The Future of the Food Supply Chain
The pandemic sent shockwaves through the food production and processing industries. From farm to fork, the effects were felt at every stage of the supply chain. And in an industry that was already undergoing substantial transformation, the pandemic acted as an additional destabilizer.
Thankfully, in most instances, the food supply chain did not break entirely. Instead, it bent, causing disruption in some areas without allowing for a complete breakdown in food availability in most parts of the world.
In this article, you’ll read about the impact that the COVID-19 pandemic had on the global food supply chain and how it was magnified by food trends that were already in place prior to the outbreak. You’ll also learn about what food supply chain participants can do to manage and mitigate the negative results of the pandemic in the future.
Pre-COVID Food Trends
Even before the pandemic struck, the food industry was undergoing foundational change. Propelled by everything from shifting demographics to political upheaval, several trends were already disrupting supply chains.
Tragically for many, food insecurity is on the rise in some parts of the world, including some countries where one would not expect to find the phenomena. The United States, for example, saw food insecurity affect over 42 million people during the COVID-19 pandemic, as economic disruption led to mass job losses and transportation difficulties.
Food insecurity can wreak havoc with food supply chains as it impacts the predictability of consumer demand. More importantly, widespread food insecurity threatens the political legitimacy of the world’s food supply chain. After all, what good are sophisticated and digital food production and transportation systems if a significant number of the world’s people cannot afford to buy its products?
It’s difficult to imagine that a world with widespread food insecurity, especially in otherwise wealthy, advanced democracies, wouldn’t be one that included political instability and unrest, both of which threaten the long-term viability of food supply chains.
Whereas the political right-wing could once be counted on to be reliably free-trade in its practices and rhetoric, the rise of populism in the western hemisphere has upended that expectation. Right-wing politicians now routinely join their left-wing counterparts in calling for significant trade protections, subsidies, export limits, and duties and taxes on imports.
The food supply chain has not been immune to this trend.
The shrinking of the free-trade umbrella had a deleterious impact on food supply chains even before COVID-19 led to the closing of national and international borders. As food inputs and products found obstacles at international points of entry, supply chains were disrupted and the costs of food production and shipping increased.
Changing eating habits
One of the most positive developments of the 20th and 21st centuries was likely the dramatic decline of extreme poverty across much of the world. While it remains a serious problem, the last few decades have seen reductions in the number of people struggling with extreme food insecurity and starvation.
As a result, people in the developing world have begun changing how and what they eat. Caloric intakes are increasing and the proportion of protein in their diets is on the rise.
At the same time, as developed economies deal with rapid increases in obesity and obesity-linked illnesses, experts continually push for a decrease in caloric intake and an increase in the proportion of our diets made up of fruits and vegetables.
Even prior to COVID-19, both of these trends changed how food flowed around the world. Developing economies saw increases in the amount of meat produced locally and imported from other countries, while advanced democracies saw a wider and more balanced array of foods produced and imported.
How To Build Food Supply Chain Resilience
Market-friendly political policies
National subsidies along the food supply chain distort economic activity and reward inefficient firms, ultimately driving up prices for consumers and other participants in the food industry. No one nation, including the United States, is entirely innocent of this behavior, as countries around the globe seek to protect local food production from international competition.
However, the increased imposition of multilateral national subsidies threatens to destabilize already fragile food supply chains by introducing yet another source of inefficiency.
Similarly, national import controls, import duties, and taxes on basic foodstuffs and food industry inputs reduce the international flow of goods necessary for the smooth operation of food supply chains. The increased tendency towards economic protectionism, exacerbated by the replacement of neo-liberal policies on the political right with new, inward-turning populist policies, suggests that this trend is not likely to abate anytime soon.
While a debate about the merits of free trade versus protectionism is outside the scope of this article, there is little doubt that free trade allows for the development of stronger, more robust international supply chains, especially in the food industry.
In sum, political actors should be encouraged to adopt free trade policies and agreements, at least with respect to the food supply, and be discouraged from adopting and continuing food subsidies that distort the international food supply market.
Digitizing the international food supply chain
Information asymmetry and the lack of availability of key information have been negative influences on the food supply chain for as long as people have shipped foodstuffs to one another. The rise of instantaneous digital technologies promises to change that, as information is transferred from one end of the chain to the other in an instant.
