Since 2008, we have seen two global food price shocks—the result of disruptions to supply and demand driven by drought, unusual weather,and increased consumption. These events have highlighted the interconnected natureof the global food system as well as its fragility in the face of volatile weather patterns, constraints on natural resources in traditional growing regions, and our ability to meet increased demand. These crises are playing out in places such as California and Brazil, where demands for energy and water, agriculture, and urban populations are in stiff competition. And as we look ahead 20 years with these events in mind, we’re confronted with a few key questions: Are today’s breadbaskets going to be tomorrow’s? Do we have the natural resources base to maintain food production in these regions? And if not what are the alternatives?
From the perspective of food companies, the food price shocks and supply variability should raise concerns not only around the environmental and social factors that are largely beyond their control, but also around supply security, which should be within their control. Most companies, however, have limited visibility on their supply chains and, as a result, lack the awareness to know where their agricultural commodities were produced and the risks and pressures these commodities might be encountering. Supply chains have essentially been outsourced and are only transactional, and little information regarding origination is available. Companies may dominate their manufacturing and marketing, but when it comes to supply chains for their raw materials, many companies are blind.
This is especially concerning when one considers that a food company’s expenditures on agricultural commodities may be three times that of their marketing budgets. Yet invisible supply chains pose serious risks to companies’ reputations and trustworthiness.
At WWF, we have spent the past eight years helping global brands understand the risks that are embedded in their supply chains—risks that come with negative environmental impacts, such as clearing forests, polluting rivers, or using harmful chemicals. Then, we work together to identify and mitigate these risks by building transparent supply chains that include sustainable food producers.
WWF wants companies to produce food in a way that doesn’t harm the environment; food companies need predictable and transparent supply chains. Together, we can work to meet both objectives.
This post originally appeared in the U.S. Chamber of Commerce Foundation publication, Achieving Food Security: Private Sector Solutions for Global Development Challenges. Reprinted with permission.