricing ebb and flow that reshapes the economic landscape. The global food supply chain issues have been exacerbated by pricing volatility through:
- Supply chain disruptions – Unforeseen roadblocks like the ones discussed above cause delays or total shutdowns of essential elements of a supply chain, leading to food scarcity and inflated prices.
- Fluctuating food prices – The continuous rise and fall in food prices creates a high-stakes, unpredictable marketplace, confounding producers, consumers, and investors alike, injecting uncertainty and fear into the market.
- Panic-driven demand – Fear-induced buying surges have strained supply chains, resulting in prices skyrocketing seemingly overnight.
A consistent upward trend in prices would have been problematic enough, but the indiscernible pricing trends of the global food supply chain are far more complex.
Food Waste and Losses
Worldwide, an estimated 30% of food produced for human consumption is lost or wasted somewhere along the food supply chain. As the global population soars to a predicted 9.1 billion by 2050, the demand for food is expected to increase by 70%. This heightened demand — particularly in developing countries — puts a strain on supply chains, risking not only quantity but also the safety and quality of food.
Food waste and losses occur at different stages for different reasons. In the early stages, food loss primarily arises due to systemic and infrastructural inadequacies, such as:
- Post-harvest losses
- Poor storage facilities
- Inefficient marketing systems
And food waste often occurs at the retail and consumer levels due to neglect or poor stock management.
No matter how waste occurs, the end results are often dire, having detrimental economic, environmental, and food-security implications for the entire globe. Depleting the availability of food in the market results in rising food prices while limiting access to food, particularly for low-income consumers. They also represent a serious sustainability issue, seeing as those wasted food supplies contributed significantly to greenhouse gas emissions for no outcome.
Traceability and Food Safety Concerns
In economies of developed countries, traceability and food safety have become integral facets of the modern supply chain. But the same can’t be said for developing countries, which often lack the infrastructure, expertise, resources, and in some cases, political willpower needed to establish a robust and viable end-to-end traceability system.
However, as traceability plays such an instrumental role in reducing contamination, food-borne disease, and spoilage in the food supply, both private and public interests would be wise to invest in the foundational infrastructures needed to implement effective traceability systems up and down the value chain.
CMTC for Resilient Supply Chains
The last few years have threatened the viability of the global food supply chain in its current form. Now, the Russian-Ukraine war and other global events have sent markets reeling, and it’s becoming clear that the traditional supply chain is no longer equipped to face disruptions at scale.
At CMTC, we believe in proactively addressing these issues rather than passively waiting and reacting. We can partner with you and provide the support you need to implement the strategies and technologies necessary to build dynamic and robust supply chains.
To discover more about our services, reach out today.