Two technologies in particular promise to revolutionize the food supply chain: blockchain and artificial intelligence.
Blockchain offers food industry participants a way to record, track, and store information about food’s movement through international shipping pipelines in a way that’s nearly impossible to disrupt or interfere with. For example, food supply chains fully integrated with blockchain could create detailed shipping and storage logs for each container of food, from farm to retail store, and make them accessible at a moment’s notice.
Further, blockchain’s smart contracting capabilities could be used to create automated shipping and storage contracts, eliminating the need for expensive human involvement in the logistics of food transport.
The various methods used in artificial intelligence, including machine learning and deep learning, could then be applied to the data to learn from previous shipping and storage journeys to optimize and refine the passage of each container from origin to destination.
But AI’s potential goes much farther than simply optimizing the route that food products take on their trip from Point A to Point Z. AI technologies are already fundamentally altering the way that logistics companies warehouse foodstuffs. They’re also reshaping the way that companies along the supply chain make decisions, using predictive technology to give human beings the insights they need to make better, more efficient choices.
Technologies like blockchain and AI don’t exist in hermetically sealed bubbles. They interact with and inform other technologies and strategies, like robotic process automation and autonomous vehicles, to create brand new solutions to age-old problems in the supply chain.
For example, several supply chain and logistics companies have already discovered the tremendous utility of combining blockchain technologies with Internet of Things (IoT) devices. This powerful combination allows for fully automated container tracking as shipments make updates to the distributed ledger by coming into contact with wireless transmitter-enabled IoT devices along their journey.
Put another way, the food industry has only begun to scratch the surface of the disruptive capabilities of new technologies like blockchain and artificial intelligence.
There is, of course, a human side to these efficiencies. As digital technologies become ever more effective at eliminating inefficiencies in the supply chain, human operators and employees may find themselves sidelined, laid off, or otherwise rendered redundant. In turn, this could exacerbate food and economic insecurity.
However, there is reason to be optimistic about these new technologies. The roles that humans play in the storage and delivery of food across the world may change, but it’s unlikely that people will be entirely replaced by digital tools. The creativity and problem-solving skills possessed by human beings are difficult, if not impossible, to replicate in a machine.
The use of new technologies shouldn’t be limited to the shipping and storage of food throughout the world. It can be extended to the point-of-sale, with food sellers taking advantage of new, digital outlets for their product.
For example, the rise of digital food delivery services has created a new service outlet for restaurants across the world. These new capabilities demonstrated their utility during the pandemic when, instead of shuttering completely, restaurants were able to continue selling food via services like Uber Eats and DoorDash.
Of course, the adoption of technologies like these has not been pain-free. Much has been written about whether the fee structures of food delivery apps are compatible with the long-term health of the restaurant industry. Time, and market forces, will tell if new outlets for food sales are viable forms of diversification for the food supply chain.
Getting a handle on climate change
No discussion of the future of the food supply chain would be complete without at least a brief mention of the 800-pound gorilla on the world stage: climate change. Rising sea levels, warming temperatures, and increased weather unpredictability could all conspire to introduce radical changes to the food supply chain.
Whether these changes will be uniformly negative, positive, or (what’s more likely) a mixed bag, remains to be seen. What is certain is that there will be an impact. In fact, that impact is already being felt across the world as growing seasons change, wildfires wipe out crops, and water for irrigation becomes more scarce in some parts of the world.
There’s no clear solution to the disruption caused by climate change. The scope and complexity of the problem make it difficult to predict how it will play out in the coming years and decades, while its widespread effects make it just as hard to prepare for and mitigate its impacts.
The issues faced by the global food supply chain can seem enormous because, frankly, they are. This is unsurprising given the scope and complexity of the food industry across the world.
What is equally true, however, is the power of the tools and strategies at the disposal of industry participants. New, digital technologies are coming into their own and promising to revolutionize parts of the food supply chain that have long been mired in a lack of transparency and inefficiency.
It remains to be seen how the industry will react to the continued aftershocks of the COVID-19 pandemic and whether it deploys all of the digital and political weapons in its arsenal as it fights to become leaner, more resilient, and more effective.
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