The global food supply chain is built on shifting ground

In recent weeks there’s been a sensational level of focus on food supply. Though Procurement Leaders has been tracking the price volatility for months now, once certain price gates are breached, the public starts to get interested. And while it’s difficult to say, especially after the ups and downs of 2008, whether a truly global crisis is around the corner – this is still one of a growing number of signals that the food supply chains of the future may be virtually unrecognisable today.

When you read around the topic, it’s clear this is not a new issue and there’s little happening that wasn’t predicted. Particularly after the wake-up call in 2008, food prices have been the elephant in the room. Looking back to 2009, I found a prescient post by ‘the doctor’ on Sourcing Innovation asking whether we can sustain the global food chain.

In that post, one of the points he raises is that sustainability (with apologies to Paul Teague) is having a growing impact on the way companies source their food. Here in 2011, that’s more accurate and more relevant than ever.

Take the example of palm oil – which has been something of a standard bearer for many big name food companies’ sustainable sourcing habits. As the global director of sustainable sourcing development at Unilever said last year: “We need to increase the uptake of certified oil in the [global] market.”

And that’s one of the dilemmas at the heart of this discussion: global food markets have different needs and regulations and as companies try to invest in these markets, their global sourcing strategies come under more and more pressure.

The impending currency wars – if we’re not already seeing the start of them – could be another, even more immediate factor. As Jonathan Webb on the PIU blog pointed out yesterday: “Buyers must be sensitive to the routes that their supply chains take. Any of the goods they purchase – no matter how distinct from the subject of a trade dispute – may be subject to heavy tariffs if an opposing country spies competitive advantage.”

And of course, to return to the current, more pressing crisis – global food supply is unpredictable, due to shifting demand, weather events and, as we’ve said, politics. And there’s plenty of evidence that global powers are going to have an influence in combating that, which could mean governance changing the way food is sourced and distributed.

We’ve seen frequent discussion about the crucial role that risk management strategies are going to play in shaping the future supply chains. But I’d argue that the combination of all these influences point to drastic change in food supply chains and that’s something that procurement is going to have to work with businesses to adapt to. And it may be sooner than you think.

Steve Hall is senior staff writer of Procurement Leaders. To find out more about the magazine, click here.