The fragility of the supply chain as a whole has been exposed by the COVID 19 pandemic. There have been major transportation delays with border closures and reprioritization of goods – such as the shift to personal protective equipment and ventilators – disrupting normal supply flows. Food supply chains have sometimes broken down due to logistical issues, and other products have gone unsold due to consumption shift – a striking example of which is the widespread closure of restaurants. For companies in regions like North America, these events have highlighted the need for greater transparency and the need to better understand the food supply chain in order to anticipate breakdowns in the future.
Some of these vulnerabilities may be addressed by building and accelerating a more sustainable food supply chain - not just on the environmental level, but on the social one as well. How companies engage, who they engage with and what they want to achieve are all factors that could be reconsidered. It is no longer about just knowing your supplier and being able to trace goods – now may be the time to also rethink the role of the food supply chain as part of the greater conversation on global nutrition, preservation of natural capital, and ensuring a decent living for farmers.
New sustainability trends have emerged as a result of COVID-19. The current health crisis is bringing to light the need for everyone on the social ladder to have access to quality, nutritious food. Consumer behaviors are changing, and companies can learn from this information and improve their supply chains. Below are just a few of the current sustainability trends in the marketplace:
- Local Sourcing – In several countries, retailers have begun to incorporate local sourcing of agri-food products into their supply chains, especially fruits and vegetables. This makes it possible to meet growing consumer demand for locally sourced food, while also reducing the carbon footprint of the supply chain due to reduced transport and associated greenhouse gas emissions.
- Linking Cities and Rural Areas – As local sourcing grows in popularity, there exists a new link between cities and the rural areas where food is produced. For example, in France, 47% of consumers prefer local products, while 66% believe farmers are not paid enough for their production.
- Food Sovereignty – Related to the first two topics, food sovereignty gives countries, states and people the right to control their food supply chain, and to avoid “food dumping” from foreign providers. Awareness surrounding this topic has increased recently in light of COVID-19 and the fragility of the global food supply chain.
- Quality of Products – Buyers are increasingly considering the quality of their food, and in particular, organic food sales have seen a spike in the European market. There are several factors that may play into this trend, including increased health concerns due to the coronavirus pandemic and high-disposable-income people eating at home rather than going to restaurants.
The Challenges Ahead
Before looking at the opportunities for sustainable food supply chains in a post-COVID-19 world, there are two major challenges to understand: how do organizations address inequality and access to nutritious, quality food? And, how can farmers be supported in the transition toward more sustainably produced nutritious food? To build greater sustainability and resiliency, the entire food supply chain will have to tackle this problem head on. Before the pandemic, 135 million people worldwide were already dealing with acute hunger, according to the United Nations Food and Agriculture Organization. And, it is estimated that in Europe alone, more than 950,000 deaths in 2017 were attributed to unhealthy diets.
There are three main tracks for addressing these challenges:
- The first is to encourage more responsible consumption by people through awareness of health and nutrition. For example, companies can use their marketing resources to promote improving the health of consumers by supplying them with the necessary information to make healthy, sustainable choices. Food labeling can be developed to empower consumers to choose these products – and this applies even to the biggest brands. A transition could also be made towards planet-friendly and healthier production by increasing the global share of fruits and vegetables in the diet. And, at the retail level, sustainably produced foods can be included in special offers to encourage consumers to shift toward more environmentally friendly and socially beneficial products.
- Second, companies can develop programs across regions to improve access to nutritious foods, and ultimately improve sustainability. In some regions, the wealth gap has widened, making it difficult for farmers to obtain the necessary materials to continue production of healthy foods. Some creative solutions have been explored to address these inequities. For example, banks have set up programs to provide farmers loans so they can purchase seeds and other materials. This can create more sustainable farming by allowing for local production to continue in these countries even during times when farmers are in financial distress.
- The third track involves supporting investments in the transition toward regenerative or agro-ecology farming. One example of this type of action is Europe’s “From Farm to Fork” strategy which launched in May as part of the Green Deal package. This strategy will invest millions of Euros to help support a transition toward a more healthy, sustainable food system in the European Union (EU). Another way governments can support this track is by funding payments for environmental services in the agricultural sector around climate-friendly practices, as well as subsidizing training and knowledge transfer at the farm level to offer aid at the source. And, supply chain owners can adopt long-term contractulization practices with farmers and processors, which helps to create stability and promote regenerative, agro-ecology farming. This practice is already taking place in the wheat and potato supply chains.
Opportunities to Accelerate a Sustainable Model
Keeping in mind the challenges of addressing equal access to nutritious food and farmers’ support, all parties in the food supply chain could begin to act upon new opportunities to accelerate a sustainable model in the Next Normal. These opportunities include:
- Rethinking the Producer-to-Consumer Process – Sustainability in the food supply chain can begin with companies rethinking the process from producer to consumer. It is possible to create a direct link between farmers and consumers through marketing materials, packaging and labelling. This strategy could improve sustainable practices throughout the supply chain by making marketable assets out of practices such as reduced use of pesticides and antibiotics, and the use of organic farming techniques.
- Gaining Better Control Over the Supply Chain – Relocating food production closer to its transportation and consumption may not only deliver better control over the supply chain, but also cut down on transport footprints and greenhouse gases. This also provides opportunities for win-win situations, where buyers create long-term contracts (3-5 years) with suppliers, which gives them greater financial stability and gives the buyer a more stable and sustainable supply chain.
- Embracing Digital Tools – By pushing the use of digital tools and digitizing farming operations, contractual commitments can be better monitored. Right now, raw materials can be tracked, but it is nearly impossible to track and monitor sustainable commitments all along the value chain. Digital tools may dramatically help traceability, making it much easier to track global performance, which helps to improve supply chain efficiency and build trust in the food on our market today, because products can be tied back to high-quality sources. This capability also enables tracking food waste and loss along the supply chain so it can be more effectively managed moving forward.
The Next Normal offers numerous opportunities to rethink and reimagine a more resilient, sustainable food supply chain. By rethinking the process from producer to final consumer, companies may accelerate their sustainable practices and increase the likelihood that nutritious, healthy food becomes more accessible to those in need. They can also make sure farmers are being supported at the source. Many of these steps can be taken immediately by investing in the agricultural transition towards more localized, sustainable and nutritious food production and consumption.