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Impact of disruption in agri-food supply and value chains

13 April 20227 min reading

A holistic approach regarding food and energy security is critical in ensuring that food and nutrition outcomes remain a priority.

Karan Singhal
Plant Manager 
Swiss Bake, Trade Kings Group, Zambia


The pandemic is on a trajectory to cause catastrophic global upheaval with the potential to alter geopolitical and socio-economic norms. Many countries are frantically responding with staggering financial stimulus recovery initiatives.

COVID-19 as a global pandemic has triggered a completely new situation in agri-food systems. It showed vulnerability within the systems globally. This stimulates unexpected risks and operational costs in the agri-food supply chain. The very important risks that occurred and that we are still facing until today as millers are the delays in freight and their increased costs in addition to the increased grain prices. Other impacts include slowing of the manufacturing of essential goods, key materials & ingredients and final products, losses in national and international business, poor cash flow in the market, and significant slow in revenues growth. This pandemic has increased global food insecurity in almost every country by reducing incomes and disrupting Agri-food supply chains and continues to create devastating effects on global hunger, and poverty. It caused a shake-up in the operations of all agri-food system’s actors, starting from the sector providing the means of food production, through food producers, the processing industry and logistics, all the way to consumers.

The effects of the coronavirus have had such a strong impact on agri-food systems that, in the future, these will not function the way they used to, and this is an opportunity to create transformative public policies serving to build more sustainable agri-food systems, and also enabling the agri-food system innovations emerging during the pandemic to be maintained and developed, which will help bridge some of the current disruptions in supply and demand and will help prepare agri-food systems for future crises. All the food chain participants, from raw material producers to end consumers, must play a role in the construction and operation of a sustainable agri-food system. The aim is to create a sustainable agri-food system that will guarantee ‘food security’ while also ensuring access to a healthy diet produced in a way that is safe for the planet.

Food security means a supply chain that is consistently able to deliver adequate quantities of food, both through preparing for disruption and having the capacity and flexibility to respond effectively to unexpected problems. A resilient supply chain is robust and resilient, possessing an ability to recover from disruption and which can re-orientate to alternate outcomes when necessary. Global trade in agricultural and food products plays an essential role in providing food security for the world. Volume and freedom of trade are key, as is the diversity of global supply into those markets.

From all over the world, there are three main issues in relation to agri-food production and the supply chain in the context of the pandemic,

  1. People today follow a healthy diet to a greater extent than in the past, in order to protect themselves and their immune system, hence the increased demand for functional food containing bioactive ingredients.
  2.  More attention is now given to food safety, to prevent the spread of the coronavirus among producers, people involved in food processing, retailers, and consumers.

iii.          Fears about and actual difficulties with ensuring food security for some population groups have appeared in the face of lockdowns and restrictions on movement.

The post-pandemic era that focuses on intensive sustaining of agri-food supply chain in tandem with meeting the high demand for new green innovation. The pandemic has had an instant effect on agri-food systems in developing countries. Restrictions to the movement of people and goods have impaired access to markets, services and food. Unlike other concurrent crises, rather than threatening the material hardware of agri-food systems, COVID-19 has so far affected the ‘software’ of agri-food systems, highlighting again that connectivity is at the heart of these systems.

A growing global trade in agricultural products increases resilience to supply shocks affecting geographical areas and allows for a more efficient global food supply chain. However, reliance on the global trading system increases vulnerability to events, such as trade restrictions, which disrupt the system. The pandemic caused some disruption to transboundary supply chains but global trade in products is expected to recover and continue growing in the long term.

The agriculture and food sector experienced significant supply chain disruptions due to the pandemic crisis and associated lockdown measures. Yet relatively limited economic impacts were observed on the sector due to the agility of producers, supply chain actors and retailers, but also to the rapid and broad response by governments. As the impact of the pandemic on this sector subsides, policymakers will need to pivot and shift spending to investments that can enhance sector-wide resilience.

The main types of impacts were observed on the agriculture and food sector are:

  1. The production of certain agricultural goods was reduced due to the unavailability of seasonal labour, restrictions in the access to intermediate agriculture inputs, and the incapacity to sell output.
  1. There were impacts on consumer demand driven by unemployment and income shocks associated with the containment measures, reduced demand for high-value products, consumer shift in demand from food services, and decline in biofuel demand.
  2. The supply chain disruptions were observed in many countries, due in part to the contamination of employees in processing firms, the adoption of distancing and sanitary requirements, and transport and logistic issues.

According to the research across the globe, food insecurity has perpetually been a leading factor. The struggle to achieve the aim of creating a sustainable agri-food system for food security is just budding. The ongoing fallout from the Covid-19 pandemic and now, the unfolding crisis between Russia and Ukraine has rolled the concern which has intensified over its impact on agri-food supply chains. Both countries are among the top five international exporters for many important cereals and oilseeds such as wheat, maize and sunflowers.

Russia and Ukraine collectively meet over 50 percent of cereals and oilseeds demand for Middle East Asia and the African continent. Both countries’ conflict affects one of the world’s most important regions for trade – the Black Sea, due to Kyiv’s closed ports and ban on commercial vessels. It takes an even larger piece of the global agri-food supply pie. If the conflict persists and exports continue to be halted during the upcoming harvest season, the chaos will reverberate throughout the globe. This will pose a risk to global food prices. The conflicts’ impact on fertilizer exports due to sanctions, which will create a vicious cycle in the production of agricultural crops.

For the last few seasons due to the effects of the pandemic and weather conditions supply is limited, and demand against the backdrop of growing populations in countries where wheat is consumed, but almost not produced (like Zambia), and the psychological desire to stockpile, is only growing. The threat of supply disruption from one of the world’s largest grain-producing regions which operates around 1MMT of cargo per annum. It is going to have a dramatic impact on food, shipping, oil and fuel costs. Further disrupt global markets, will have negative consequences for global grain supplies in the short term, and low-income net food-importing countries, many of which have seen an increase in malnutrition rates over the past few years in the face of pandemic disruptions.

The global fertilizer market has been reeling from record-high prices. Further shortages will have global implications, particularly in developing countries where price impacts could significantly reduce fertilizer use and result in poor local harvests at a time of reduced global stocks and record global skyrocketing prices.

A holistic approach regarding food and energy security is critical in ensuring that food and nutrition outcomes remain a priority. Global food security concerns in a situation with an already tight supply across the main nutrients. It has to be acknowledged that there are several limitations of our paper. ‘Prediction is very difficult, especially about the future’ appears more relevant than ever. First, we analyzed situations that had been changing dynamically, in order to repeal the further dynamics of change. Hence, it would be worth turning again to food producers and sellers with the question of how they perform in the current scenario.

 


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